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GAMBLER'S FALLACY

It is accepted that after four losses a win is 'due'.

Published by The Retail Trader · JUL 31, 2026 · Trading Psychology

Gambler's Fallacy — The belief that everything is 'due' after four losses. The market does not remember your record.

WHERE THIS FITS IN

This term comes under Trading Psychology, in the section “BIASES OF THE BRAIN”. These are those mental shortcuts which are useful in normal life, but are costly in the market:

RELATED TERMS TO READ

Other terms in this group — understanding them together is more useful:
• Confirmation Bias
• Recency Bias
• Anchoring
• Loss Aversion
• Overconfidence
• Hindsight Bias
• Survivorship Bias
• Sunk Cost Fallacy
• Lottery Bias

To read the entire group and all its examples in one place, see the journal "TRADING PSYCHOLOGY: Words from the Mind" - this term has been taken from there.

This entry is for educational purposes only and is not a recommendation to buy or sell. Exchanges change charges, margins, lot sizes and expiry rules from time to time, so verify any figures with your broker or exchange.

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