Bag Holder

A bag holder is a trader left holding a position far below cost after the move that attracted them has died, now waiting indefinitely to "get back to even." The term is standard market vocabulary, usually applied to buyers who arrived late in a pump or a fading momentum name and never took the stop.

The trap has two jaws. First, loss asymmetry: an 80% decline requires a 400% rally to break even, and faded momentum stocks rarely reclaim their highs. Second, the sunk-cost reflex of averaging down converts a small planned loss into a large unplanned investment in the account's worst idea. Break-even, meanwhile, is an anchor with no analytical content — the market does not know anyone's cost basis.