What Is Loss Aversion?
Loss aversion is the tendency to feel losses about twice as strongly as equal gains. It explains panic
selling, holding losers too long, and why fear moves markets harder than greed.
A loss
hurts about twice as much as an equal gain
feels good.
The result
So we panic-sell at bottoms and avoid
sensible risk. Fear wins.
It is the single strongest force a Fear and Greed Index captures.
Source: CFGI
Markets