Learning by Trading

Using a large sample of individual investor records over a nine-year period, we analyze survival rates, the disposition effect, and trading performance at the individual level to determine whether and how investors learn from their trading experience. We find evidence of two types of learning: some...

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Veröffentlicht in:	The Review of financial studies 2010-02, Vol.23 (2), p.705-739
Hauptverfasser:	Seru, Amit, Shumway, Tyler, Stoffman, Noah
Format:	Artikel
Sprache:	eng
Schlagworte:	Arithmetic mean Coefficients Experiential learning Financial portfolios Investment analysis Investment decision Investors Learning experiences Learning rate Mills ratio Portfolio management Portfolio selection Regression coefficients Securities trading Studies Trade Variable coefficients
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Beschreibung
Zusammenfassung:	Using a large sample of individual investor records over a nine-year period, we analyze survival rates, the disposition effect, and trading performance at the individual level to determine whether and how investors learn from their trading experience. We find evidence of two types of learning: some investors become better at trading with experience, while others stop trading after realizing that their ability is poor. A substantial part of overall learning by trading is explained by the second type. By ignoring investor attrition, the existing literature significantly overestimates how quickly investors become better at trading.
ISSN:	0893-9454 1465-7368
DOI:	10.1093/rfs/hhp060