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Psychology

Gambler's Fallacy

The mistaken belief that statistically independent events influence each other. In memecoins: 'it has been bleeding for four hours, it must be due for a bounce.' Dying charts die for compounding reasons that typically intensify rather than reverse.

See also
Psychology Recency Bias Overweighting recent events when forming judgments. In memecoins: treating the last three trades as definitive evidence of skill or its loss. Produces the hot-hand fallacy (size up after wins) and the cold-hand fallacy (stop trading after losses), both of which are expensive errors. → Psychology Loss Aversion The empirical finding that losses feel approximately twice as painful as equivalent gains feel pleasurable (Kahneman and Tversky, 1979). The engine behind the disposition effect. Structurally incompatible with memecoin trading, which requires cutting many losers fast to afford the rare large winner. → Psychology Reactor (Archetype) The trader archetype anchored to feelings and PnL. Identity collapses with the bag — a green day means 'I am a good trader,' a red day means 'I am a bad trader.' Time horizon compresses to the next five minutes. Re-learns the same lesson on a six-week loop indefinitely because there is no record. →
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