The tendency to rely too heavily on the first piece of information you see (the anchor) when making decisions.
Anchoring is when an arbitrary reference point distorts your judgment. In trading, the most common anchors are your entry price, the all-time high, the previous day's close, or any "important number" you saw recently. Once that number is in your head, you measure everything against it, even when it's irrelevant to current conditions.
The most damaging anchor is your entry price. After entry, traders constantly compare the current price to where they got in: "It's down 20 pips from my entry, that's bad." But the market doesn't care about your entry. The relevant question is whether the current setup still has an edge — not whether you're up or down from where you bought.
Professionals are trained to ignore their entry price after the fact. The exit decision should be based on fresh analysis of where the market is now, not on whether you're profitable or losing on the position.
Many traders who bought BTC at $20,000 in 2018 held all the way down to $3,000 because they were anchored to their entry. The same traders, asked "would you buy BTC at $5,000 today?" would have said no — proving the anchor was driving the decision, not the analysis.
Frequently asked about anchoring bias
What is an anchoring bias in trading?+
The tendency to rely too heavily on the first piece of information you see (the anchor) when making decisions.
When will I see anchoring bias used in real trading?+
Every time you talk about a trade in terms of "break even" or "how far from entry." Both phrases are anchoring tells.
What is the most common mistake traders make with anchoring bias?+
Setting take profits based on round numbers (1.1000, 1.2000) without checking if the level is technically meaningful. Round numbers are anchors, not levels.
What do experienced traders know about anchoring bias that beginners don't?+
After entering a trade, hide your entry price from view if your platform allows it. Trade the chart, not the P&L. This single change eliminates most anchoring damage.
Read the lesson here. Mark the chart on TradingView. Compare brokers with the checklist.
TradingView is the chart workspace most learners already recognize: watchlists, alerts, drawings, and clean multi-market charts. Broker research stays methodology-first: jurisdiction, costs, platform, withdrawals, and risk before any account decision.