Availability bias
Why do the most vivid market moments feel more common than the weekly summary says they were?
In plain words
Availability bias is judging how likely something is by how easily an example of it comes to mind. Markets deliver a handful of dramatic moves that are memorable, while the net result over a whole period often looks far quieter than those moments suggest.
Why it matters
A trader who sizes positions around the sharpest drop or rally they remember is calibrating on the most memorable episode rather than the distribution of all periods. That can make normal weeks feel dangerous, or calm weeks feel like they hide risk.
In a real week: ETH, week of 15 July 2019
ETH fell 12.85% on 16 July 2019 and rose 7.08% on 18 July, a 22.8% weekly range, yet the week closed just 0.2% below its open. The close sat in the upper third of the week range at 76.7, and the weekly return ranked at the 51st percentile of 74 weeks of history.
A common mistake
Equating the most memorable episode in a week with the week's overall result. A sharp drop and a sharp rally can cancel, leaving the period's net change small.