Investor Perspectives on Trading in the Stock Market as a Source of Income (original) (raw)
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Analysis of Pre-existing Investment Behavior and Influence of Trading Apps
Journal of Student Research
The last few years have seen a rise in trading apps, and Robinhood is one trading app that has attracted millennials. This paper explores trading apps such as Robinhood and their role in providing financial inclusion and safe trading opportunities. This paper discusses investment behavior in the status quo, explaining overconfidence, sociability, and the disposition effect. Investment behavior can include the behavioral biases and common notions investors utilize for trading. Furthermore, this paper assesses the design and business model of Robinhood. Five expert investors were interviewed (such as a professor and other MBA graduates from Wharton School of Business, financial experts from private equity firms in the US and Mexico, and a JP Morgan investment banking professional), and five casual investors were interviewed to understand their opinions on investment behavior, certain trading apps, common criticisms of stock trading, and solutions to these concerns. The findings led to...
2022
ABSTRACT Not because a trader is profitable, does not mean there is a strategy being utilized. Being profitable in the markets require following a discipled strategy that is proven to be profitable. Discipline is founded on consistency and a thorough understanding of the psychology of the markets in tandem with an understanding of self. A trader has achieved discipline in trading when that trader has consistently followed the rules set out by and for oneself, rules that lead to profitability. Having knowledge of the market is an imperative to gaining that discipline. However, knowledge of financial markets alone is no guarantee for investment or trading success, if that were the case my Finance professor would secretly be a very rich man moonlighting as an educator. The rules you will ultimately design for yourself will not work in isolation, as they will be a composite rule set (strategy if you will) then be careful in noting that breaking even a part of or one rule in your strategy will result in failure. Background of the Problem The problem that the paper seeks to address is understanding and discipline. Making the right decision seems to be an elusive goal for over 90% of traders in the market. Online records prevail that over 90% of traders fail. And the reasons given are all based on psychology to include overconfidence, lack of discipline, poor money management, weak strategy, poor timing, and emotional instability. Trading the markets is a psychological game, no, a psychological battle. Purpose and Goals The primary purpose is coverage. Coverage of the course content, then using that knowledge coverage to highlight the importance in and of understanding the market thoroughly. This thorough understanding gives the opportunity to construct a psycho-strategic approach to analysing fundamentals, sentiments and price action thus building around all that ones own profitable rules for trading in the markets. Understanding price movement is key. Knowing why events move price on the Beta or non-beta level is paramount to success in investment or trading. Investors are typically long-term holders of shares or bonds. Traders are typically shorter-term holders, borrowers even as they often trad cash for difference (CFDs), coming in flavours of long-term, day- traders, and scalpers. Key words: 1. Budgeting 2. Corporate finance 3. Financial planning 4. Financial supervision 5. Investing 6. Market instruments 7. Market value 8. Securities 9. Trading 10. Working capital
The Self-directed Individual Investor and Online Investing Platform Decision Support
(PhD Thesis), 2022
Empirical research on retail investors has attempted to explain online investor subpar perfor-mance by inferior decision-making and behavioural biases. The previous findings on human reasoning have mostly been based on quantitative transaction and investing account data. The purpose of this study was to explore investor priorities and reasoning to improve investing processes co-created by investors and online investing platform service providers. The findings are based on direct access to investors through qualitative interviews and participative anal¬yses of live online investing platforms. A modified design science approach was applied to evaluate the develop¬ment initiatives identified. While investors remain exposed to behavioural biases, bias mitigation methods have been dis¬covered to develop during the investor life-cycle – reducing the explanatory power of traditional biases. A new biased behaviour named tangibility bias has been suggested. This bias makes investors compromise portfolios for improved control and transparency. An investor’s portfolio management activities may be limited by bounded rationality, but the individual also lives in a reality bounded by practical restrictions, non-financial objectives and beliefs. This contextual rationality may involve hedonic objectives and the investor may ques¬tion the validity of investing tenets like portfolio asset allocation. As a result of bounded and contextual rationality, experienced investors may have an inclination for underdiversified port¬folios with a strong focus on individual investment positions. Investing is a multiple-year, man¬aged un¬dertaking, and focusing only on human shortcomings in momentary decision-making fails to recognise the importance of the overall investing process managed over multiple years. The use of decision support provided by online investing platforms was limited. The main prac¬tical role of the platforms was execution of already incubated decisions and monitoring of in¬vestment performance. The reasons given for not adopting portfolio-level decision support were: incom¬patibility with investors' investing approach, usability issues and lack of transpar¬ency. More triv¬ial reasons included absence of portfolio management functionality or investor disinterest in implementing normative investing tenets and asset allocation. In empirical litera¬ture, potential reasons have been discovered for the negative impact of online investing. Inves¬tors found information overflow complicating the de¬cision-making. Short-term position data was conspicuous at the cost of long-term portfolio per¬formance feedback. A proportion of investors felt a push to deviate from their rather passive in¬vesting agenda. Potential for improved investor-platform interaction was evaluated using an ex-ante focused design science approach. The analyses and evaluations showed that investors can be nudged to adopt planning and portfolio level functions if the user experience is positive, the investor is not required to change the investing process and perceived complicity is not in¬creased. Not only the investing style, but personal motivation and engagement play a role in the adoption of new platform decision support. Investors are a heterogeneous group of users and modulari¬sation of investing services is suggested to match the diversity in investor needs and priorities. Even though automated investing did not attract this self-directed investor sam¬ple, a proportion of investor participants expressed interest in interactive artificial intelligence based analytics, advice and suggestions.
Portfolio and psychology of high frequency online traders
2006
In Italy, online trading is an important and well established phenomenon. This paper investigates the portfolio and psychological traits of Italian high frequency online traders. Our analysis is based upon a telephonic survey conducted with more than 200 online traders. The sample is composed of both active traders, those conducting at least two trade per month, and heavy traders, those with daily negotiation activities. In this paper, first we investigate the trading and portfolio characteristics of our sampled investors. A measure of portfolio composition and turnover is given, together with trading habits such as: the market and frequency of negotiation. The second part of the paper deals with two psychological characteristics of Italian online traders: overconfidence, i.e. the extent to which they overestimate the precision of their information, and self-monitoring, which is a form of social intelligence. Differently from other papers, where overconfidence is assumed by the trad...
Investorsâ Adoption of Internet Stock Trading: A Study
The Journal of Internet Banking and Commerce, 2010
The purpose of this paper was to examine whether investors who adopted Internet stock trading perceived differently from those of non-adopters. The primary data based on 299 investors (149 adopters and 150 non-adopters) were analyzed using advanced multivariate techniques like factor analysis and discriminant analysis besides percentages, means, and Z-test. Results indicated that attitude dimensions and demographic variables contributed significantly in classifying investors as adopters or non-adopters in Internet trading. As regards attitude dimensions, ‘variety of financial products and safety’ contributed significantly in discriminating between adopters and non-adopters of Internet trading followed by the factor such as ‘convenience and transparency’. As far as the demographics were concerned, the mature/older, experienced, and businessmen investors were less likely to use Internet stock trading as compared to young, inexperienced, and non-businessmen investors.
ONLINE INVESTOR’S BEHAVIOUR - AN EMPIRICAL ANALYSIS
Annals of the Bhandarkar Oriental Research Institute
With the rapid transformation in financial services as mobile banking penetration increases, there is more potential for other digital financial services, including digital investments, digital money, digital payments, digital insurance, and many more. The purpose of this research study is to ascertain an association between an occupation and the level of awareness towards various online investment avenues and to find out the differences between the male and female investors for online investment preferences. The study has employed the descriptive and empirical research design. The data collected was analysed using nonparametric tests such as the Kruskal-Wallis H test and Man-Whitney U test. Furthermore, the analysis reveals that there is a significant relationship between an occupation and level of awareness for online investments such as equity shares, bank deposits, post office savings accounts, life insurance policies, and metals (gold and silver). And there is a statistically significant difference between males and females investors for online investment preferences.
Examining An Online Investment Research Service: The Motley Fool
Journal of Business & Economics Research (JBER), 2011
The Motley Fool has been described as “the most popular Internet stock chat website” (Hirschey et al, Financial Analysts Journal, 1999). Per the company’s website, the mission of the privately-held multimedia financial services company is to educate, amuse, and enrich” in order “to build the world’s greatest investment community” (www.fool.com/press/about.htm). The Motley Fool notes that their products are designed to “help people take control of their financial lives”. While other internet financial services exist, this article examines the performance of the investment services/advice provided by The Motley Fool (TMF) because of its notoriety. We use investment publications, information posted on the company’s website, and academic research for our analysis. Our findings show that, despite the popularity of TMF, investors need to critically evaluate TMF financial recommendations. Considerable time and effort are required to effectively manage financial resources and, undoubted...