Brain Activity of the Investor's Stock Market Financial Decision

Abstract

Using electroencephalogram technologies (EEG) to map the brain, this investigation is among the first to analyze if the brain circuits used to make buying, selling or maintain stock decisions are the same or not and if different circuits are used to make decisions in a growing market or a market with high volatility. We use two groups of 20 volunteers that start to trade in two different markets. One group traded first in a market with prices increasing steadily and after in a market with high volatility, and the other group traded first in the market with high volatility and after in a growing market.

Our results are very innovative in finance area: brain mappings associated with such decisions differed between these two groups, and also when they made buying, selling or holding decisions. These results clearly show that people may use different reasoning strategies to make financial decisions depending on their trading experiences.

Keywords: Neurofinance, EEG, Brain Mapping, Decision Making, Stock Market