Investors who check the value of their portfolio/holding with great frequency are more likely to be subject to myopic loss aversion. Frequent checks of holdings make people more sensitive to losses than to gain. If we check our portfolio very often we see many days when we have loss these automatically reduces our risk taking capacity & we end up selling our holdings in panic & thus we take less risk & we earn less. While if the same investor maintains longer time frame between checks, there is less possibility that the portfolio will experience losses.

Thinking Man recommends following rules to avoid active trading while investing in financial assets:

  • Align investment with goals & don’t check it frequently
  • Before investing do detail analysis
  • Don’t get panic due to short term volatility