“Thinking Like a Trader” May Diminish Emotional Reaction and Aversion to Loss


The late 1990s saw the rise not only of the NASDAQ, the Dow, and the S & P 500, but also of amateur traders-individuals not formally trained to work in the unpredictable world of the stock market-to complement seasoned professionals. Beyond the differences in their credentials, a study led by researchers at the California Institute of Technology (Caltech) and New York University suggests that taking the perspective of a professional trader may alter the emotional reaction to losing money and result in different choices. Their findings appear in the latest issue of the Proceedings of the National Academy of Sciences (PNAS).