Atlas of Cognitive Biases #16 · Overconfidence. Everything takes longer
What it looks like in trading
“in 3 months I'll be making a living from trading”
too little time allowed for learning and testing
a learning budget with no reserve for losses
An example from a session
A trader assumes that within a quarter they'll go from learning to consistent results. Actually learning order flow usually takes months of regular practice (Ask Lucas: “how long does learning take?”).
What the research says
Buehler, Griffin and Ross (1994): students estimated they would finish their thesis in about 34 days on average. It actually took them about 56 days on average. Even their “most pessimistic” estimates were too optimistic.
Underestimating the time, cost and risk of future tasks, even when we know that similar tasks in the past overran the plan.
How does the planning fallacy show up in trading?
Typical signs: “in 3 months I'll be making a living from trading”; too little time allowed for learning and testing; a learning budget with no reserve for losses.
Educational content, not psychological advice or an investment recommendation.