UNDERSTANDING BEHAVIOURAL FINANCE AND TRADING PSYCHOLOGY

Transcription

1 A practical experience in UNDERSTANDING BEHAVIOURAL FINANCE AND TRADING PSYCHOLOGY Tablet Optimised

2 We are in a new financial era where assert price valuations are driven less by fundamental factors, and more by behavioural expectations. This one day programme, focussing on the current market environment, highlights the impact of behavioural finance in 2016 and decision making within an environment of risk. Piers Curran - Head of Trading

3 HOW TODAY S MARKETS CAN BE DRIVEN BY A BEHAVIOURAL RESPONSE TO RISK. Uncertainty over asset price valuations and monetary policy guidance has never been higher; this module looks at how the decisions can be impacted by such an environment. The aim of this one day session is to introduce participants to the core concepts of behavioural finance and trading psychology, focussing on contemporary drivers of financial markets, the resulting impact on asset valuations and how individuals respond. Through a series of practical interactive examples and exercises participants will gain an understanding of how asset prices can be driven by human behaviour that may not always represent the valuation a purely fundamental approach to analysis may suggest. Candidates will then be introduced to the impact of trading psychology on decision making within an environment of risk, taking to their own trading desks and experience three market scenarios which highlight how their decision making processes are effected by emotional factors. The assessed variables of the trading session include the below, but we would expect to tailor these exactly to your institutions specification: Deviation of return Are returns close or disperse to the mean average of return? Variance Resilience Ability of the trader to mitigate positive or negative performance on future trading decisions Pragmatism Ability of the trader to book profit or take a loss on a trade close to the maximum potential profit or loss Discipline How fast does the trader rectify a mistake made on any size or limit breaches? Patience Time spent in winning or losing positions

4 A MORNING WITH CONTEMPORARY BEHAVIOURAL LEARNING INTRODUCTION Overview of the module Behavioural test and questionnaire Challenging the rationality of the behaviours that drive these goals: an introduction to fundamental analysis versus behavioural factors BEHAVIOURAL FINANCE: A CONTEMPORARY REVIEW A comparison of historical behavioural trends and contemporary asset price valuations Focus on China a unique case in retail equity volatility? Focus on oil comparing Peak Oil behavioural moves in 2008 to contemporary behavioural moves EXPLORING THE CHALLENGES OF BEHAVIOURAL FINANCE Basic decision making theory-biases of judgement and errors of preference Prospect theory Herd mentality Anchoring Confirmation bias and cognitive illusions Overcoming psychological performance barriers in practice Personality profiling using The Kolb s cycle for continuous improvement of personal approach to risk TRADING PSYCHOLOGY: A PERFORMANCE REVIEW Candidates take a personal assessment on personality traits to better understand their psychological make-up Performance review; candidates are taken through examples of Amplify Traders that have been affected by the psychology of performing under pressure Stress, The Kolb s cycle and continuous performance improvement

5 AN AFTERNOON OF TRADING WITH UNCERTAINTY AND RISK UNDERSTANDING GLOBAL INDICATORS Review: Contemporary market trends Preview: Economic data and market expectations PLATFORM DEMONSTRATION Non-assessed trade execution and application of basic technical tools TRADING SESSION ONE Candidates execute trades across asset classes with a strict limit on size of exposure but no limit on overall loss TRADING SESSION TWO Candidates execute trades across asset classes with a strict limit on size of exposure and strict limit on overall loss TRADING SESSION THREE After lunch candidates execute trades with significantly increased size of exposure and strict limit on overall loss TRADING SESSION FOUR Candidates log into a new licence showing large adverse positions in volatile and illiquid products SESSION REVIEW Candidates receive their results and heat map reports highlighting their performance variance

6 PERFROMANCE ANALYSIS Our technology records every decision candidates make, and the market environment in which they made them, helping them understand how they may have been effected be behavioural factors.

7 Our proprietary market simulations give candidates an unprecedented experience actually applying the key investment concepts being taught with real market data. As candidates progress through this unique practical day, performance at each stage is recorded and reviewed to give candidates a full insight into how asset prices really move. Truly a highlight of the training. The facilitators were incredibly prepared and the interface advanced. This was simply the most important part of the training. Kelly Burke - Bank of America Merrill Lynch Amplify Trading delivers practical market training in over 15 Universities in the UK