Skip to content
Trading Game
Trading Game
Trade Confidently and Safely
  • Home
  • About
    • About Louise Bedford
    • About Chris Tate
    • Chris Tate Media Kit
    • Louise Bedford Media Kit
  • Why Choose Us
    • Audited Results
    • In The Press
  • Mentor Program
  • Rave Reviews
    • More Rave Reviews
    • Even More Rave Reviews
    • Extra Rave Reviews
    • Still More Rave Reviews
    • This Is Getting Ridiculous
    • Success Stories
    • More Success Stories
    • We Are Traders
    • A Poem To Inspire You…
    • Hot Off The Press Reviews
    • You Want Proof?
  • Our Network
    • Our Brokers
  • Shop
  • Blog
  • Contact
  • LOGIN
  • Home
  • About
    • About Louise Bedford
    • About Chris Tate
    • Chris Tate Media Kit
    • Louise Bedford Media Kit
  • Why Choose Us
    • Audited Results
    • In The Press
  • Mentor Program
  • Rave Reviews
    • More Rave Reviews
    • Even More Rave Reviews
    • Extra Rave Reviews
    • Still More Rave Reviews
    • This Is Getting Ridiculous
    • Success Stories
    • More Success Stories
    • We Are Traders
    • A Poem To Inspire You…
    • Hot Off The Press Reviews
    • You Want Proof?
  • Our Network
    • Our Brokers
  • Shop
  • Blog
  • Contact
  • LOGIN

Do Superstitious Traders Lose Money?

You are here:
  1. Home
  2. Blog
  3. Get Your Shit Together
  4. Do Superstitious Traders Lose Money?

More than likely.

The interesting thing about this piece is that whilst it is largely directed as the Chinese community and their approach to numerology and its perceived importance in decision making the same sort of irrationality applies universally. You need only pick up a copy of our local trading magazine Your Trading Edge to see that it abounds with irrationality such as Gann, Fibonnaci, and astrology.

Within decision making you have a triad of components, the cognitive capacity of the person making the decision, the quality of the information being received and the time to make the decision. Decision making is therefore bounded since none of these features can be infinite. However, I think there is a flaw in this matrix in that it doesn’t include irrationality which in humans can be unbounded. Simply look around you and you will soon be convinced of the veracity of this. Irrationality is the default state for humans, this is why we had to invent both logic and the scientific method to enable us to actually begin to understand the universe we live in.

     

Superstition, which is defined as a belief that is not based on reason, has been a part of the human condition since humans began. But does superstition adversely affect human welfare? We answer this question in the context of trading in the Taiwan Futures Exchange, where we exploit the Chinese superstition that the number “8” is lucky and the number “4” is unlucky.

 

Defining a “superstition index” of a trader as the proportion of limit order submissions at prices ending at “8” minus the proportion of limit order submissions at prices ending at “4,” we find that individual investors are superstitious but institutional investors are not. Further, amongst individual investors, there is a negative correlation between trading profits and the superstition index. We find that these losses arise from bad trades at nearly all price points for a superstitious trader, not just at “8” and “4,” suggesting that superstition may be a symptom of a general cognitive disability in making financial decisions.
More here – Social Science Research Network

 

Categories: Get Your Shit Together, Trading PsychologyBy Chris TateAugust 21, 2014

Post navigation

PreviousPrevious post:The Best And Worst Trades Of All TimeNextNext post:I Am Clearly Missing Something

Related Posts

Can Stock Market Forecasters Forecast?
February 15, 2021
2020: A Recap of My 1270%, $18.2 million trading year.
February 10, 2021
Random Thoughts 10 – Rig it to Win it
February 9, 2021
Random Thoughts 9 – Friction
February 2, 2021
Trading Game
BACK TO TOP



General Advice Warning

The Trading Game Pty Ltd (ACN: 099 576 253) is an AFSL holder (Licence no: 468163). This information is correct at the time of publishing and may not be reproduced without formal permission. It is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any of the information you should consider its appropriateness, having regard to your own objectives, financial situation and needs.

Privacy and Licensing | Terms & Conditions | Referrals

  • Home
  • About
  • Why Choose Us
  • Mentor Program
  • Rave Reviews
  • Our Network
  • Blog
  • Shop
  • Contact Us
  • Log In

Copyright © The Trading Game. All Rights Reserved. | website designed by Papdan.com

Social Media: