Loss aversion

Losses are felt roughly twice as strongly as equivalent gains, which distorts decisions in a predictable direction.

The consequence in portfolios is the disposition effect: selling winners too early to bank a gain and holding losers too long to avoid realising a loss. For both tax and momentum reasons, that behaviour gets things backwards.

Kahneman and Tversky measured the asymmetry in their prospect theory work, and it has been replicated widely.

Fix it with a selling rule written before the position exists.