Martin Seligman, professor of psychology at University of Pennsylvania, did various experiments to show that often people learn helplessness when they suffer setbacks. He showed this phenomenon initially using experiments with dogs.
A first group of dogs were given shock and if they attempted to escape, they were allowed to escape.
A second group of dogs were given shock but even if they attempted to escape, they were not allowed to escape. After few such shocks, the second group of dogs did not attempt to escape even if they were now given the option to escape[1]. In our context, investors possibly give up when they themselves fail or see others fail.
As per psychologists Daniel Kahneman and Amos Tversky, people (investors/traders) usually make decisions and judgments based on biases rather than on rationality (or statistics)[2]. Few instances of failure could form a bias in the investors/traders, ignoring statistics.
So, yes, few instances of losses (or even profits) can influence an traders. That could be the reason why traders may be giving up before they make big money.
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