Abstract

http://ssrn.com/abstract=2478124
 


 



Do Superstitious Traders Lose Money?


Utpal Bhattacharya


Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management

Weiyu Kuo


National Chengchi University (NCCU) - Department of International Business

Tse-Chun Lin


The University of Hong Kong - Faculty of Business and Economics

Jing Zhao


The Hong Kong Polytechnic University - School of Accounting and Finance

March 22, 2016

27th Australasian Finance and Banking Conference 2014 Paper

Abstract:     
Do superstitious traders lose money? 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. We find that individual investors, but not institutional investors, submit disproportionately more limit orders at “8” than at “4”. This imbalance, defined as the “superstition index,” is positively correlated with trading losses. These losses are robust after controlling for a series of symptoms of financial unsophistication, such as wealth, cognitive limitation, disposition effect, and past performance. Nevertheless, superstition does decrease with trading experience.

Number of Pages in PDF File: 65

Keywords: superstition, financial sophistication, limit order clustering, investment performance, individual investors

JEL Classification: D14, G02, G14, G15


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Date posted: August 10, 2014 ; Last revised: March 22, 2016

Suggested Citation

Bhattacharya , Utpal and Kuo, Weiyu and Lin, Tse-Chun and Zhao, Jing, Do Superstitious Traders Lose Money? (March 22, 2016). 27th Australasian Finance and Banking Conference 2014 Paper. Available at SSRN: http://ssrn.com/abstract=2478124

Contact Information

Utpal Bhattacharya
Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management ( email )
Clear Water Bay
Kowloon
Hong Kong
Weiyu Kuo
National Chengchi University (NCCU) - Department of International Business ( email )
Taipei City
Taiwan
Tse-Chun Lin (Contact Author)
The University of Hong Kong - Faculty of Business and Economics ( email )
Pokfulam Road
Hong Kong
China
Jing Zhao
The Hong Kong Polytechnic University - School of Accounting and Finance ( email )
Room 733, Li Ka Shing Tower
The Hong Kong Polytechnic University
Hong Kong
Hong Kong
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