Psychological Break Even

Psychological Break Even is the price level at which a trader feels they have recovered from a loss, even if the trade is not technically profitable when considering fees or opportunity cost. This mental threshold is often set at the original entry price, regardless of how market conditions have changed.

Traders will often wait for the price to return to this level to exit, purely to satisfy their ego or to avoid the pain of realizing a loss. This behavior often leads to holding losing trades too long or missing better exit opportunities, ultimately resulting in deeper losses.