Atlas of Cognitive Biases #12 · Overconfidence. Everyone is above average
What it looks like in trading
“Most traders lose, but I'm different”
dismissing industry statistics
no plan for things going worse than expected
An example from a session
Research on day traders' accounts in Brazil (Chague, De-Losso and Giovannetti, 2019): among those who traded for more than 300 days, 97% lost money and only about 1% earned more than the minimum wage. Every one of them believed at the start that they'd be in the profitable minority.
What the research says
Ola Svenson (1981): 93% of the US students surveyed thought they drove better than the average participant. The effect recurs in ratings of intelligence, ethics and professional skill.