Have you ever encountered this situation: you finally make some money and just want to cash out quickly; but once you're trapped, you refuse to cut your losses, insisting on waiting for it to break even?

There are actually some interesting psychological mechanisms behind this. In trading circles, this is called the "effect"—those psychological phenomena that secretly influence your judgment.

In simple terms, it's your brain and emotions fighting against rationality. These often stem from cognitive biases and emotional reactions, sometimes even influencing the entire market trend.

**First, let's talk about the "Disposition Effect"**

This term sounds quite professional, but it actually refers to: wanting to sell when making a profit, and stubbornly holding onto losing positions. Many people have this problem—unable to hold onto profitable trades, but reluctant to cut losses on losing ones.

Why does this happen? The root lies in our innate dislike of losses. Psychology has a saying: the pain of losing 100 dollars is much stronger than the pleasure of gaining 100 dollars.

So when your account turns green, your subconscious starts to panic: "What if I sell now and it keeps rising? Will I regret it to death?" This fear of regret causes many to choose avoidance—neither selling to stop loss nor facing reality.

**And let's mention "Overconfidence"**

Another common trap is overconfidence—that feeling of being especially skilled, able to predict the market accurately, leading to blindly increasing leverage and going all-in. The market won't indulge you— the more confident you are, the harder you'll fall.

Recognizing these psychological traps is very important. It's not that learning about them will instantly make you an expert, but at least it helps you realize: many times, it's not the market that's wrong, but your brain playing tricks on you. Understanding this allows for more objective and calmer decision-making.