Nobody plans to hold a position down eighty percent. It happens through a sequence in which each step is small. The stop is not honoured because the loss is still recoverable, the position becomes a long-term hold, the thesis is restated, and identity attaches to the conviction.
Four effects do the work. anchoring-to-entry makes the purchase price the target, loss-aversion makes realising it intolerable, the endowment-effect makes the holding feel valuable because it is yours, and hope-as-a-strategy replaces the original reason.
The exit is the flat test applied honestly, with a deadline. If you would not buy it here in this size, the position is a decision you are avoiding, and avoiding it has a running cost in attention as well as money. See bagholder.
Related: bagholder, anchoring-to-entry, hope-as-a-strategy, endowment-effect