Anchoring — Your Entry Price Is Not a Number the Market Knows

The mechanism

Anchoring: the first number encountered skews all later judgment. Traders anchor on entry price ("I'll sell when I'm back to even at $52"), on 52-week highs ("it can't go higher than $80"), and on round numbers. The market prices NONE of these — it prices forward cash flows. Your cost basis is a private fact with zero informational content.

Where it bites

Holding losers until breakeven (the entry anchor), refusing to buy a great business "because it ran from $40" (the price-history anchor), and setting targets at round numbers instead of structure. Each replaces the question "what is this worth / what is the setup?" with a number that exists only in your head.

The debiasing habit

Evaluate every position as a fresh decision: "holding this = buying it at today's price" (day 35's fresh-money test). And when setting levels, derive them from structure (zones, invalidation) — never from your entry, your desired profit, or the clock.

Sources

• Anchoring BiasInvestopedia