Do Superstitious Traders Lose Money?

Utpal Bhattacharya (), Wei-Yu Kuo (), Tse-Chun Lin and Jing Zhao ()
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Wei-Yu Kuo: National Chengchi University
Jing Zhao: Hong Kong Polytechnic University

No 2019-62, HKUST IEMS Working Paper Series from HKUST Institute for Emerging Market Studies

Abstract: Do superstitious traders lose money? 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 disproportionately more limit orders at "8" than at "4." This imbalance, defined as "superstition index" for each investor, is positively correlated with trading losses. Superstitious investors lose money mainly because of their bad market timing and stale orders. Nevertheless, the reliance on number superstition for limit order submissions does decrease with trading experience.

Pages: 80 pages
Date: 2019-05, Revised 2019-05
New Economics Papers: this item is included in nep-mst and nep-pay
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hku:wpaper:201962

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