Abstract

http://ssrn.com/abstract=2478124
 


 



Do Superstitious Traders Lose Money?


Utpal Bhattacharya


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

Weiyu Kuo


National Chengchi University (NCCU) - Department of International Business

Tse-Chun Lin


University of Hong Kong

Jing Zhao


University of Hong Kong

November 12, 2014


Abstract:     
Is trading based on superstition harmful? 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 more limit orders at “8” than at “4”. This imbalance, defined as the “superstition index,” is positively correlated with trading losses. These losses arise at all price points, not just at “8” and “4,” suggesting that superstition may be a symptom of financial unsophistication. Nevertheless, superstition does decrease with trading experience.

Number of Pages in PDF File: 57

Keywords: superstition, cognitive abilities, limit order clustering, investment performance, individual investors

JEL Classification: D14, G02, G14, G15

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Date posted: August 10, 2014 ; Last revised: November 13, 2014

Suggested Citation

Bhattacharya , Utpal and Kuo, Weiyu and Lin, Tse-Chun and Zhao, Jing, Do Superstitious Traders Lose Money? (November 12, 2014). Available at SSRN: http://ssrn.com/abstract=2478124

Contact Information

Utpal Bhattacharya
Hong Kong University of Science & Technology - 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)
University of Hong Kong ( email )
Pokfulam Road
Hong Kong, Pokfulam HK
China
Jing Zhao
University of Hong Kong ( email )
Room 908, K.K.L. Building
The University of Hong Kong, Pokfulam Road
Hong Kong
Hong Kong
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