Keywords
learning, behavioral biases, disposition effect, individual investor performance
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.
Original Publication Citation
Learning by Trading, 2010, with Amit Seru and Noah Stoffman, Review of Financial Studies
BYU ScholarsArchive Citation
Seru, Amit; Shumway, Tyler; and Stoffman, Noah, "Learning By Trading" (2009). Faculty Publications. 9286.
https://scholarsarchive.byu.edu/facpub/9286
Document Type
Peer-Reviewed Article
Publication Date
2009
Publisher
Review of Financial Studies
Language
English
College
Marriott School of Business
Department
Finance
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