Beware of "Recency Bias" Recency bias has been killing the...

Beware of "Recency Bias"

Recency bias has been killing the performance of traders for many years. In the name of trend following, traders have executed long and short positions on the basis of momentum: they’ve bought stocks when those shares have been up and sold them when they’ve been down. By couching the decision to buy strength or sell weakness as patience (“waiting for price confirmation”) or as going with the trend, traders talk themselves into recency bias as a virtue.