Atlas of Cognitive Biases #14 · Overconfidence. Wins are talent, losses are bad luck
What it looks like in trading
“I made money because I read the market well”, “I lost because of manipulation”
blaming the broker, the news, the algorithms
never analysing winning trades that were just luck
An example from a session
After a winning session the trader doesn't open the journal; after a losing one they look for someone to blame. After a month their belief in their own skill has grown, even though the quality of their decisions hasn't changed.
What the research says
Miller and Ross (1975) described this mechanism in social psychology. Gervais and Odean (2001) showed in a theoretical model how traders who credit successes to themselves become more and more confident after a winning streak: they “learn” to be overconfident.
Crediting successes to yourself and blaming failures on external factors. It protects self-esteem but blocks learning. Also known as self-attribution bias.
How does self-serving bias show up in trading?
Typical signs: “I made money because I read the market well”, “I lost because of manipulation”; blaming the broker, the news, the algorithms; never analysing winning trades that were just luck.
Educational content, not psychological advice or an investment recommendation.