Stock Market · True or False
Is it true that loss aversion causes investors to sell winners too early?
True. People lock gains quickly but hold losers.
Investors sell winners too early to lock in gains while holding losers hoping to break even — this asymmetry reduces returns by cutting winners short and letting losers run.
Taking profits on your best performers while holding your worst ones, when the opposite approach produces significantly better long-term results.
This scenario is one of 155 in the Skillful Stock Market track. Each card states a situation, you decide true or false, and the explanation follows immediately.
- Answer
- True
- Track
- Stock Market
- Topics
- behavioral-finance, loss-aversion
Also asked as
Why do investors sell winning stocks too early? How loss aversion affects selling decisions? What causes premature profit-taking in investing?
The scenario in full
Loss aversion causes investors to sell winners too early.
Frequently asked questions
Is it true that loss aversion causes investors to sell winners too early?
True. People lock gains quickly but hold losers.
Why do investors sell winning stocks too early?
True. People lock gains quickly but hold losers. Investors sell winners too early to lock in gains while holding losers hoping to break even — this asymmetry reduces returns by cutting winners short and letting losers run.
How loss aversion affects selling decisions?
True. People lock gains quickly but hold losers. Investors sell winners too early to lock in gains while holding losers hoping to break even — this asymmetry reduces returns by cutting winners short and letting losers run.
What causes premature profit-taking in investing?
True. People lock gains quickly but hold losers. Investors sell winners too early to lock in gains while holding losers hoping to break even — this asymmetry reduces returns by cutting winners short and letting losers run.
Where does this stock market question come from?
It is one of 155 scenarios in the Skillful Stock Market track. Each card states a realistic situation, you decide true or false, and the explanation follows immediately.
How do I practise more questions like this?
Start the Stock Market quiz. It runs about two minutes per session, the first 150 questions are free across every category, and your progress saves automatically.