Economics is clear: a cost you cannot recover should have zero weight in what you do next. Psychology disagrees — abandoning a position, a strategy, or a story we have invested in feels like declaring the investment wasted, and the mind will spend real new money to avoid that admission. The deeper the hole, the stronger the pull to keep digging: each new rupee is framed as “protecting” the old ones.
- Averaging into dead positions. Not because the setup improved — because “I’m already in so deep.”
- The invested-story hold. Weeks of research on a stock make the position unquittable — selling would waste the research.
- Strategy loyalty past the evidence. A system that has clearly failed its evaluation window is kept “because of everything I’ve put into learning it.”
- Recovery framing. “I can’t stop trading now — I’m down too much” — the loss becomes the argument for the behaviour causing it. This is the sunk-cost engine inside revenge trading.
Zero-based position review. Daily, for each open position: starting from flat, would I put new money into this, here? If no, the position is being held by history, not by edge.
Pre-committed abandonment lines. Every position and every strategy gets its invalidation written in advance — the level or the sample size at which it is finished, decided before anything was sunk.
Reframe the exit as the save. Cutting a dead position does not waste the sunk cost — the sunk cost is gone either way. The exit rescues the next rupees, which are the only ones still yours to protect.
Count tuition honestly. A written “lessons ledger” converts sunk losses into named rules; the investment stops being wasted the moment it produces a rule that prevents its repetition.