From the study
“…subjects whose emotional reaction to monetary gains and losses was more intense on both the positive and negative side … exhibited significantly worse trading performance.”What it means: In 80 day traders followed for five weeks, those who reacted most strongly to wins and losses performed worst. Not just fear: big highs hurt too.
Lo, A. W., Repin, D. V., & Steenbarger, B. N. (2005). Fear and Greed in Financial Markets: A Clinical Study of Day-Traders. American Economic Review, 95(2), 352–359. Read the original