Confirmation bias, recency bias, and gambler’s fallacy are a...

Confirmation bias, recency bias, and gambler’s fallacy are amplified when traders over‑interpret small sample results

Nang lists common cognitive traps that cause traders to see patterns where none exist.
He explains that because the market is highly dynamic, a few winning trades can create an illusion of skill.
The solution is rigorous statistical testing and avoiding “hand‑wavy” narratives.
Recognizing these biases helps maintain discipline and prevents over‑confidence.

Rishi NangTitans Of Tomorrow01:31:30

Quote

“Humans are going to succumb to confirmational bias, recency bias, all the gamblers fallacy.” — Rishi Nang

Quote

“If we knew we're doing it, then it wouldn't be a bias.” — Rishi Nang

Nang explains why intuition is a subconscious synthesis of data, the limits of out-of-sample R-squared, and how over-confidence can be dangerous.

“Intuition is a subconscious aggregation of relevant data, not a mystical ability”

“Out‑of‑sample R‑squared in finance is typically 0.03‑0.04, indicating very low predictive power”

“Financial markets provide a small, noisy data set that makes overfitting especially dangerous”