Regret aversion – Regret aversion leads traders to avoid decisions that could result in regret. It causes them to hold losing positions or add funds to a bad trade, hoping to avoid the regret of realizing a loss. This is closely related to the sunk-cost fallacy. As Investopedia notes, regret aversion is when people make emotional decisions to avoid feeling regret over an initial decision. For traders, this means clinging to losers or doubling down on losing bets “in hopes that it will somehow recover.” In forex robots, this bias is avoided by using fixed rules: a bot with a hard StopLoss removes the option to cling. The literature notes that regret aversion can cause “investors to cling to the failing security, or even throw more money at it,” often worsening the loss. Automated strategies sidestep regret by cutting losses according to predefined rules (e.g. unbreakable loss limits).

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