Overconfidence is one of the traits that I always try to avoid at all times. This is because I clearly know the harm it can cause to a good course. Especially in this field of finance, it is suicidal when a financial investor or analysts exaggerates or overestimates their ability to successfully perform a certain task. Although it is alright for one to be confident in whatever they may be doing, it is equally risky when they excessively believe in themselves that they will succeed. Adding some doubt to an endeavour makes one to reason better. I consider the number of times that I have joined a competition with the mind-set that no one in this competition can beat me, forgetting that all the competitors also desire to win the competition but there can only be one winner.
Behavioural issues related to overconfidence greatly affect financial decisions. For instance, the first time I tried my hand in the financial markets, I was very confident that I will profit from it very easily. My friend had told me about Forex trading and how he had made easy money. Armed with the meagre knowledge that he had transferred to me in regard to how to trade and how the market works, I invested some few dollars and I was very confident that I will make profit from this venture. The excitement about how I will profit from this endeavour made me to trade poorly and lose almost all my investment. If at all I could perceive this financial venture from a perspective that I can also lose my investment, I think that I would have not been satisfied with the little knowledge and the level of confidence that I had while making this financial decision.
Works Cited
Overconfidence, Investopedia, (2012). Retrieved from http://www.investopedia.com/university/behavioral_finance/behavioral9.asp
