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Learning by TradingAmit SeruUniversity of Chicago - Booth School of Business and NBER Tyler ShumwayUniversity of Michigan at Ann Arbor Noah StoffmanIndiana University Bloomington - Department of Finance September 2009 The Review of Financial Studies, Vol. 23, Issue 2, pp. 705-739, 2009 Abstract: Using a large sample of individual investor records over a nine-year period, we analyze survival rates, the disposition effect, and trading performance at the individual level to determine whether and how investors learn from their trading experience. We find evidence of two types of learning: some investors become better at trading with experience, while others stop trading after realizing that their ability is poor. A substantial part of overall learning by trading is explained by the second type. By ignoring investor attrition, the existing literature significantly overestimates how quickly investors become better at trading.
Keywords: D10, G10 Accepted Paper SeriesDate posted: February 1, 2010Suggested CitationContact Information
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