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Do Smartphone Apps Enhance Smart Trading Decisions?

Do Smartphone Apps Enhance Smart Trading Decisions?
Do Smartphone Apps Enhance Smart Trading Decisions?
Smart devices and their user interfaces, ‘apps’ (SDA), have gained rapid acceptance amongst consumers. However, the impact of this technology’s use on the nature and quality of individual decisions has remained under-researched. We fill this gap by examining 4.5 million trades of 5315 investors in the UK spread trading markets. The results suggest that there are demographic differences between those who do and do not use smart devices for trading. In addition, even after controlling for these, there are differences in the performance and nature of trading decisions of these two groups. In addition, we show that those who use SDA at some time tend to achieve higher Sharp Ratios, but exercise less trading discipline (measured by disposition effect). Importantly, those who at some time have used smart devices for trading, achieve improved performance (in terms of returns) and risk control (higher Sharp Ratios), when they use SDA compared to when they use traditional trading channels. However, when they use SDA they tend to be more subject to the disposition effect. We discuss the possible reasons for our findings and the implications for financial market operators, regulators and for the efficiency of markets.
Ma, Tiejun
1f591849-f17c-4209-9f42-e6587b499bae
Moreno Paredes, Juan, Carlos
9476e555-6741-43e7-a639-42fa02719bab
Sung, Ming-Chien
2114f823-bc7f-4306-a775-67aee413aa03
Johnson, Johnnie
6d9f1a51-38a8-4011-a792-bfc82040fac4
Ma, Tiejun
1f591849-f17c-4209-9f42-e6587b499bae
Moreno Paredes, Juan, Carlos
9476e555-6741-43e7-a639-42fa02719bab
Sung, Ming-Chien
2114f823-bc7f-4306-a775-67aee413aa03
Johnson, Johnnie
6d9f1a51-38a8-4011-a792-bfc82040fac4

Ma, Tiejun, Moreno Paredes, Juan, Carlos, Sung, Ming-Chien and Johnson, Johnnie (2017) Do Smartphone Apps Enhance Smart Trading Decisions? 7th Annual SKBI Conference 2017: Advances in Data Science and Implications for Business, Singapore, Singapore. 26 May 2017.

Record type: Conference or Workshop Item (Paper)

Abstract

Smart devices and their user interfaces, ‘apps’ (SDA), have gained rapid acceptance amongst consumers. However, the impact of this technology’s use on the nature and quality of individual decisions has remained under-researched. We fill this gap by examining 4.5 million trades of 5315 investors in the UK spread trading markets. The results suggest that there are demographic differences between those who do and do not use smart devices for trading. In addition, even after controlling for these, there are differences in the performance and nature of trading decisions of these two groups. In addition, we show that those who use SDA at some time tend to achieve higher Sharp Ratios, but exercise less trading discipline (measured by disposition effect). Importantly, those who at some time have used smart devices for trading, achieve improved performance (in terms of returns) and risk control (higher Sharp Ratios), when they use SDA compared to when they use traditional trading channels. However, when they use SDA they tend to be more subject to the disposition effect. We discuss the possible reasons for our findings and the implications for financial market operators, regulators and for the efficiency of markets.

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More information

Published date: 26 May 2017
Venue - Dates: 7th Annual SKBI Conference 2017: Advances in Data Science and Implications for Business, Singapore, Singapore, 2017-05-26 - 2017-05-26
Organisations: Decision Analytics & Risk, Southampton Business School, Southampton Marine & Maritime Institute

Identifiers

Local EPrints ID: 411988
URI: https://eprints.soton.ac.uk/id/eprint/411988
PURE UUID: 8fde0684-a843-481c-aafa-93f63e2025f8
ORCID for Ming-Chien Sung: ORCID iD orcid.org/0000-0002-2278-6185

Catalogue record

Date deposited: 04 Jul 2017 16:31
Last modified: 30 Jul 2019 00:35

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