Definition
Wins get credited to skill while setbacks are assigned to external factors.
Example
A trader credits a profitable rates position to "strong macro intuition" but attributes an FX loss to "unexpected central bank noise." Over time, wins accumulate as evidence of skill, while losses are externalised and dismissed, preventing accurate assessment of process quality.
Cognitive Driver
The mind seeks to protect self-esteem and maintain a positive identity. Successful outcomes are incorporated into the self-concept, while failures are framed as circumstantial. This asymmetry distorts learning and inflates perceived capability.
Market Expression
Profits reinforce confidence in discretionary judgment. Losses are blamed on policy shocks, geopolitics, positioning squeezes, or "market irrationality." Process flaws remain unexamined. The trader's perceived skill diverges from actual performance data.
Trigger Conditions
- Markets with high event risk or ambiguous catalysts
- Roles where traders are rewarded for narratives of skill
- Periods of strong performance that mask underlying randomness
- Environments with limited accountability or weak review structure
- High-pressure situations where ego protection becomes salient
Diagnostic Markers
- Post-trade notes emphasise skill in profitable outcomes
- Losses attributed to external noise rather than decision quality
- Lack of consistent self-critique in losing trades
- Overconfidence that increases independently of hit-rate
- Infrequent acknowledgement of luck, variance, or tail events
Cost Profile
- Miscalibrated confidence and inaccurate assessment of edge
- Persistence of poor processes due to lack of honest review
- Oversizing trades based on inflated belief in personal skill
- Underestimation of randomness in markets
- Weak learning loops and repeated behavioural errors
Differentiation From Adjacent Biases
- Not hindsight bias: hindsight rewrites predictability; self-attribution rewrites causality.
- Not overconfidence: overconfidence inflates ability; self-attribution explains outcomes in a self-serving way.
- Not confirmation bias: confirmation filters evidence; self-attribution filters responsibility.
Corrective Lens
Link outcomes directly to stated pre-trade catalysts. Require attribution notes to distinguish between process, luck, and external drivers. Use objective performance analytics--hit-rate, expectancy, volatility-adjusted returns--to recalibrate perceived skill and prevent narratives from overpowering evidence.