Definition. The tendency to overestimate the influence of our own actions on outcomes that largely depend on chance.
How it works
Ellen Langer described the phenomenon (1975). Active involvement, familiarity with the situation and previous successes increase the sense of control, even when the outcome is random.
Example
After a series of good decisions a trader starts to believe they “feel the market” and downplays the role of chance in a short series of results.
What to watch out for
You control the process: preparation, sticking to the plan and risk management. The outcome of a single decision isn't fully under your control.
You'll find the full explanation with graphics, examples and exercises in the 💪 Fitness and routine space, and its use in the live market in the 🔴 Live Room. Both are available to Club members (in Polish).
