Statistical Trading Analysis

The effect of position-sizing was studied during simulated stock
trading, by measuring the performance of participants recruited
from Uppsala University. Information about the study was given in
a few classes among economics, law, and psychology majors. On
public bulletin boards within the departments, notes were posted
and anyone interested could sign up during September/October
2000. No prior knowledge of trading/investing was required.
Participants were notified by phone how they would participate
and that the remuneration could be lost if performing poorly.
A total of 62 students were randomly assigned into three groups:
20 + 20 were assigned to the three-hour lecture on positionsizing,
and 22 were assigned to the control group. The participants
were asked to state their knowledge of trading/investing in the
stock markets as no knowledge, some knowledge or active
Of the 40 participants assigned a lecture, 3 did not show up at the
lecture and 5 were not able to participate in the simulations (e.g.,
because of illness or non-compliance). Two forms of the
participants in the control group were suspected to have been
tampered with, and these two results were therefore not included
in any computations. Totally, 10 individuals (16%) were dropouts,
and the remaining 52 participants, 18 female and 34 male students
(see Table 2), were ranging in age from 19-56 years (mean age =
24.9 years).
Table 2. Distribution of gender and prior knowledge of
trading/investing (N = 52)
Gender/Knowledge Treatment Control
Female 8 10
Male 24 10
Active Traders 5 4
Some knowledge 8 6
No knowledge 19 10
The participants were randomly assigned into three groups. Two
experimental groups and one group acting as a control. The
experimental groups were given a three-hour lecture at separate
occasions and, in order to minimize the effect of the lecturer, by
separate lecturers. The curriculum was the same for both groups.
Both lecturers used the same content, including position-sizing, risk
management, and psychological biases, according to Appendix 1.


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