SMART MONEY FOREX UNIVERSITY

PSYCOLOGY Q/A

Trading Psychology & Biases

Which cognitive bias refers to the tendency of individuals to overestimate their ability to predict the
outcome of trades?

a) Confirmation bias

b) Overconfidence bias

c) Anchoring bias

d) Availability bias

Answer: b) Overconfidence bias

FOMO stands for:

a) Fear of missing out

b) Failure of monetary opportunity

c) Finding optimal market opportunities

d) Financial opportunities management

Answer: a) Fear of missing out

Which emotion often drives investors to make impulsive and irrational decisions?

a) Fear

b) Greed

c) Hope

d) All of the above

Answer: d) All of the above

Which cognitive bias involves the tendency of individuals to seek information that confirms their existing
beliefs or biases?

a) Confirmation bias

b) Recency bias

c) Loss aversion bias

d) Hindsight bias

Answer: a) Confirmation bias

What is the psychological phenomenon called when investors hold on to losing positions, hoping for a
reversal?

a) Fear of missing out

b) Anchoring bias

c) Loss aversion

d) Hope bias

Answer: d) Hope bias

Which emotion tends to lead to selling too early and missing out on potential gains?

a) Fear

b) Greed

c) Hope

d) Regret

Answer: a) Fear

What is the term for the psychological tendency to avoid accepting losses and holding on to losing
trades?

a) Anchoring bias

b) Loss aversion
c) Regret aversion

d) Hindsight bias

Answer: b) Loss aversion

Which psychological bias involves placing undue importance on the most recent information while
disregarding historical data?

a) Confirmation bias

b) Recency bias

c) Anchoring bias

d) Availability bias

Answer: b) Recency bias

Which emotion often leads to chasing after hot stocks without proper analysis or research?

a) Fear

b) Greed

c) Hope

d) Regret

Answer: b) Greed

Which cognitive bias involves relying too heavily on the first piece of information received when making
decisions?

a) Confirmation bias

b) Recency bias

c) Anchoring bias

d) Hindsight bias

Answer: c) Anchoring bias

What is the term for the tendency of investors to believe that a recent streak of successes or failures will
continue into the future?

a) Confirmation bias

b) Gambler's fallacy

c) Hindsight bias

d) Availability bias

Answer: b) Gambler's fallacy

Which emotion often leads investors to hold on to winning positions for too long, risking potential
gains?

a) Fear

b) Greed

c) Hope

d) Regret

Answer: c) Hope