Open AccessAnalysis of Pre-existing Investment Behavior and Influence of Trading Apps
Author(s) -
Anish Guddati,
Dhruva Bhat
Publication year - 2021
Publication title -
journal of student research
Language(s) - English
Resource type - Journals
ISSN - 2167-1907
DOI - 10.47611/jsrhs.v10i4.2212
Subject(s) - overconfidence effect , disposition effect , casual , alternative trading system , investment (military) , status quo , business , equity (law) , behavioral economics , stock trading , investment banking , electronic trading , trading turret , algorithmic trading , stock (firearms) , trading strategy , finance , financial economics , open outcry , economics , stock market , market economy , psychology , law , context (archaeology) , horse , engineering , biology , social psychology , paleontology , political science , mechanical engineering , politics
The last few years have seen a rise in trading apps, and Robinhood is one trading app that has attracted millennials. This paper explores trading apps such as Robinhood and their role in providing financial inclusion and safe trading opportunities. This paper discusses investment behavior in the status quo, explaining overconfidence, sociability, and the disposition effect. Investment behavior can include the behavioral biases and common notions investors utilize for trading. Furthermore, this paper assesses the design and business model of Robinhood. Five expert investors were interviewed (such as a professor and other MBA graduates from Wharton School of Business, financial experts from private equity firms in the US and Mexico, and a JP Morgan investment banking professional), and five casual investors were interviewed to understand their opinions on investment behavior, certain trading apps, common criticisms of stock trading, and solutions to these concerns. The findings led to the conclusion that investment behavior is harmful in the status quo. Results did indicate that Robinhood does promote at least some dangerous behavior through excessive active trading and is one example of a problematic trading app through the 4th Industrial Revolution, but trading apps can only amplify behavioral biases most retail investors already display.