Overconfidence/effect In Share Market

It is human nature for us to overestimate our abilities and become overconfident. Studies show that investors are often overconfident when it comes to their ability to predict market direction. Oddly enough, this is something that happens more often among novice investors. Compared to experienced investors, those who are new to the market tend to set higher return expectations and end up being overwhelmed by the unfavourable outcome. As a result of overconfidence, some investors tend to trade too frequently only to get unsatisfactory returns or worse yet, losses. With the convenience of online trading, some even quit their full time jobs to dabble in day trading, thinking that they have the ability to predict the market and earn fast money. These are the people that usually end up getting burned if they do so without proper understanding of what they have been buying and selling, especially when the market is highly volatile.