Availability bias (Recency bias)

Availability bias (Recency bias)- This bias causes traders to overweight recent news or price moves when making decisions. For example, after a sudden market crash a trader might irrationally expect more losses and exit all positions, or after a long rally might chase gains. In algorithmic terms, recency bias can cause over-reliance on very recent data; a bot might overfit to the latest trend or spike assuming it will continue. Recency bias is defined as the tendency to overweight new information while ignoring the true probabilities of events. It can cause panic selling or bubble chasing based on salient recent events.