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The 'it used to be 900' mindset, and how it freezes decisions
Published by The Retail Trader · AUG 09, 2026 · Trading Psychology
'This stock was 900, now it is at 600 — it is cheap.' Almost every investor has said or heard this. There is a hidden mistake in it: the number 900 carries no information for today's decision.
Anchoring means grabbing hold of one number and judging everything else around it. In trading that number is often one of three: your own entry price, the stock's old high, or some round figure.
All three have the same problem — they have no relationship with the business's condition today.
Your entry price is known only to you. For the market it does not exist. Even so, many decisions are made around it — 'I will get out at break-even', 'let it come up a little more'.
These decisions are not about the stock. They are about your own accounting. And the market is not here to make that accounting come out right.
A stock being 60% below its old high does not mean it is cheap. That high may have been built on expectations of that time that have since proved wrong.
The right questions are not about the high, they are about the business:
• What is the difference between the earnings then and the earnings today?
• Is the expectation on which that high was built still alive?
• What is this price saying on today's numbers?
• If I were looking at this company for the first time today, what would I think?
People place more orders at numbers like 100, 500, 1000. So these levels sometimes actually work — but the reason is psychology, not structure.
The practical benefit of this: do not place your stop exactly on a round number. That is where the crowd is thickest, and that is the spot tested the most.
A small exercise: when looking at your holdings, hide the entry price column and look only at today's data. Then ask — would I buy this today?
Most people find that many of their positions are alive only because they remember an old number.
This article is for educational purposes only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.