Ethan L647 Jackson

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What is overconfidence bias in trading?

Overconfidence bias makes traders believe they are more skilled than they actually are. This leads to oversized positions, ignoring stop-losses, or abandoning risk rules. While confidence is important, excessive overconfidence results in unnecessary losses. To control it, traders should track performance, review mistakes, and respect risk management limits. Consistency, not reckless confidence, defines long-term success in trading.