# Anchoring

*Behavioral Finance — Finicade finance glossary*

Anchoring is letting an initial number disproportionately shape a later judgement, even when it's irrelevant. In investing the most damaging anchor is your purchase price: it determines nothing about future value, yet it drives decisions about when to sell. Analyst target prices, 52-week highs and the previous round's valuation all work as anchors in exactly the same way.

**Also known as:** anchoring bias, anchor and adjust

**Related terms:** [Behavioral Biases](https://finicade.com/glossary/behavioral-biases), [Framing Effect](https://finicade.com/glossary/framing-effect), [Cost Basis](https://finicade.com/glossary/cost-basis), [Disposition Effect](https://finicade.com/glossary/disposition-effect), [Valuation Multiple](https://finicade.com/glossary/valuation-multiple)

**Taught in:** Mind Over Markets — Two Systems Exam

Source: https://finicade.com/glossary/anchoring