History matters: How short-term price charts hurt investment performance
Recommended citation: Borsboom, C., Janssen, D. J., Strucks, M., & Zeisberger, S. (2022). "History matters: How short-term price charts hurt investment performance." Journal of Banking & Finance., 134, 106351.
Published in: Journal of Banking & Finance
In this paper, we uncover the hidden pitfalls of charts that only display a short horizon of past prices, using a controlled experiment. We reveal that these seemingly innocent visualizations can provoke individuals to react more strongly to transitory price fluctuations, leading them to trade more. This unexpected behavior increases trading costs and harms overall investment performance, a problem that is mitigated when long-horizon charts are used instead.