The psychology of overtrading

Chris Dillow

Chris Dillow
The psychology of overtrading

One of the oldest findings in behavioural finance is that investors often trade more than they should and lose money by doing so. What's not so clear is why they do this. One possibility is that they are overconfident; they simply overestimate their ability to beat the market. Another is that they get a buzz from trading, as they might from gambling. Two new pieces of research, however, suggest some other motives - one rational, one not.

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