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The performance of amateur traders on a public internet site: a case of a stock-exchange contest

Listed author(s):
  • Philippe Bernard

    ()

    (LEDa University of Paris-dauphine)

  • Michel Blanchard

    ()

    (LEDa University of Paris-dauphine)

This paper studies a very thorough e-trading data base, including all of the bid/ask orders and daily portfolio values of more than 600 on-line amateur traders in the Paris Stock market focusing on the stormy period covering 2007-2009. Traders also participate in a monthly contest and can win significant prizes. Our first result emphasizes the huge average losses of amateur traders. On average, portfolio values fall from an initial value of 100 to a terminal value of 7 in the 29 months covered here. Our final value is 28 including rewards. The second result is more surprising. Despite our splitting context, smart traders don't clearly emerge. There is clearly no performance persistence, neither for winners nor for loser. With a very few exceptions, winners seem to be just lucky not skilled.

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File URL: http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I3-P162.pdf
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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 33 (2013)
Issue (Month): 3 ()
Pages: 1729-1737

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Handle: RePEc:ebl:ecbull:eb-13-00229
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  8. Anderson, Anders, 2006. "Is online trading gambling with peanuts?," Papers 06-02, Sonderforschungsbreich 504.
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  10. Terrance Odean, 1999. "Do Investors Trade Too Much?," American Economic Review, American Economic Association, vol. 89(5), pages 1279-1298, December.
  11. Jegadeesh, Narasimhan & Titman, Sheridan, 1993. " Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency," Journal of Finance, American Finance Association, vol. 48(1), pages 65-91, March.
  12. Brad M. Barber & Yi-Tsung Lee & Yu-Jane Liu & Terrance Odean, 2009. "Just How Much Do Individual Investors Lose by Trading?," Review of Financial Studies, Society for Financial Studies, vol. 22(2), pages 609-632, February.
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