According to Compounding Quality (@QCompounding), Charlie Munger identified 24 standard causes of human misjudgement after decades of research, highlighting cognitive biases that frequently lead to poor decision-making among even experienced investors. For crypto traders, understanding these psychological pitfalls, such as confirmation bias, incentive-driven bias, and social proof, is crucial for improving trade discipline and risk management. Applying Munger’s lessons can help traders avoid emotional trades and enhance the quality of their trading strategies, especially in volatile cryptocurrency markets (Source: @QCompounding, June 2, 2025).

According to Compounding Quality on Twitter, denial can significantly impair trading performance as traders ignore negative realities, saying 'It's not that bad' or 'It can't be true.' This psychological tendency leads to delayed reactions and poor decision-making, which is especially critical in fast-moving cryptocurrency markets where rapid, fact-based responses are essential for managing volatility and risk (Source: @QCompounding, May 20, 2025). Recognizing and overcoming denial is key to executing timely trades and protecting capital during market downturns.