█ Prospect theory, the disposition effect, and asset prices
In the research paper "Prospect Theory, the Disposition Effect, and Asset Prices," authors Yan Li and Liyan Yang delve into the implications of prospect theory on asset pricing and trading volume through the lens of the disposition effect.
The disposition effect, a tendency to sell assets that have...
█ Traders, managers and loss aversion in investment banking
In investment banking institutions, traders and managers exert immense pressure to maximize gains while minimizing losses. In fact, loss aversion, the tendency to prefer avoiding losses over acquiring equivalent gains, is what influences most of their decision-making. If not managed effectively, this...
One of the biggest mistakes a trader can make is to neglect the aspect of risk management. In this video, I divulge the most pivotal lesson I’ve gleaned from my experience in trading. During the initial years of my trading journey, I disregarded the importance of risk management, which proved to be detrimental in a significant way. The watershed moment of my...
People that call themselves neuro-economists make all sorts of experiments, the ABCD questions are from Kahneman and Tversky from 40 years ago, I found these examples on stanford website.
There was another similar study, or series of studies in Lyon, France. They got people to speculate and when they dangled the carrot in front of them they basically created...
The goal of this article is to understand what really moves the markets.
1. Central Bank Decisions
These organizations manage the countries monetary system and policy.
They control the countries money supply and operate through specific mandates.
Stable inflation is a common mandate applicable to the majority of central banks.
Interest rates are a crucial tool...
