Gamblers’ fallacy

Gambler’s fallacy - This is the mistaken belief that past independent events influence future outcomes (e.g. “This currency pair fell 5 times, so it’s due to rise”). In trading, a gambler’s fallacy might make a trader wrongly assume a reversal is imminent after a string of losses. Bots generally ignore this bias by definition, but a developer might inadvertently code it by trying to “even out” results. The gambler’s fallacy is defined as the erroneous belief that an event is less likely or more likely because of previous occurrences when independent. It can cause traders to abandon sound strategy for false expectations, so systems should not assume mean-reversion or exhaustion without statistical evidence.