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What Makes a Good Trader? On the Role of Quant Skills, Behavioral Biases and Intuition on Trader Performance

Author

Listed:
  • Brice Corgnet

    () (Economic Science Institute & Argyros School of Business and Economics, Chapman University)

  • Mark DeSantis

    (Economic Science Institute & Argyros School of Business and Economics, Chapman University)

  • David Porter

    (Economic Science Institute & Argyros School of Business and Economics, Chapman University)

Abstract

We study the determinants of individual trader performance by conducting a comprehensive analysis of a broad range of variables that have been studied separately in different strands of the literature (financial literacy, cognitive skills, behavioral biases and the theory of mind). We utilize an experimental trading environment that allows us to control information flows into the market and measure a large set of individual characteristics. We show that behavioral biases (such as overconfidence and the failure to understand random sampling) significantly explain trader performance whereas standard cognitive and theory of mind skills only have a marginal effect. These results support the recent effort to incorporate Behavioral Finance research findings into the financial training curriculum.

Suggested Citation

  • Brice Corgnet & Mark DeSantis & David Porter, 2015. "What Makes a Good Trader? On the Role of Quant Skills, Behavioral Biases and Intuition on Trader Performance," Working Papers 15-17, Chapman University, Economic Science Institute.
  • Handle: RePEc:chu:wpaper:15-17
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    References listed on IDEAS

    as
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    Cited by:

    1. Dickinson, David L. & Chaudhuri, Ananish & Greenaway-McGrevy, Ryan, 2017. "Trading While Sleepy? Circadian Mismatch and Excess Volatility in a Global Experimental Asset Market," IZA Discussion Papers 10984, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Experimental asset markets; behavioral finance; cognitive ability; financial education;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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