Overconfidence in trading shows up as oversizing after wins, ignoring the plan because 'I've got a feel for this market,' and dismissing risk-management rules as too conservative.
Studies of retail traders consistently find that average self-rated skill is significantly higher than actual returns would suggest. This isn't unique to trading — it's the Dunning-Kruger effect applied to a domain where feedback is delayed and noisy.
The dangerous variant: feedback misattribution. After a lucky win, the brain attributes the outcome to skill rather than luck, then escalates risk on the next trade. Three lucky wins in a row can produce an account-ending fourth bet.
Counters in the journal world: track per-trade self-grades, then check whether your A-grade trades actually outperform your C-grades over 50+ trades. Most traders find their self-ratings are uncorrelated with outcomes — humbling but useful data.