The irony of forecasting markets: Nitin Kamath flags a costly mistake traders can’t do without

Nitin Kamath, co-founder of Zerodha, has said that one of the most common and costly mistakes traders make is that they can predict the market, even though they don’t know it. Sharing insights from a new podcast episode on Zerodha’s YouTube channel, Kamath said there is a clear gap between “knowing” and “doing” when it comes to trading behavior.

Kamath’s comments came as he highlighted a conversation between SEBI-registered research analyst Sandeep Rao and veteran trader Tom Sosnoff, co-founder of Thinkerswim and TasteTrade.

Sosnoff, considered one of the most influential derivatives traders in the US, has a decades-long career and the time it took him to realize that experience doesn’t necessarily translate into predictive power.

Sosnoff said he once believed he had the edge because he had spent more than 40 years tracking the markets closely, seeing “more ticks in the S&P” than almost anyone else. But eventually he realized that this gave him no real advantage in predicting the next market move.

“It took me a really long time to appreciate that I have no real edge over anyone else when it comes to predicting what’s going to happen next,” he said.

He added that while experience provides familiarity and comfort — “having seen everything once or twice” — it still doesn’t translate into the ability to consistently predict price movements.

According to him, traders overestimate the value of experience due to ego or the assumption that time spent watching the markets automatically results in better foresight.

Kamath said Sosnoff’s comments underscore a pattern seen in retail trading, where individuals often trade on conviction rather than probability or risk management. The belief that market movements can be accurately predicted leads to large losses, especially during periods of high volatility.

The talk also explores other themes surrounding trading psychology, market structure, and why most retail traders struggle to stay profitable over the long term. Kamath said the episode offers meaningful takeaways for new and seasoned market participants, especially at a time when more first-time investors are venturing into equities and derivatives.

The full discussion is available on Zerodha’s YouTube channel.

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