You Can't Predict Markets: Nithin Kamath Highlights 'The Most Costly Mistake' Traders Make
"Most traders know that you can't predict the markets, but they trade as if they can," the Zerodha co-founder said.
Zerodha co-founder Nithin Kamath has highlighted one of the most common and costly mistakes traders make: believing they can predict market movements, even when they know deep down that they cannot.
Reacting to a new podcast episode on Zerodha’s YouTube channel, Kamath pointed out the gap between “knowing” and “doing” in trading behaviour.
"Most traders know that you can't predict the markets, but they trade as if they can. This has to be the most common and costly trading mistake of all. Goes to show the difference between knowing and doing," the billionaire entrepreneur said to his nearly 7.5 lakh followers on X.
Kamath shared remarks made during a discussion featuring SEBI-registered research analyst Sandeep Rao and veteran trader Tom Sosnoff, who is also the co-founder of Thinkorswim and tastytrade.
Sosnoff, widely regarded as one of the most influential derivatives traders in the US, reflected on his decades-long career and how long it took him to realise that experience does not equate to predictive power.
Sosnoff admitted that he once believed his edge came from over 40 years of closely tracking markets, watching “more ticks in the S&P” than almost anyone else. But eventually, he understood that this gave him no real advantage in forecasting the next move.
"It took me a really long time to appreciate that I don’t have any real edge over anyone else when it comes to predicting what happens next,” he said. While experience brings familiarity and comfort, having “seen everything once or twice", he realised it still doesn’t translate into consistent price prediction.
According to Sosnoff, traders often overvalue experience due to ego or the assumption that time spent observing markets must lead to superior foresight. Kamath noted that this mindset is common among retail traders, who frequently trade on conviction rather than probability or risk management. This belief in accurate forecasting often results in significant losses, especially during volatile periods.
The conversation also delved into trading psychology, market structure, and why most retail traders struggle to remain profitable over time.
Kamath emphasised that the episode offers valuable lessons for both new and seasoned market participants, particularly as more first-time investors enter equities and derivatives.
