Behavioural Finance and Trading Psychology
Why do some investors sell investments that are doing well, but hold those that are doing poorly? Why do many new traders buy at the high and sell at the low, when they should be doing the opposite? Why do traders panic, get stressed out and trade poorly, whenever the markets move quickly? Understanding the science behind these behaviours will help us understand some of the psychological challenges faced by traders/portfolio managers, and the potential errors they can cause.
Learn how to improve your investment decisions and trading processes by examining some real-life examples and case studies from the financial markets.
By the end of the training, participants will be able to:
‧ Understand how human psychology affects the trading and investing decision making process
‧ Identify some of the common psychological challenges faced by traders and investors
‧ Understand how to handle the challenges which arise from the trading and investing process
‧ Better advise clients and steer them away from common mistakes
‧ Heuristics, the perception of value, herd behaviour, the desire to be right, the brain’s two systems.
‧ Prospect theory
- The value of gains and losses
- Examples: anchoring bias, playing it safe, rogue traders
‧ The emotional impact of fear and greed
- Fear of failure, the impact of stress, anchoring, FOMO
- Overconfidence, over-trading, aggressive risk-taking
‧ Designing and implementing a robust trading process
Who should attend
Traders, portfolio managers, managers in the financial markets and asset management, private bankers, wealth managers, independent financial advisors, other investment professionals who advise on or invest in the financial markets.
Andy has a BSc from the University of Durham, England and an MSc in mathematical modelling from Edinburgh University, Scotland.