Traders spike in confidence when learning a new strategy, but actual skill grows slowly. This mismatch, called the Dunning-Kruger effect, keeps most traders overconfident and losing money until they crash. Real mastery only comes when confidence finally matches genuine competence.
I was losing for many years, and the biggest reason was because I didn't understand this relationship between competence and confidence. What it means is that if you start doing something, you read something, you learn something, and your confidence is going very high very quickly. And the biggest issue is you are getting very quickly to so-called peak of Mount Stupid. Most traders are staying here almost forever because then if you realize that you are doing something wrong here, then you are getting much lower with your confidence as your competence is growing. Over the long term, as you are getting real competence, just then your confidence is where it should be and you are reaching mastery.
