Performance and learning in an ambiguous environment: A study of cryptocurrency traders

Roland Gemayel and Alex Preda

International Review of Financial Analysis, 2021, vol. 77, issue C

Abstract: We investigate the performance and learning ability of traders in an environment governed by ambiguity, such as the cryptocurrency market. Using a profit decomposition methodology, we find significant cross-sectional and temporal heterogeneity in performance. Traders do not learn to progressively increase the magnitude of returns; however, they are able to improve on their ability to realise profits as a mechanism of adaptation to survive through ambiguity. This adaptation increases as traders progress through their career. Moreover, we find evidence in support of the gambler’s fallacy. We argue that learning in ambiguous environments has limitations, allowing traders primarily to survive.

Keywords: Cryptocurrencies; Trading; Learning; Ambiguity; Performance appraisal; Skill (search for similar items in EconPapers)
JEL-codes: C10 G23 G40 G41 G50 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521921001794
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:77:y:2021:i:c:s1057521921001794

DOI: 10.1016/j.irfa.2021.101847

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().