GLOSSARY TERM
Overconfidence
Overconfidence means believing too strongly in your ability to predict markets or choose winning investments.
What does this mean in practice?
An overconfident investor may trade too often, take too much risk or underestimate how uncertain markets really are. A few successful decisions can create the false impression that good results will continue easily.
Example
After a few successful trades, someone starts believing they can reliably beat the market and begins taking larger risks or making faster decisions without enough caution.
Why it matters
Overconfidence can lead to unnecessary risk, higher costs and poorer decisions over time. A more humble and consistent approach is often more helpful in long-term investing.
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