NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Viktor Prokopenya

SBS Swiss Business School and exp(Capital)
Internatsyyanal’naya Vulitsa 36
Minsk 220030
Belarus

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NBER Working Papers and Publications

April 2016Uninformative Feedback and Risk Taking: Evidence from Retail Forex Trading
with Itzhak Ben-David, Justin Birru: w22146
We document evidence consistent with retail day traders in the Forex market attributing random success to their own skill and, as a consequence, increasing risk taking. Although past performance does not predict future success for these traders, traders increase trade sizes, trade size variability, and number of trades with gains, and less with losses. There is a large discontinuity in all of these trading variables around zero past week returns: e.g., traders increase their trade size dramatically following winning weeks, relative to losing weeks. The effects are stronger for novice traders, consistent with more intense “learning” in early trading periods.
 
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