Overconfidence and Overtrading

Overconfidence and Overtrading


Overconfidence occurs when investors overestimate 3D프린터 관련주 their knowledge, skills, and algostocks.com predictive abilities. This can lead to:

  • Excessive Risk-Taking: Taking on more risk than is prudent.
  • Ignoring Warning Signs: Dismissing negative information or red flags.


Overtrading is the excessive buying and selling of stocks, often driven by the illusion of control. This behavior can result in high transaction costs and poor overall performance.

Cognitive Biases in Investing

Anchoring Bias

Anchoring bias involves relying too heavily on the first piece of information encountered (the “anchor”) when making decisions. In investing, this can manifest as:

  • Initial Stock Price: Making decisions based on the price at which a stock was first purchased, rather than its current fundamentals.
  • Historical Highs and Lows: Using past peak prices as benchmarks for future performance.

Confirmation Bias

Confirmation bias is the tendency to seek out information that confirms existing beliefs and ignore contradictory evidence. This can lead to:

  • Selective Information Gathering: Only considering news or analysis that supports one’s investment thesis.
  • Reinforcement of Misconceptions: Holding onto losing positions longer than necessary.