A friend of mine couldn’t stop talking about Nifty 12,000 back in late 2020.
After the US elections, the index crossed that level, and he just froze, convinced it was “too high.” He booked profits early, missed the rally, and waited for a dip that never came.
Fast forward, in late 2023, another friend was anchored to 18,000.
Nifty had crossed 18,600, and he kept saying, “Let it come back to 18k, then I’ll buy.”
He’s still waiting.
Now in 2024, I know someone is stuck on 21,000.
After the recent breakout post-tariff announcements, his mental reference point hasn’t moved. Despite new highs, he’s anchored, and it’s costing him.
This is anchoring bias a cognitive trap where our minds fixate on a specific number (like an index level, price, or valuation), and it clouds our judgment.
We treat that level like an absolute truth, even when the market has moved on.
In trading, anchoring can make you:
- Miss opportunities
- Enter or exit too early
- Ignore current data because you’re clinging to old levels
Here’s the truth markets evolve, but our minds often don’t.
Anchoring feels safe. But safety isn’t profitable.
If you find yourself thinking, “I’ll wait for it to come back to X,” ask yourself —
Are you trading the market or your memory?