A theory by Nobel laureate Daniel Kahneman et al. It states that humans innately feel the pain of a loss about 2 to 2.5 times more intensely than the joy of an equivalent gain, a fundamental cognitive bias.
How to Do It
Acknowledge that the "regret" felt during a stop-loss is the brain's default setting, and do not blame yourself.
Effect
Detaches losses from "personal failure," framing them as a "biological reaction," enabling calm execution.
How to Use
1. Verbally note "Prospect Theory is active" when a loss occurs
2. Reduce position size to a painless level
3. Log stop-losses as "business expenses"