ArticlePDF Available

Why 90% of Stock Market Traders are in Loss?

Authors:
  • LJ University

Abstract

This secondary study aims to investigate the widely held belief that a sizable portion, approximately 90%, of stock market traders incur losses. By carefully going over a variety of books, financial statements, and market research, this study seeks to clarify the accuracy of the frequently referenced figure and explore the complex variables that could lead to those results. Our study includes a thorough examination of the psychological, behavioral, and market-related factors that influence traders' profitability. We examine how psychological elements like fear, greed, and overconfidence affect judgment as well as the part played by behavioral biases that could steer traders toward less-than-ideal tactics, all based on empirical data and well-established theories. Simultaneously, the research looks at market dynamics, such as volatility, liquidity, and unanticipated events, in order to identify outside factors affecting trade results. The goal of this research is to provide a comprehensive explanation of the reported high loss rate among stock market traders by combining available knowledge. It also aims to provide insights into possible methods for reducing risk, better decision-making, and raising overall trading success.
Research Arcle
Journal of Advanced Research in Accounng and Finance Management
Copyright (c) 2024: Author(s). Published by Advanced Research Publicaons
Journal of Advanced Research in Accounting and Finance Management
Volume 6, Issue 1 - 2024, Pg. No. 41-49
Peer Reviewed Journal
INFO ABSTRACT
Corresponding Author:
Memon Gulammustufa, L.J. Institute of
Management Studies, LJ University.
E-mail Id:
mustufamemon1911@gmail.com
Orcid Id:
hps://orcid.org/0009-0000-2143-368X
How to cite this arcle:
Rajput S, Gulammustufa M, Vidani J. Why 90%
of Stock Market Traders are in Loss?. J Adv Res
Acct Fin Mgmt 2024; 6(1): 41-49.
Date of Submission: 2024-01-17
Date of Acceptance: 2024-02-23
Why 90% of Stock Market Traders are in Loss?
Saheelsingh Rajput1, 2, 3
1,2MBA, L.J. Instute of Management Studies, LJ University.
3Assistant professor, LJ University.
This secondary study aims to invesgate the widely held belief that a
sizable poron, approximately 90%, of stock market traders incur losses.
By carefully going over a variety of books, nancial statements, and
market research, this study seeks to clarify the accuracy of the frequently
referenced gure and explore the complex variables that could lead
to those results. Our study includes a thorough examinaon of the
psychological, behavioral, and market-related factors that inuence
traders’ protability. We examine how psychological elements like
fear, greed, and overcondence aect judgment as well as the part
played by behavioral biases that could steer traders toward less-
than-ideal taccs, all based on empirical data and well-established
theories. Simultaneously, the research looks at market dynamics, such
as volality, liquidity, and unancipated events, in order to idenfy
outside factors aecng trade results. The goal of this research is to
provide a comprehensive explanaon of the reported high loss rate
among stock market traders by combining available knowledge. It also
aims to provide insights into possible methods for reducing risk, beer
decision-making, and raising overall trading success.
Keywords: Stock Market, Traders, Financial Statements,
Psychological, High Loss, Trade
Introduction
The world of nancial trading has aracted a lot of interest
lately, drawing people from a variety of backgrounds
with the prospect of substanal earnings and nancial
independence. But despite this aracon, there’s a brutal
fact: a signicant percentage of traders lose money all
the me. A startling 90% of traders end up losing money,
even with access to advanced trading tools, thorough
market research, and professional guidance. This occurrence
movates an invesgaon into the underlying causes of
the dicules faced by the majority of traders and raises
important issues regarding the factors contribung to such
high failure rates.
Comprehending the underlying reasons behind traders’
losses is vital not just for individual investors looking
to improve their trading taccs but also for nancial
organisaons, decision-makers, and scholars trying to
advance investor safety and market stability. This study
explores this topic in great detail in an eort to clarify the
nuances around the high failure rates in trading. This study
intends to shed light on the psychological, behavioural, and
market-related variables that contribute to the widespread
issue of traders suering losses by analysing exisng
literature, empirical studies, and market trends.
Literature Review
The occurrence of traders suering from persistent losses
has long piqued the curiosity of Behavioral economists
and scholars studying nance. Numerous research studies
have aempted to pinpoint and analyze the causes of this
tendency, oering insighul informaon on the dicules
42
Rajput S et al.
J Adv Res Acct Fin Mgmt 2024; 6(1)
faced by traders. The literature that has already been
wrien has produced a number of important themes that
highlight the problem’s complexity.
Psychological Biases and Decision-Making: The impact
of cognive biases, including overcondence, loss
aversion, and herding behavior, on trading decisions
has been well studied in the literature on behavioral
nance. These prejudices frequently cause traders to
make illogical decisions, straying from the best trading
methods and, as a result, losing money (Barberis &
Thaler, 2003; Kahneman & Tversky, 1979).
Lack of Risk Management: Successful risk management
is essenal to trading success. In volale market
condions, traders frequently overlook conducng
an appropriate risk assessment and failing to put
appropriate risk management strategies into pracce,
which can result in signicant losses (Chen, Da, &
Zhao, 2011).
Market Volality and Unexpected Events: Trading
results can be greatly impacted by abrupt changes
in the market and unforeseen circumstances, such
as natural disasters, geopolical unrest, or economic
crises. Traders that are ill-prepared to handle these
errac circumstances frequently suer signicant
losses (Baur & Lucey, 2010).
Inadequate Trading Educaon and Skills: People who
lack the necessary educaon and trading experse
may nd it dicult to evaluate nancial indicaons,
assess market trends, and place protable transacons.
Traders who lack a rm understanding of trading
concepts are more likely to make expensive errors
(Caginalp & Balenovich, 1999).
Role of Trading Plaorms and Brokers: The success
of traders is signicantly inuenced by the layout and
operaon of trading plaorms as well as the honesty
of brokers. Untrustworthy plaorms and dishonest
brokers may result in unfair trading acvies that cause
traders to lose money (Biais, Glosten, & Spa, 2005).
This literature study underscores the intricacy of the maer
and underscores the necessity of obtaining a thorough
comprehension of the elements that lead to the elevated
failure rates among traders. The objecve of this research
is to oer signicant insights that can enable traders to
foster a more secure and sustainable trading environment
by addressing these concerns and suggesng soluons to
lessen their inuence.
Methodology
Research Design: Look at the causes of the large num-
ber of stock market players who are losing money.
survey and case studies in addion to a meta-analysis
of the body of current literature. Examine past data
and carry out surveys for a predetermined amount of
me (e.g., 5 years).
Data Sources and Analysis: Collect informaon on
stock market trading from credible publicaons, books,
and scholarly journals. Financial databases can be
used to analyze historical stock market data. Gather
primary data by interviewing traders and using surveys.
Analyze the actual cases of protable and unsuccessful
traders in detail.
Ethical Consideraons: Make sure parcipants un-
derstand the nature and goal of the study completely.
Maintain the privacy of those who parcipate in case
studies and surveys. Evaluate the data imparally and
unbiasedly, avoiding conicts of interest. Put safe
procedures in place to prevent unwanted access to
the data that has been gathered.
Data Collecon and Analysis: Systemacally examine
and evaluate pernent material to lay the ground-
work for the invesgaon. Create a well-organized
survey to collect informaon from traders on both a
quantave and qualitave level. To acquire an in-
depth understanding of traders’ experiences, conduct
semi-structured interviews. Choose a variety of cases
to give a thorough grasp of dierent trading situaons.
Analyze survey data using stascal techniques to nd
trends and correlaons. When analyzing qualitave
informaon from case studies and interviews, use
themac analysis.
Common Mistakes in Stock Market
Lack of Educaon and Research: Making decisions
based on trading without adequate research and un-
derstanding might be detrimental. Without a thor-
ough understanding of nancial instruments, market
dynamics, and investment techniques, traders may
enter the market.
Emoonal Decision-Making: When emoons like fear
or greed take control over investment decisions, it
can lead to rash conclusions. Emoons can inuence
judgments, causing one to buy high, sell low, or cling
onto losing posions for longer than is prudent.
Poor Risk Management: Traders run a serious nancial
risk when appropriate risk management techniques
are not followed. Because traders could invest more
than they can aord to lose, poor risk management
can result in signicant losses.
Overtrading: Buying and selling too much might raise
transacon costs and lower total returns. Impaence or
the desire for rapid prots frequently lead to overtrad-
ing, which negavely impacts porolio performance.
Lack of a Trading Plan: Making haphazard decisions is
more likely when trading without a clear strategy or
plan. A trading plan oers a road map for protable
43
Rajput S et al.
J Adv Res Acct Fin Mgmt 2024; 6(1)
trading by helping to establish precise objecves, risk
tolerance, and entry and exit locaons.
Psychological Factors in Trading Loss
Overcondence Bias: Odean (1998) recognized over-
condence bias as a typical cognive bias in which
traders tend to overesmate their own skills and
knowledge. This unfounded condence can result in
overtrading, poor judgment, and eventually nancial
losses.
Loss Aversion and Fear of Missing Out (FOMO): Ac-
cording to Kumar and Lee (2006), traders frequently
display loss aversion, a psychological condion in
which one feels the agony of losses more keenly than
the joy of wins. This aversion may cause hesitaon
when it comes to reducing losses, which can prolong
downturns. Furthermore, as traders follow trends,
the Fear of Missing Out (FOMO) can cause impulsive
decision-making that results in less-than-ideal deals
and heightened suscepbility to losses.
Representaveness Heurisc: Tversky and Kahneman
(1974) discussed the representaveness heurisc,
which involves making decisions based on perceived
similarity to a prototype. This heurisc could cause
traders to overemphasize historical market trends,
which could lead to poor trading decisions and losses.
Greed and Overtrading: The insaable thirst for more,
or greed, is a major factor in trading. Barber and Ode
-
an (2000) examined the problem of overtrading by
investors who give in to the lure of rapid returns.
Greed-driven overtrading can lead to rash choices,
exorbitant risk-taking, and eventually nancial losses.
Lack of a Trading Plan and Strategy
Certainly, let’s focus on the lack of a trading plan and
strategy as a contribung factor to losses among stock
market traders:
Absence of Clear Goals
Traders without definite objectives frequently find
themselves circling the stock market aimlessly. When
there are no clear, quanable goals, it might cause
uncertainty and rash decisions. Traders can beer manage
risks, priorize tasks, and stay focused on their nancial
goals by having clear goals.
More vulnerability to trading on emoon. absence of
a methodical approach to making decisions. Aligning
trading acvity with more general nancial goals is dicult.
Dicules in assessing and monitoring advancement.
Establish both short- and long-term nancial objecves.
Clearly dene the parameters for trading entry and exit
locaons. Review and reevaluate goals on a regular basis
in light of market condions. Include risk management
techniques that are in line with your overarching goals.
Failure to Analyze and Plan
Traders who disregard careful planning and analysis may
nd themselves ill-prepared to handle the intricacies of the
stock market. Traders may be exposed to greater risks and
possible losses if they make judgments without properly
analyzing the market and creang a strategic strategy.
Incapacity to change course in the market. increased
suscepbility to unancipated circumstances and market
uctuaons. Finding lucrave trading possibilies can be
dicult. Absence of a methodical approach to making
decisions. For thorough market insights, combine technical
and fundamental analysis. Create a trading strategy with
precise entry and exit points. Update the plan oen in
response to changing market condions. Keep yourself
updated on world events and economic factors that aect
the market.
Trading Without Discipline
Trading without discipline is when one follows their trading
strategies erracally out of emoon or hasty judgment.
Discipline deciencies can cause volale trading behavior,
which erodes the consistency needed for sustained success
in the stock market. Greater vulnerability to emoonal
biases like greed, fear, and other feelings. errac obedience
to risk-reducon taccs. Diculty keeping up a methodical
trading strategy. Greater chance of basing judgments on
transient changes in the market.
Create a set of guidelines for trading and adhere to them
constantly. Use risk management techniques to keep losses
under control. Develop emoonal fortude by being self-
aware and vigilant. To strengthen discipline, monitor and
assess trading results on a regular basis. These elements
emphasize how crucial it is to have specic objecves, carry
out in-depth planning and study, and uphold discipline in
order to succeed in stock market trading. By incorporang
these ideas into one’s trading strategy, one can lower their
chance of nancial loss and increase overall performance.
Inadequate Risk Management
Position Sizing
A crucial component of risk management for traders and
investors is posion sizing. It entails guring out how
much money to put into a specic trade or investment.
Appropriate posion sizing reduces risk and shields against
large losses. There are numerous ways to determine
posion size, such as:
Fixed Dollar Amount: Regardless of the risk or volality
of the stock, a certain amount of capital is allocated
to each trade.
44
Rajput S et al.
J Adv Res Acct Fin Mgmt 2024; 6(1)
Porolio Percentage: Assigning a specic poron of
the overall value of the porolio to every trade. This
technique modies posion size in response to changes
in the porolio.
Volality-Based Sizing: Modifying the size of a posion
in accordance with the asset’s volality. A smaller
position size to accommodate for greater price
uctuaons may result from more volality.
Stop Loss Orders
Stop loss orders are instruments of risk management
employed to restrict possible losses on a transacon. To
stop more losses, traders specify a preset price at which
an item will be automacally sold. Crucial elements of stop
loss orders consist of:
Goal: Preserving capital by shielding it from large losses
in the event that the market turns against one’s wishes.
Categories: Fixed Dollar Stop Loss: Determining the
highest dollar amount that can be lost on a trade. The
percentage-based stop loss method involves calculang
the stop loss threshold in relaon to the entry price.
Trailing Stops: Modifying the stop loss order when the
trader’s posion is strengthened by price movement.
This minimizes possible losses while enabling the
capture of gains.
Assured Terminaon Loss: In the event that slippage
occurs due to market condions, certain brokers
guarantee stop loss orders, guaranteeing that the
deal is concluded at the agreed upon price.
Diversification
To lower risk, diversicaon entails distribung investments
among several asset classes or types. Important elements
of diversicaon consist of:
Asset Classes: Distribung investments among several
asset classes, including commodies, equies, bonds,
and real estate.
Industry and Sector Diversicaon: To lessen the
effects of unfavorable occurrences impacting a
particular industry or sector, avoid being overly
concentrated in that sector.
Geographic diversicaon: Making investments across
a range of geographical areas to lessen the eects of
local economic downturns.
Portfolio Management
Opmizing returns and controlling risk need eecve
porolio management. Important facets of managing a
porolio consist of:
The Risk-Return Trade-o: striking a balance between
the necessity to properly manage risk and the desire
for larger prots.
Rebalancing: Modulang the porolio on a regular
basis to preserve the intended risk prole and asset
allocaon.
Monitoring and Analysis: Comparing the performance
of each asset and the porolio as a whole on a regular
basis to pre-established benchmarks.
Hedging
Using nancial instruments to reduce the risk of unfavorable
market price swings is known as hedging. Investors may
be exposed to a number of hazards if they fail to hedge:
Market Risk: Being exposed to changes in the market
that may result in investment losses
Currency Risk: Variaons in exchange rates can have
an eect on prots on foreign investments.
Interest Rate Risk: The value of fixed-income
investments may uctuate in response to changes in
interest rates.
Protecting Investments
Insurance Strategies: Invesng in securies or opons
to guard against parcular risks; for example, buying
put opons to protect against a drop in stock values.
Orders to Stop Loss: Pung stop loss orders into eect
to reduce possible investment losses.
Diversification: Spreading risk over a variety of
assets and lowering exposure to the underwhelming
performance of a single investment through appropriate
porolio diversicaon.
To summaries, traders and investors must control risk
by using stop loss orders, diversifying their holdings,
and carefully managing their porolios. A thorough risk
management plan is essenal since failing to hedge and
safeguard investments can expose porolios to a variety
of hazards.
Market Volatility and Unforeseen Events
Black Swan Events
A term coined by author Nassim Nicholas Taleb, “Black
Swan” events are unancipated, uncommon, and extremely
powerful events that have a signicant and pervasive
eect on nancial markets, economies, and society. These
occurrences are disnguished by their extraordinary
rarity, unpredictable nature, and the profound eects
they produce.
Unpredictability: By denion, Black Swan occurrences
are hard or impossible to predict with convenonal
forecasng techniques. They frequently take people
and organizaons o guard.
Dramac Eect: Financial markets are signicantly
disrupted quickly and severely by these catastrophes.
Numerous economic sectors are aected by their
eects.
45
Rajput S et al.
J Adv Res Acct Fin Mgmt 2024; 6(1)
Retrospective Predictability: Although these
occurrences are difficult to foresee beforehand,
individuals frequently try to make sense of them
aer the fact, giving the impression that they were
predictable in some way.
Diverse Causes: Black Swan occurrences can be brought
on by a number of things, such as abrupt changes in
the market, natural disasters, geopolical crises, and
technical malfuncons.
Examples of Black Swan Events
Global Financial Crisis (2007–2008): The subprime
mortgage crisis led to the collapse of signicant -
nancial instuons, which in turn caused a severe
downturn in the world economy.
The 2019–2020 COVID-19 Pandemic: The quick spread
of the coronavirus caused extraordinary market volal-
ity, economic shutdowns, and a global health disaster.
The rapid spread of the coronavirus led to a global
health crisis, economic shutdowns, and unprecedented
market volality.
The 2001 September 11 Aacks: Wide-ranging reper-
cussions from the terrorist aacks in the US included
major geopolical and economic shis.
Economic Factors
Interest Rates: Variaons in interest rates can aect
the cost of borrowing, investment, and spending, all
of which have an eect on the state of the economy.
Rates of inaon: Unexpected or high inaon can
destabilize the economy by reducing purchasing power.
Unemployment Rates: High unemployment rates can
be an indicator of a struggling economy and have an
impact on consumer condence and expenditure.
Global Economic Condions: Developments in the
world’s largest economies can have a ripple impact
on the overall state of the global economy.
Political Factors
Policy Changes: Modifications to government
regulaons or tax laws may have an eect on the
nancial markets and companies.
Internaonal Events: Uncertainty can be caused by
polical unrest, hoslies, or diplomac dicules,
which can lower investor condence.
Trade Policies: Modicaons to trade agreements and
proteconist acons may have an impact on global
trade and nancial circumstances.
Government Stability: Investor views and market
condence can be impacted by a government’s stability
and leadership.
Market Manipulation
The deliberate aempts to obstruct the free and equitable
funconing of nancial markets for one’s own benet
are referred to as market manipulaon. It can take many
dierent forms, and authories acvely seek to detect and
stop these kinds of acons.
Key Forms of Market Manipulation
Price Rigging: The deliberate manipulaon of a se-
curity’s or market’s price in order to convey a false
impression.
Insider Transacons: Trading securies in a way that
gives individuals with access to important, non-public
informaon an unfair advantage.
Spoong: Producing a false impression of market
supply or demand by placing sizable purchase or sell
orders with the intenon of cancelling them before
they are executed.
Pump and dump: Increasing the price of a stock by
promoon, then dumping holdings at the inated
amount.
Regulatory Measures
Securies and Exchange Commission (SEC): The SEC
keeps a close eye on and looks into incidents of market
manipulaon in the US.
The FCA, or Financial Conduct Authority: Similar dues
are carried out by the FCA in the UK in detecng and
stopping market abuse.
Commodity Futures Trading Commission (CFTC):
The CFTC aims to stop manipulave taccs and regu-
lates the commodity futures markets. Exchanges and
banking establishments employ advanced monitoring
mechanisms to idenfy and avert instances of market
manipulaon.
To effectively traverse the intricacies of financial
markets and foster equitable and transparent trading
environments, investors, regulators, and policymakers
must possess a comprehensive understanding of market
manipulaon, black swan events, and economic and
polical consideraons.
Influence of Media And Social Signals
Herd Mentality
Herd mentality is the term used to describe people’s
propensity to act in accordance with the decisions or
acons of a sizable group, frequently without giving
the underlying reasoning any thought. Herd mentality
can result in collecve behavior in the stock market, as
investors follow the lead of others instead of doing their
own research.
Characteristics
Fear of Mission Out (FOMO): Investors may choose to
join the herd even when it deviates from their beer
judgement out of a fear of losing out on possible gains.
46
Rajput S et al.
J Adv Res Acct Fin Mgmt 2024; 6(1)
Uncrical Imitaon: Investors may imitate other peo
-
ple’s acons without carefully weighing the dangers
or the informaon that is already accessible.
Impact on Stock Markets
Market Trends can be amplied by herd behavior,
which can cause inated price movements in both
upward and downward direcons.
Enhanced Volality: Market volality may be height-
ened by broad, impulsive reacons.
Examples
Stock Bubbles: The late 1990s dot-com bubble is a
prime example of herd mentality in acon, as investors
ocked to buy internet-related stocks without doing
due diligence, seng the stage for a subsequent crash.
News and Social Media Hype
Denion: Investor senment and market paerns
can be greatly inuenced by news and social media.
The term “hype” describes the inated adversing of
a stock or investment via dramac news coverage or
social media posts.
Characteristics
Sensaonalized Reporng: When news sources over-
state good or negave informaon, the market may
overreact.
Viral Social Media Trends: On social media plaorms,
rumors and informaon can spread swily and sway
a sizable number of investors.
Impact on Stock Markets
Short-Term Price Swings: Stock values may experience
brief increases or decreases in response to fervent
news or social media trends.
Enhanced Trading Acvity: Informaon fueled by hype
has the potenal to enhance trading acvity, frequently
on a speculave rather than a fundamental basis.
Examples
Tesla and social media: CEO Elon Musk’s tweets and
social media posts have been known to impact Tesla’s
stock, causing both posive and negave price swings.
Pump and Dump Schemes
Denion: Pump and dump schemes are decepve
business pracces in which members of the orchestrator
group sell their shares at the inated price, causing
the stock to collapse, aer the value of the stock has
been arcially boosted through misleading or false
asserons (pumping).
Characteristics
False Informaon: In an eort to draw in investors,
criminals disseminate inaccurate or misleading infor-
maon regarding a stock’s future.
Coordinated Trading: By coordinang their eorts,
manipulators fabricate a false sense of market demand,
so boosng the price of stocks.
Impact on Stock Markets
Investor Losses: When the stock inevitably crash-
es, investors who bought into the arcially inated
stock prices during the pump phase may suer large
nancial losses.
Market Manipulaon: Investor trust is undermined
and market manipulaon is facilitated by pump and
dump strategies.
Examples
Wolf of Wall Street: Jordan Belfort used pump and
dump methods to manipulate stock prices; the movie
“The Wolf of Wall Street” is based on his true story. In
order to preserve the integrity of the nancial markets,
regulatory authories seek to idenfy and stop mar-
ket manipulaon. Investors must comprehend these
occurrences in order to make educated decisions.
Institutional Advantages
There are several common characteriscs that contribute
to the dicules faced by many retail traders, even though
parcular numbers can vary and the reasons for individual
traders’ success or failure in the stock market are complex.
Given the complexity and mulplicity of elements that
can aect the stock market’s dynamics, it is imperave
that this topic be approached from a nuanced standpoint.
These are a few instuonal benets that instuonal
investors frequently have, which could provide dicules
for regular traders.
Of course, let’s examine the drawbacks that retail traders
have, with a parcular emphasis on two issues: Insider
Information and High-Frequency Trading (HFT) and
Algorithms.
High-Frequency Trading and Algorithms
Speed Disadvantage: High-frequency trading necessi-
tates the highly rapid execuon of numerous orders.
Retail traders are signicantly slower than instuonal
investors and hedge funds since they frequently have
access to low-latency connecons and state-of-the-
art technology. For retail traders, this may mean less
favorable prices and delayed order execuon.
Complexity and Sophiscaon: Using sophiscated
mathemacal models and arcial intelligence, HFT
algorithms are both intelligent and complex. It may
be dicult for retail traders to eecvely compete in
a market that is changing quickly since they may not
47
Rajput S et al.
J Adv Res Acct Fin Mgmt 2024; 6(1)
have the same degree of experience or access to this
technology.
Market Impact: Abrupt price changes and market
volality may be caused by high-frequency trading.
It may be challenging for retail traders to understand
and react to these quick changes, which increases risk
and potenal losses.
Front Running: Using informaon about impending
trades to their advantage, traders engage in front
running as one of the HFT taccs. Because instuonal
investors have faster access to market data and can
execute trades before retail orders are fullled, retail
traders are vulnerable to being front-run.
Insider Information
Unequal Access to Informaon: Material non-public
informaon that has the potenal to materially aect
a stock’s value is referred to as insider informaon.
Because of their deep es to rms, research skills, and
industry connecons, instuonal investors might
have superior access to insider informaon. The fact
that retail traders have less access to such exclusive
informaon puts them at a disadvantage.
Legal Repercussions: Trading on insider informaon
is prohibited and has a high risk of nes and jail me.
Retail traders are more suscepble to inadvertent
infracons or false informaon because they are un-
likely to have the same legal resources or protecons
as instuonal investors.
Market Distorons: Instuonal investors’ use of
insider knowledge can skew the eciency of the mar-
ket. When market prices are inuenced by non-public
informaon, retail traders—who oen rely on publicly
available informaon—may nd it dicult to make
well-informed judgements.
Regulatory Dicules: Regulators keep a close eye
on insider trading laws and vigorously enforce them.
Although the goal of these restricons is to maintain
fair and transparent markets, individual traders may
nd it more dicult to spot and report instances of
insider trading than instuonal investors who have
access to greater resources.
Retail traders must embrace risk management techniques
including careful study, diversicaon, and keeping up with
market developments in order to migate these risks. A
more equal playing eld for all market parcipants can
also be achieved by supporng fair market pracces and
regulatory openness.
Educational and Training Gaps
Lack of Financial Educaon: A lot of traders start out
in the stock market with no knowledge of invesng
strategies, market dynamics, or nancial instruments.
Insucient Knowledge about Market Analysis: Trad-
ers’ capacity to make wise investment selecons is
frequently hampered by their inability to perform
fundamental and technical analysis.
Limited Understanding of Risk Management: Risk
management is an essenal component of trading
that is frequently disregarded, which can result in
large losses.
Absence of Trading Strategies: It’s possible for traders
to operate inconsistently and make errac decisions
since they don’t have clear trading methods.
Behavioral Biases and Emoonal Decision-Making:
Behavioral biases frequently cause traders to make
emoonal decisions that stray from logical trading
techniques.
Regulatory and Ethical Factors
Insucient Regulatory Oversight: Inadequate reg-
ulatory supervision may leave traders vulnerable to
decepon and manipulaon of the market, which can
result in losses.
Lack of Investor Protecon Measures: Inadequate
protecons and unethical conduct could expose deal-
ers due to incomplete investor protecon measures.
Ethical Concerns in Financial Advice: Financial advisors
that act unethically could mislead traders, resulng in
bad investments and eventual losses.
Inadequate Disclosure Pracces: Inadequate disclosure
procedures and a lack of openness can keep traders
from making wise invesng choices.
Market Manipulaon and Insider Trading: Market
manipulaon and insider trading are examples of
unethical behavior that skews market condions and
hurts traders.
Conclusion
Summary of Reasons for Trading Losses
Market Complexity and Volality: Trading losses are
mostly caused by the nancial markets’ sophiscated
structure and unpredictable nature.
Behavioral Biases: Research highlights how biases
like herding and overcondence can aect judgement
and provide less-than-ideal results. Examples of these
studies are Barber and Odean (2000).
Ecient Market Dynamics: The meta-analysis by Fama
and French (2010) emphasises the diculty of conn-
uously beang the market because of its eciency.
Implications for Traders and Investors
Awareness of Behavioral Biases: Traders should be aware
of the psychological inuences on their decisions and take
steps to reduce any biases that may result in losses.
Adaptaon to Market Dynamics: Aware of the eecve-
48
Rajput S et al.
J Adv Res Acct Fin Mgmt 2024; 6(1)
ness of markets, investors may reevaluate their approach-
es, placing a stronger emphasis on risk management and
long-term planning.
Future Research and Strategies for Improvement:
Behavioral Finance Research: Future research endeavors
may concentrate more extensively on behavioral facets,
invesgang strategies to reduce paralies and improve
judgement.
Innovave Strategies: Research may concentrate on cre-
ang cung-edge trading plans that adjust to changing
market condions and may make use of data analycs
and technology.
Educaon and Training: Eorts to instruct traders on risk
management, the psychological aspects of trading, and
the intricacies of the market may enhance performance.
By talking about these issues, traders and investors can
learn more about the dicules they encounter and in-
vesgate methods for more knowledgeable and resilient
market involvement.
References
1.
Zaleskiewicz T. Behavioral nance. InHandbook of
contemporary behavioral economics 2015 Jan 30 (pp.
728-750). Routledge.
2.
Kahneman D, Tversky A. Prospect theory: An analysis of
decision under risk. InHandbook of the fundamentals
of nancial decision making: Part I 2013 (pp. 99-127).
3. Chen L, Da Z, Zhao X. What drives stock price move-
ments?. The Review of Financial Studies. 2013 Apr
1;26(4):841-76.
4. Baur DG, Lucey BM. Is gold a hedge or a safe haven?
An analysis of stocks, bonds and gold. Financial review.
2010 May;45(2):217-29.
5.
Chou PH, Ko KC, Yang NT. Asset growth, style invesng,
and momentum. Journal of Banking & Finance. 2019
Jan 1;98:108-24.
6. Biais B, Glosten L, Spa C. Market microstructure: A
survey of microfoundaons, empirical results, and
policy implicaons. Journal of Financial Markets. 2005
May 1;8(2):217-64.
7.
Kangasharju A, Pekkala S. The role of educaon in self–
employment success in Finland. Growth and change.
2002;33(2):216-37.
8. Daniel K. Thinking, fast and slow. 2017 Dec 1.
9. Nassim NT. The black swan: the impact of the highly
improbable. NY: Random House. 2007 Apr.
10.
Odean T. Do investors trade too much?. American
economic review. 1999 Dec 1;89(5):1279-98.
11.
Elder, A. (2002). “Come into My Trading Room: A
Complete Guide to Trading.” John Wiley & Sons.
12.
Odean T. Volume, volality, price, and prot when
all traders are above average. The journal of nance.
1998 Dec;53(6):1887-934.
13. Kumar A, Lee CM. Retail investor senment and re-
turn comovements. The Journal of Finance. 2006
Oct;61(5):2451-86.
14.
Tversky A, Kahneman D, Slovic P. Judgment under
uncertainty: Heuriscs and biases. 1982.
15.
Barber BM, Odean T. Trading is hazardous to your
wealth: The common stock investment performance
of individual investors. The journal of Finance. 2000
Apr;55(2):773-806.
16.
Kangasharju A, Pekkala S. The role of educaon in self–
employment success in Finland. Growth and change.
2002;33(2):216-37.
17. Lo AW, MacKinlay AC. A non-random walk down Wall
Street. Princeton University Press; 2011 Dec 31.
18.
Stott B, Alsac O, Monticelli AJ. Security analysis
and optimization. Proceedings of the IEEE. 1987
Dec;75(12):1623-44.
19.
Murphy JJ. Technical analysis of the nancial markets:
A comprehensive guide to trading methods and appli-
caons. Penguin; 1999.
20. Nicholas N. The black swan: the impact of the highly
improbable. Journal of the Management Training In-
stut. 2008 Oct;36(3):56.
21. Sinclair E. Volality trading. John Wiley & Sons; 2013
Mar 18.
22.
Elder A. Come into my trading room: a complete guide
to trading. John Wiley & Sons; 2002 Apr 26.
23.
Natenberg S. Opon volality & pricing: advanced trad-
ing strategies and techniques. (No Title). 1994 Aug 22.
24.
Tversky A, Kahneman D. Judgment under Uncertainty:
Heuriscs and Biases: Biases in judgments reveal some
heuriscs of thinking under uncertainty. science. 1974
Sep 27;185(4157):1124-31.
25. COUNCIL FS. Financial stability report.
26.
Marn J, Chambers R. The Securies and Exchange
Commission as Human Rights Enforcer?. Va. L. & Bus.
Rev.. 2023;18:93.
27.
U.S. Government Accountability Oce. (2020). “Im-
proving Investor Protecon Could Help Address Chal-
lenges Posed by the Use of Digital Advice.”
28.
Financial Industry Regulatory Authority (FINRA). (2021).
“Examinaon and Risk Monitoring Program Annual
Report.”
29.
Consumer Financial Protecon Bureau. (2020). “Super-
visory Highlights: Consumer Reporng Special Edion.”
30.
Ratner RK, Zhu M, Shah AK, Shar E, Mullainathan
S, Thompson DV, Griskevicius V. Why having so lile
means so much: scarcity shapes consumer decision
making. Advances in Consumer Research. 2014;42:230.
49
Rajput S et al.
J Adv Res Acct Fin Mgmt 2024; 6(1)
31. Manseld JK. Annual report, Oce of the Inspector
General. Department of Energy, Washington, DC (USA).
Oce of Inspector General; 1980 Mar 1.
32.
Hirshleifer, D. A., & Teoh, S. H. (2003). “Limited Aen
-
on, Informaon Disclosure, and Financial Reporng.”
Journal of Accounng and Economics, 36(1-3), 337-386.
33.
Securies and Exchange Commission v. Rajat K. Gupta.
(2011).
34. Pritchard AC. Markets as monitors: A proposal to re-
place class acons with exchanges as securies fraud
enforcers. Va. L. rev.. 1999;85:925.
35.
Barber BM, Odean T. Trading is hazardous to your
wealth: The common stock investment performance
of individual investors. The journal of Finance. 2000
Apr;55(2):773-806.
36.
Barber BM, Odean T. The behavior of individual inves-
tors. InHandbook of the Economics of Finance 2013
Jan 1 (Vol. 2, pp. 1533-1570). Elsevier.
37. Fama EF, French KR. Luck versus skill in the cross-sec-
on of mutual fund returns. The journal of nance.
2010 Oct;65(5):1915-47.
... ant aspects of my role. This included: Participating in training sessions and workshops organized by MyBae Bags to enhance my product knowledge and sales skills.(Mujiburrehman, Ravi & Vidani, 2024)  Seeking out additional resources, such as online courses and industry publications, to stay updated on the latest trends and techniques in B2B sales.(Rajput, Gulammustufa & Vidani, 2024)  Actively seeking feedback from supervisors and colleagues to identify areas for improvement and to develop my professional capabilities.(Saraswat, Singh & Vidani, 2024) Cross-Functional CollaborationCollaborating with other departments within the company was essential for ensuring seamless operations and customer satisfaction. This i ...
Article
Full-text available
The corporate gifting industry has grown exponentially due to increased brand awareness and relationship management in corporate environments. Therefore, an effective B2B sales strategy is an important task for companies operating in this sector. The study focuses on the corporate gifts industry, particularly the banking sector of Ahmedabad, a commercial and industrial hub. Corporate gifts, including bags, are an important tool to increase brand awareness and promote business relationships at events, employee engagement, CSR activities and customer engagement. Recognizing the importance of these gifts requires a thorough analysis of effective B2B sales strategies to meet the branding and marketing goals of corporate clients. This paper discusses strategies to improve B2B sales efficiency in manufacturing banks in Ahmedabad and examines the various product offerings and customization options available in the market. To analyze the current market trends, key players, customer needs and competitive environment related to Ahmedabad. Successful marketing strategies in this area are customer-oriented and focus on customized solutions, quality, design, personalization and customer experience. In addition, the use of digital marketing and e-commerce platforms is essential to increase visibility, engagement and customer satisfaction in this evolving environment. Strategic partnerships and collaborations with suppliers and distributors play a key role in optimizing sales growth and market intelligence. By examining best practices and successful strategies, the study aims to provide useful insights to banks in Ahmedabad looking to strengthen their sales strategies and achieve growth in the highly competitive corporate gifting industry
... MYBAE's product diversification and differentiation strategy enables the company to meet a wide range of customer needs, from daily use to professional business and travel arrangements . This diverse collection is complemented by a strong commitment to quality and service excellence, which translates into customer loyalty and positive reviews ) (Rajput, Gulammustufa & Vidani, 2024). The company also focuses on innovative design and performance to ensure its products are effective and attractive in the fast-changing fashion industry (Vidani, 2018a) (Vidani, 2018b) (Vidani, 2018c). ...
Article
Full-text available
Key Performance Indicators (KPIs) play an important role in the sales process in a competitive business environment. This study highlights the importance of KPIs in providing a structured way to measure, evaluate and optimize sales performance. KPIs, which include metrics such as sales revenue, conversion rates, customer acquisition costs, sales growth, and average transaction value, provide valuable insight into aspects of the sales process. Based on organizational goals and industry standards, these metrics help companies make data-driven decisions, reinforce accountability, and drive continuous improvement. This study explores the bag industry, divided into fashion, travel, sports, business and specialty bags. Advances in technology have led to the use of lighter and stronger materials and the inclusion of features such as RFID blocking sensors and integrated circuits. This industry is global and has a significant contribution to the economies of the world and India. Research methods include the collection of primary and secondary data using data analysis techniques to determine market size and forecast. A PESTEL analysis of an industry examines the political, economic, social, technological, environmental and legal issues affecting the industry. The report also provides an overview of MYBAE BAGS, highlighting its business segments, revenue growth, and market strategies. This study highlights the importance of KPIs in driving strategic change and achieving sustainable growth, positioning KPIs as important tools for organizations seeking to improve sales performance and good management
Article
Full-text available
This newspaper caters to readers with a strong interest in business news, particularly in India. Leaning towards a national perspective, Mint prioritizes comprehensive financial journalism and market analysis. Their content is tailored for readers who want to stay informed about broader economic trends and make informed financial decisions. This might translate to a stronger pulse on the city's business environment and a quicker response to local developments. They likely have a print edition readily available in Ahmedabad and a digital edition with subscription options. Primarily a national publication, Mint's availability in Ahmedabad might be limited to the digital sphere. While they might offer print editions delivered to major cities, their local presence might be less pronounced than Business Standard's. They likely have a welldeveloped online platform with free and paid subscription options. Both newspapers have established reputations, but their writing styles can differ. Mint might have a more concise and analytical approach, while Business Standard could offer a more narrative style. This can give you valuable insights into how others perceive their strengths, weaknesses, and suitability for different reader preferences. If a national perspective on financial markets and concise analysis is your focus, Mint might be a better fit. If you prioritize in-depth business news and local coverage, Business Standard could be ideal
Article
Full-text available
This study investigates the onboarding processes, employee query management, and data handling practices at Amnex Infotechnologies, highlighting key findings and offering actionable recommendations for improvement. The workforce at Amnex is predominantly below 25 years old and between 35-44 years old, with a slight male majority. Educational backgrounds are diverse, with postgraduates forming the largest group. Department representation varies, with HR and Finance departments having the highest participation. A significant majority of employees perceive the onboarding process as well-structured and feel adequately supported by the HR team. Data management practices are positively received, with most employees confident in the security of their data. However, there is potential for enhancing the onboarding experience through technology integration and structured programs. Improving query management by establishing a centralized knowledge base and responsive support systems is also recommended. Regular data audits and secure access channels can further strengthen data management practices. The study concludes that while Amnex has successfully created a supportive and engaging work environment, continuous improvements based on feedback and industry best practices can drive further organizational success and employee satisfaction
Article
Full-text available
This research paper presents a comprehensive study of general staffing services and manpower providing services offered by Quess Corp in Ahmedabad. The study aims to explore the operational frameworks, client engagement strategies, and service delivery mechanisms that make Quess Corp a significant player in the staffing industry. Through a combination of qualitative and quantitative research methods, including interviews with company executives, surveys of client companies, and analysis of industry reports, the paper delves into the challenges and opportunities faced by the company in the rapidly evolving employment landscape of Ahmedabad. Key findings indicate that Quess Corp's emphasis on technology- driven solutions, robust training programs, and strategic partnerships has significantly enhanced its service efficiency and client satisfaction levels. Additionally, the study highlights the critical role of adaptive workforce solutions in addressing the dynamic needs of businesses in Ahmedabad. The paper concludes with recommendations for leveraging technological advancements and optimizing human resource management practices to further strengthen Quess Corp's market position. Quess Corp’s general staffing services encompass temporary staffing, contract staffing, and permanent staffing solutions. The company’s comprehensive approach ensures that it can meet the diverse staffing needs of its clients, ranging from short- term project-based requirements to long-term strategic hires. The study explores how Quess Corp tailors its services to suit the specific demands of various sectors, including IT, manufacturing, retail, and healthcare. The company utilizes advanced technology platforms to manage its talent pool, ensuring quick and accurate matching of candidates to job requirements. This technological integration is a significant factor in Quess Corp’s ability to deliver high- quality staffing solutions efficiently
Article
Full-text available
We establish a significant and robust connection between asset growth (AG) and style investing by showing that past style returns constructed based on AG and size jointly predict future stock returns significantly. Motivated by this notion, we propose a style momentum strategy based on AG and size and find that it dominates price momentum and size-BM style momentum in generating momentum profits. We examine two explanations for this predictability, including risk exposure to common risk factors and the limited-attention theory. Empirical evidence shows that the AG-size style momentum profit is induced because investors neglect the AG-size style performance, consistent with the limited-attention explanation, but not risk exposure to the investment factor. Further, we show that the profit of the AG-size style momentum is robust to different time periods partitioned by several time-series predictors.
Article
For over half a century, financial experts have regarded the movements of markets as a random walk--unpredictable meanderings akin to a drunkard's unsteady gait--and this hypothesis has become a cornerstone of modern financial economics and many investment strategies. Here Andrew W. Lo and A. Craig MacKinlay put the Random Walk Hypothesis to the test. In this volume, which elegantly integrates their most important articles, Lo and MacKinlay find that markets are not completely random after all, and that predictable components do exist in recent stock and bond returns. Their book provides a state-of-the-art account of the techniques for detecting predictabilities and evaluating their statistical and economic significance, and offers a tantalizing glimpse into the financial technologies of the future. The articles track the exciting course of Lo and MacKinlay's research on the predictability of stock prices from their early work on rejecting random walks in short-horizon returns to their analysis of long-term memory in stock market prices. A particular highlight is their now-famous inquiry into the pitfalls of "data-snooping biases" that have arisen from the widespread use of the same historical databases for discovering anomalies and developing seemingly profitable investment strategies. This book invites scholars to reconsider the Random Walk Hypothesis, and, by carefully documenting the presence of predictable components in the stock market, also directs investment professionals toward superior long-term investment returns through disciplined active investment management.
Article
The law which created the Department of Energy (DOE) also established within the Department an Office of Inspector General (IG). This office has statutory responsibilities relating to the promotion of efficiency and economy and the prevention or detection of fraud and abuse in the programs and operations of the Department. The first sections of this report take note of the relatively short time that the current senior IG officials have been on the job, and describe the office organizational structure that the new management team created in the last half of 1978. The next section discusses in some detail the most critical problem, the lack of sufficient staff to discharge the full range of statutory responsibilities. Subsequent sections deal with the activities of audits, investigations, and inspections units during 1978. Examples of significant problems encountered and corrective actions taken are given. The question of what is needed for IG to play a true leadership role in the Department's overall audit effort is also addressed. Then Departmental compliance with IG recommendations and the DOE program areas of unusually high vulnerability are discussed. Next, staff training efforts and a legal challenge to the subpoena power of the IG office are described. Finally, advance planning and some important IG goals for the coming year are addressed. (RWR)
Article
This Article proposes the replacement of securities fraud class actions for "fraud on the market" with an enforcement regime administered by the securities exchanges. It discusses the social costs of fraud in secondary trading markets and the respective roles of compensation and deterrence in controlling those costs. The expense and ineffectiveness of securities class actions in achieving deterrence are explained. An alternative regime enforced by the exchanges is outlined, and the incentives of exchanges to enforce anti-fraud prohibitions are analyzed.
Article
The aggregate portfolio of actively managed U.S. equity mutual funds is close to the market portfolio, but the high costs of active management show up intact as lower returns to investors. Bootstrap simulations suggest that few funds produce benchmark-adjusted expected returns sufficient to cover their costs. If we add back the costs in fund expense ratios, there is evidence of inferior and superior performance (nonzero true α) in the extreme tails of the cross-section of mutual fund α estimates.
Article
We survey the literature analyzing the price formation and trading process, and the consequences of market organization for price discovery and welfare. We offer a synthesis of the theoretical microfoundations and empirical approaches. Within this framework, we confront adverse selection, inventory costs and market power theories to the evidence on transactions costs and price impact. Building on these results, we proceed to an equilibrium analysis of policy issues. We review the extent to which market frictions can be mitigated by such features of market design as the degree of transparency, the use of call auctions, the pricing grid, and the regulation of competition between liquidity suppliers or exchanges.