Definition
Recent price action receives outsized weight compared with longer-cycle evidence.
Example
A trader increases equity exposure after several strong sessions, treating a short-term rebound as evidence of a durable trend. Broader cycle indicators--valuation, liquidity, macro momentum--are sidelined because recent price action feels more vivid and convincing.
Cognitive Driver
The mind compresses timelines. Recent information is more available, more emotionally charged, and more cognitively "fluent." It dominates memory retrieval and feels disproportionately important relative to long-term base rates.
Market Expression
Short-term moves are mistaken for structural shifts. Traders extrapolate streaks. Tactical noise becomes interpreted as macro change. Asset allocation creeps in the direction of the most recent price behaviour rather than the underlying regime.
Trigger Conditions
- High-volatility markets
- Rapid news cycles producing constant stimulation
- Momentum bursts or sharp reversals
- Environments where strong recent performance feels intuitively meaningful
- Lack of explicit cycle or regime references
Diagnostic Markers
- Viewpoints shift quickly based on the last few sessions.
- Cycle indicators and long-run valuation metrics are ignored.
- Conviction spikes after periods of strength and collapses after weakness.
- Tactical moves are mistaken for fundamental ones.
- Position sizing responds to streaks rather than probability distribution.
Cost Profile
- Chasing short-term noise
- Late entries into mature moves
- Premature exits during normal volatility
- Portfolio drift toward unintentional momentum exposures
- Weak alignment to structural drivers
Differentiation From Adjacent Biases
- Not availability bias: recency is about temporal overweighting; availability is about salience.
- Not overconfidence: recency distorts expectations, not self-belief.
- Not trend-following strategy: trend-following is systematic; recency is improvised extrapolation without statistical grounding.
Corrective Lens
Contextualise all short-term movements against regime indicators, multi-year baselines, and structural drivers. Use fixed review templates that force explicit comparison between recent price action and long-term distributions, preventing the emotional pull of fresh data from dominating decision-making.