What are the main cognitive biases that affect decision making?

Cognitive biases significantly impact crypto trading decisions. FOMO (fear of missing out) drives investors to buy at peaks, while loss aversion causes panic selling during downturns. Confirmation bias leads traders to seek information supporting existing beliefs, ignoring contrary data. Anchoring bias makes investors fixate on previous price levels. Overconfidence causes excessive risk-taking, especially after gains. Recency bias prioritizes recent events over historical patterns. Herd mentality causes traders to follow crowds rather than analyze fundamentals. Understanding these biases helps develop discipline through stop-losses, written trading plans, and avoiding emotional decisions. Successful traders use position sizing and risk management to counteract psychological pitfalls.