Download or read book Behavioral Biases of Informed Traders written by Eunju Lee and published by . This book was released on 2019 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide evidence on anchoring biases in insider trading using a stock's 52-week high. When stock prices are close to their 52-week highs, insiders are reluctant to purchase stocks and willing to sell them. Similarly, when stock prices are far from the 52-week highs, they are willing to buy stocks instead of selling them. This anchoring behavior is robust to controlling for insiders' contrarian strategy and firm characteristics. We find that these biased insider trades are not able to predict future returns or may lead to losses to investors who follow such insider trading. Our findings suggest that insiders are prone to behavioral biases, notwithstanding their access to private information.
Download or read book Hard to Value Stocks Behavioral Biases and Informed Trading written by Alok Kumar and published by . This book was released on 2008 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses investor-level data to provide direct evidence for an intuitive but surprisingly untested proposition that investors make larger investment mistakes when valuation uncertainty is higher and stocks are more difficult to value. Using multiple measures of valuation uncertainty and multiple behavioral bias proxies, I show that individual investors exhibit stronger behavioral biases when stocks are harder-to-value and when market-level uncertainty is higher. I also find that informed trading intensity is higher among stocks where individual investors exhibit stronger behavioral biases. Collectively, these results indicate that uncertainty at both stock and market levels amplifies individual investors' behavioral biases and that relatively better informed investors attempt to exploit those biases.
Download or read book Do signal providers on social trading platforms exhibit behavioral biases written by Christian Kreutzer and published by GRIN Verlag. This book was released on 2019-09-09 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2018 in the subject Economics - Finance, grade: 1,7, University of Marburg (Accounting & Finance), language: English, abstract: This work examines the effect of transparency on the trading behaviour in the context of social trading. The focus lies on the effect of transparency on the behavioural bias known as the disposition effect. The disposition effect indicates that trader tend to hold their losing stocks for a too long amount of time and sell their profitable stocks too soon. Additionally, the effect of transparency on the home bias will be analysed. The home bias is the trader’s preference for domestic stocks at the expense of portfolio diversification. The underlying question is: "Can transparency mitigate the extent of the disposition effect and home bias?" In the past, there has been a wide extent of competing theories about which factors influence these biases. However, a factor which has not been in the center of attention is transparency; in other words a permanent visible statistic about the trader’s performance, trades, positions and their success. The results of this paper may help to draw comparisons to the field of traditional fund managers. To begin with, this work will start by providing information about the status quo of the disposition effect and the home bias. This will show why it is important to look at transparency. Next, the idea behind social trading will be explained and the platform Wikifolio will be introduced. The empirical part will be divided into two segments. The first segment will cover the disposition effect. It will start with the underlying hypothesis, followed by the data sampling and empirical results. The segment about the empirical results will contain two panel data regressions that will analyse the trader’s holding time of losing and gaining positions separately. The second segment will cover the hypothesis, data and empirical results of the home bias.
Download or read book Decision Intelligence Analytics and the Implementation of Strategic Business Management written by P. Mary Jeyanthi and published by Springer Nature. This book was released on 2022-01-01 with total page 236 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents a framework for developing an analytics strategy that includes a range of activities, from problem definition and data collection to data warehousing, analysis, and decision making. The authors examine best practices in team analytics strategies such as player evaluation, game strategy, and training and performance. They also explore the way in which organizations can use analytics to drive additional revenue and operate more efficiently. The authors provide keys to building and organizing a decision intelligence analytics that delivers insights into all parts of an organization. The book examines the criteria and tools for evaluating and selecting decision intelligence analytics technologies and the applicability of strategies for fostering a culture that prioritizes data-driven decision making. Each chapter is carefully segmented to enable the reader to gain knowledge in business intelligence, decision making and artificial intelligence in a strategic management context.
Download or read book Behavioral Biases Among Professional Traders written by Jaehyun Han and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Investment Intelligence from Insider Trading written by H. Nejat Seyhun and published by MIT Press. This book was released on 2000-02-28 with total page 452 pages. Available in PDF, EPUB and Kindle. Book excerpt: Learn how to profit from information about insider trading. The term insider trading refers to the stock transactions of the officers, directors, and large shareholders of a firm. Many investors believe that corporate insiders, informed about their firms' prospects, buy and sell their own firm's stock at favorable times, reaping significant profits. Given the extra costs and risks of an active trading strategy, the key question for stock market investors is whether the publicly available insider-trading information can help them to outperform a simple passive index fund. Basing his insights on an exhaustive data set that captures information on all reported insider trading in all publicly held firms over the past twenty-one years—over one million transactions!—H. Nejat Seyhun shows how investors can use insider information to their advantage. He documents the magnitude and duration of the stock price movements following insider trading, determinants of insiders' profits, and the risks associated with imitating insider trading. He looks at the likely performance of individual firms and of the overall stock market, and compares the value of what one can learn from insider trading with commonly used measures of value such as price-earnings ratio, book-to-market ratio, and dividend yield.
Download or read book Evidence on Behavioral Biases in Trading Activity written by Laura Frieder and published by . This book was released on 2004 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper is concerned with how the psychological biases of investors are reflected in trading around earnings announcements. We analyze order imbalances (buy orders less sell orders) following earnings surprises to determine whether traders invest in a manner that is consistent with the representativeness and availability heuristics (manifested respectively by undue extrapolation of perceived patterns in random sequences and overreaction to dramatic or vivid events). We then test whether such trading patterns affect returns. Our stimulus for the representativeness heuristic is a string of same-sign earnings surprises, and that for the availability heuristic is an extreme earnings surprise. Though not justified by subsequent price performance, we uncover evidence that investors extrapolate past trends in earning performance. Specifically, following strings of consecutive positive earnings surprises, the amount of net buying after controlling for other regularities in trading activity is significantly greater than it is after an isolated positive surprise. This difference is increasing in the number of consecutive positive surprises in the string. Furthermore, subsequent to strings, purchasing activity is negatively correlated with returns throughout the remainder of the year. Despite the strong manifestation of representativeness, investors who trade according to an availability heuristic are less conspicuous.
Download or read book Human Bias in Algorithmic Trading written by John Paul Broussard and published by . This book was released on 2014 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper documents a stark periodicity in intraday volume and in the number of trades. We find activity in both variables spikes by about 20% at regular intervals of 5 or 10 minutes throughout the trading day. We argue that this activity is the result of algorithmic trading influenced by human traders/programmers' behavioral bias to transact on round time marks. An alternative explanation, that algorithms choose to concentrate their trades in time to take advantage of lower costs or to protect themselves from better informed traders, is not supported.
Download or read book Investor Behavior written by H. Kent Baker and published by John Wiley & Sons. This book was released on 2014-02-10 with total page 645 pages. Available in PDF, EPUB and Kindle. Book excerpt: WINNER, Business: Personal Finance/Investing, 2015 USA Best Book Awards FINALIST, Business: Reference, 2015 USA Best Book Awards Investor Behavior provides readers with a comprehensive understanding and the latest research in the area of behavioral finance and investor decision making. Blending contributions from noted academics and experienced practitioners, this 30-chapter book will provide investment professionals with insights on how to understand and manage client behavior; a framework for interpreting financial market activity; and an in-depth understanding of this important new field of investment research. The book should also be of interest to academics, investors, and students. The book will cover the major principles of investor psychology, including heuristics, bounded rationality, regret theory, mental accounting, framing, prospect theory, and loss aversion. Specific sections of the book will delve into the role of personality traits, financial therapy, retirement planning, financial coaching, and emotions in investment decisions. Other topics covered include risk perception and tolerance, asset allocation decisions under inertia and inattention bias; evidenced based financial planning, motivation and satisfaction, behavioral investment management, and neurofinance. Contributions will delve into the behavioral underpinnings of various trading and investment topics including trader psychology, stock momentum, earnings surprises, and anomalies. The final chapters of the book examine new research on socially responsible investing, mutual funds, and real estate investing from a behavioral perspective. Empirical evidence and current literature about each type of investment issue are featured. Cited research studies are presented in a straightforward manner focusing on the comprehension of study findings, rather than on the details of mathematical frameworks.
Download or read book Lecture Notes In Market Microstructure And Trading written by Peter Joakim Westerholm and published by World Scientific. This book was released on 2018-11-29 with total page 267 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book, written by Joakim Westerholm, Professor of Finance and former trading professional, is intended to be used as basis for developing courses in Securities markets, Trading, and Market microstructure and connects theoretic rigor with practical real world applications.Market technology evolves, the roles of market participants change, and whole market segments disappear to be replaced by new ways to exchange securities. Yet, the same underlying economic principles continue to drive trading in securities markets. Thus, the scope of the book is global, providing a framework that is relevant both for current market designs and for future markets we will see develop. It is designed to stay relevant in a rapidly evolving field.The book contains a selection of lecture notes through which students will gain an in-depth understanding of the mechanism that drives trading in securities markets. The book also contains another set of lecture notes with more advanced, research-based material, suitable for Honours or Master level research students, or for PhD candidates. The material is self-explanatory and can also be used for self-study, preferably in conjunction with assigned readings.
Download or read book Investment Traps Exposed written by H. Kent Baker and published by Emerald Group Publishing. This book was released on 2017-03-20 with total page 447 pages. Available in PDF, EPUB and Kindle. Book excerpt: Investment Traps Exposed helps investors and investment practitioners increase their awareness about the external and internal traps that they or their clients can encounter.
Download or read book Behavioral Finance written by H. Kent Baker and published by John Wiley & Sons. This book was released on 2010-10-01 with total page 1184 pages. Available in PDF, EPUB and Kindle. Book excerpt: A definitive guide to the growing field of behavioral finance This reliable resource provides a comprehensive view of behavioral finance and its psychological foundations, as well as its applications to finance. Comprising contributed chapters written by distinguished authors from some of the most influential firms and universities in the world, Behavioral Finance provides a synthesis of the most essential elements of this discipline, including psychological concepts and behavioral biases, the behavioral aspects of asset pricing, asset allocation, and market prices, as well as investor behavior, corporate managerial behavior, and social influences. Uses a structured approach to put behavioral finance in perspective Relies on recent research findings to provide guidance through the maze of theories and concepts Discusses the impact of sub-optimal financial decisions on the efficiency of capital markets, personal wealth, and the performance of corporations Behavioral finance has quickly become part of mainstream finance. If you need to gain a better understanding of this topic, look no further than this book.
Download or read book Informed Traders as Liquidity Providers written by Alexandra Hachmeister and published by Springer Science & Business Media. This book was released on 2007-11-03 with total page 188 pages. Available in PDF, EPUB and Kindle. Book excerpt: Alexandra Hachmeister’s thesis empirically analyzes and positively answers the question whether informed traders provide liquidity in an open limit order book. The analyses include a detailed market description of the German equity market, a new methodological approach for the identification of informed traders as well as the analysis of the individual liquidity providing and demanding behavior of the identified informed traders.
Download or read book The Impact of Financial Advice on Trade Performance and Behavioral Biases written by and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Fintech with Artificial Intelligence Big Data and Blockchain written by Paul Moon Sub Choi and published by Springer Nature. This book was released on 2021-03-08 with total page 306 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book introduces readers to recent advancements in financial technologies. The contents cover some of the state-of-the-art fields in financial technology, practice, and research associated with artificial intelligence, big data, and blockchain—all of which are transforming the nature of how products and services are designed and delivered, making less adaptable institutions fast become obsolete. The book provides the fundamental framework, research insights, and empirical evidence in the efficacy of these new technologies, employing practical and academic approaches to help professionals and academics reach innovative solutions and grow competitive strengths.
Download or read book A Simple Model of Herding and Contrarian Behaviour with Biased Informed Traders written by Pengguang Lu and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book ABCs of Trading written by Jennifer Itzkowitz and published by . This book was released on 2015 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: Psychological research suggests that individuals are satisficiers. That is, when confronted with a large number of options, individuals often choose the first acceptable option, rather than the best possible option (Simon 1957). Given the vast quantity of information available and the widespread convention of listing stocks in alphabetical order, we conjecture that investors are more likely to buy and sell stocks with early alphabet names. Consistent with this view, we find that early alphabet stocks are traded more frequently than later alphabet stocks and that alphabeticity also affects firm value. We also document how these effects have changed over time.
