behaviour
Heads I'm skilled, tails it's bad luck
The rule
We call our wins skill and our losses bad luck. That story feels nice but it blocks all learning.
Where it flips
Blaming yourself for pure bad luck is the opposite mistake, and just as useless. Where it misleads: you beat yourself up over chance. The fix: keep an honest record and judge the decision by your thinking at the time, splitting what you controlled from what you did not.
When a bet works, we tell ourselves we are clever. When it fails, we blame the market, the news, or someone else. The story always saves our pride. So we never fix the method that actually caused the loss. Over time, this turns luck into false confidence and stops us getting better.
A worked example
One lucky win becomes "my genius" and funds a bigger, bolder bet. The loss that follows is filed under "just unlucky." So nothing is learned, and the same mistake comes back. [illustrative]
How to spot it
- ·wins framed as skill, losses as luck
- ·no honest look back at what went wrong
- ·the same mistake made twice
Behavioural finance research · Behavioural finance research