Overconfidence Bias

Cognitive Control

Believing you're better at trading than you actually are. The tendency to overestimate your knowledge, abilities, and the precision of your predictions. After a few wins, traders often believe they've 'cracked the code' and start taking bigger risks - usually right before a major loss. Example: You've had 5 winning trades in a row. You start thinking 'I've got this figured out' and double your position size. The 6th trade wipes out all your gains. Sound familiar?