Trading Psychology - Behavioral Finance RSS Feed

An Introduction to Common Behavioral Biases Affecting Financial Decision Making

CME Group — Sun, 12 Oct 2008 09:58:00 EST

1. Recognition of the behavioral influences driving collective and individual investor actions through ongoing analysis
2. Education of the theories and concepts affecting behaviour and market action constantly updated through academic partnerships and research
3. Application of acquired knowledge to financial markets enabling fresh insight and individual performance enhancement

Fundamentals of Behavioral Finance

CME Group — Sat, 11 Oct 2008 10:01:00 EST

1. Bounded Rationality: When assessing probability, investors satisfy their financial needs or goals and do not maximize the opportunity
2. Representativeness: How we "approximate" judgment incorrectly
3. Prospect Theory: The pain of loss is greater than the pleasure experienced by a gain.

Application to Markets

CME Group — Fri, 10 Oct 2008 10:04:00 EST

Behavioral biases active in current markets:

1. Cognitive dissonance
2. Contagion
3. Conjunction
4. Assimilation
5. Herd behavior

Nudge: Behavioral Finance with Richard Thaler

CME Group — Thu, 09 Oct 2008 10:07:00 EST

Contains a presentation of choice architecture and its impact on economic and social policies.

Psychology of Impulse Trades

CME Group — Wed, 08 Oct 2008 10:09:00 EST

Most people have both rational and behavioral tendencies in their personalities. It is the control of the behavioral tendencies through the disciplined resistance to the impulse that distinguishes successful traders.