How Human Slippage is Amplifying your Cognitive Biases When you Trade.

Let’s face it. Slippage is a solved problem. Largely. But human slippage isn’t. And the reason is simple. Brokers have crammed their expansive web platforms it in to your 6-inch mobile screen. Now you’re left juggling between multiple apps and a dozen screens, traversing the intricate maze of markets. This unnecessary back-and-forth consumes precious time and costs you valuable points.

Yet, there’s more to it. 

​Human slippage possesses the ability to drag you deeper in to your biases, inevitably affecting your trading decisions negatively. Just like any bias, understanding and acknowledging the impact of human slippage on biases becomes imperative. In this article, let's explore these biases intertwined with human slippage, that can impact your P&L. 

Imagine this: you’re glued to the spot chart, and suddenly, there it is — the perfect entry setup; an opportunity unfolding right before your eyes. You then see the ATM put trading at Rs. 80, but multiple steps, dozens of screen switches and a few crucial seconds later; when you’re finally ready to swipe to buy, price has surged well beyond 85.

Doesn’t this happen to you? Now, your target might have been well above 100 and the trade setup might still indicate a great buy. But hesitation creeps in because your brain is now stuck to the initial Rs. 80. This is a classic case of anchoring bias. Your brain uses the initial information of Rs. 80 as a reference point, and ends up relying heavily on it while making a decision. Result? You wait on the sidelines, watching the price fly off, while you wait helplessly regret all you could have made of the opportunity. 

What’s worse is traders on mobile lose critical time while being lost in between screens, whereas the price runs further away, and ends up amplifying the anchoring bias. All because of Human Slippage.

Ever had that moment when you ditched a trade too soon, simply because you were afraid of losing more? That’s the sneaky thing called loss aversion bias. While it can trigger at any trading juncture, its more likely to occur with mistimed entries that lead to those initial losses. 

Human slippage haunts mobile options traders daily. When that delay in entering costs you crucial points, plunging your P&L into the red from the get-go, it sparks the fear of further declines. This fear prompts premature exits, depriving traders of potential gains. While loss aversion bias, like other biases, is inevitable, the insidious nature of human slippage triggers a domino effect, increasing the frequency of trading decisions impaired by loss aversion bias. 

In trading, biases often persist as the unseen architects of our decisions — an undeniable truth we must accept, to manage them better. But what's unacceptable is the relentless suffering caused by human slippage, putting us in to the grips of these biases, and ultimately creating a dent in our P&L. 

That's precisely why we built Punch — to minimize the effects of Human Slippage and revolutionize the way you trade options on mobile.