# Overconfidence

*Behavioral Finance — Finicade finance glossary*

Overconfidence is systematically overestimating your own knowledge, precision and skill. It's the best-documented bias in investing and the most expensive: research on brokerage accounts found that the most active traders underperformed the least active by several percentage points a year, with turnover the direct cause. Narrow confidence intervals on forecasts are its clearest measurable signature.

**Also known as:** overconfidence bias, illusion of skill, better than average effect

**Related terms:** [Illusion of Control](https://finicade.com/glossary/illusion-of-control), [Self-Attribution Bias](https://finicade.com/glossary/self-attribution-bias), [Day Trading](https://finicade.com/glossary/day-trading), [Behavioral Biases](https://finicade.com/glossary/behavioral-biases), [Confirmation Bias](https://finicade.com/glossary/confirmation-bias)

Source: https://finicade.com/glossary/overconfidence