You bought Ethereum at $3,500.
Price dropped to $2,800. Every day you check — not where price is going — but how far it is from $3,500.
“It is down $700 from where I bought.” That number owns your thinking.
You will not sell below $3,500. You will not add below $3,500. Every decision you make is filtered through that one anchor price.
The market does not know you bought at $3,500. It does not care. But your brain cannot let it go.
This is anchoring bias.
Anchoring bias is the tendency to rely too heavily on one specific piece of information — usually the first number encountered — when making decisions.
In trading the anchor is almost always your entry price.
Everything gets measured against it. Profit and loss feel relative to that number — not to what the market is actually doing or where it is likely to go next.
Refusing to sell at a loss.
Your anchor is your entry price. Selling below it feels like failure.
So you hold — not because the analysis supports holding, but because you cannot accept selling below your anchor.
Setting unrealistic targets.
You bought at $3,500. You want to sell at $4,000 — a round number above your entry.
But the chart shows strong resistance at $3,800.
Your anchor is overriding the technical evidence.
Averaging down without logic.
Price dropped from your entry. You buy more to lower your average.
Not because the setup is valid — but because the lower price feels cheap relative to your anchor.
You are not trading the market. You are trading your anchor.
Missing new opportunities.
You are fixated on your existing position recovering to your entry price.
Meanwhile new setups appear and disappear.
Your anchor is costing you more than just the open loss.
All of these can distort your thinking if you give them too much weight.
Rule 1 — Ask the clean slate question.
“If I had no position and no history with this asset — what would I do right now based purely on the chart?”
This removes your anchor and forces clean analysis.
Rule 2 — Judge trades by current structure — not entry price.
Is price above or below key moving averages? Is the trend intact?
These questions matter. Your entry price does not change any of them.
Rule 3 — Set targets before entry.
Decide your take profit level before you enter — based on chart structure.
Do not adjust targets after entry based on where you bought.
Rule 4 — Measure performance in R — not in dollars from entry.
Did the trade hit 2R? 3R? Did it stop out at 1R loss?
R multiples remove the emotional weight of the entry price anchor completely.
Rule 5 — Review anchoring in your journal.
For every trade where you held past your stop or adjusted targets — ask honestly: was I anchored to my entry price?
The answer is usually yes.
In the next topic we will study recency bias — the tendency to overweight recent events and assume they will continue forever.