We react emotionally rather than looking at the statistics: traders sell winning stocks to lock in the wins—it feels good, even though the numbers say that winners continue to go up in the short term; they hold on to losers to avoid locking in the losses—that would feel bad, even though the numbers say you should cut and run. In fact, numerous studies show that professional investors have a remarkable ability to ignore statistical information for their own gut and intuition—and that they’d often be better served not trading at all as a result.
