Measuring Neural Engagement in High-Stakes Trading

The emergence of wearable electroencephalography (EEG) technologies presents new opportunities to identify and quantify neural correlates of decision-making in real-time, financially consequential settings. We report a field study in which we use wearable EEG devices to record brainwave activity from professional day traders during real-world, high-stakes trading. Using these signals, we construct an established psychophysiological Engagement Index (EI) and document clear spike-and-decay patterns around trade execution. Linking EI dynamics to trading performance, we find that more successful trades are preceded by larger EI spikes in the 30 seconds before execution, while baseline or background EI levels have no predictive power and, if anything, are negatively associated with performance. We further show that higher EI is associated with attenuated behavioral biases in trading, including the round number heuristic and the disposition effect. This result provides novel evidence that high neural engagement in sophisticated tasks alleviates decision-makers’ reliance on System 1-type responses.