Articles

Amaanullah Bhatti’s 2026 FX research explores how momentum can lose strength after a strong price move. The framework combines price location, VWAP deviation and a turning ADX to identify potential exhaustion and reversion toward fair value. While the approach offers an interesting way to study fading momentum, it remains a recent preprint and has not yet established a universally profitable trading signal.

Terrance Odean’s research reveals a common investor mistake: selling winning stocks too quickly while holding losing stocks for too long. This behavior, known as the disposition effect, shows how emotions and the fear of realizing losses can influence investment decisions. Odean’s study found that the stocks investors sold after gains often performed better later than the losing stocks they continued to hold, highlighting how psychological biases can reduce investment perform

Carol Osler’s research on stop-loss orders explains how clustered orders around predictable price levels can amplify market movements. When a price reaches these levels, multiple stop-loss orders may trigger together, creating additional buying or selling pressure. This can reinforce the original trend and produce a rapid “price cascade.” Her research provides a market-microstructure explanation for why seemingly small price movements can sometimes accelerate dramatically.

Bruno Biais, Larry Glosten, and Chester Spatt’s research explains how trades can influence prices in both temporary and lasting ways. A large order may temporarily move prices because of liquidity, inventory, and trading pressure. However, when a trade reveals new information, its effect can become persistent. This distinction helps explain price impact, liquidity, information asymmetry, and how markets continuously incorporate trading activity into prices.

Discover what Barber and Odean’s research reveals about trading psychology. Learn how overconfidence can lead to excessive trading, why investors often sell winners too early and hold losers too long, and how these behavioural biases can quietly reduce investment returns. A must-read for every new trader seeking to understand the psychology behind market decisions.

Prospect Theory by Kahneman and Tversky explains why traders often behave differently when facing gains and losses. We may prefer to secure profits quickly but take greater risks when trying to avoid a loss. Learn how loss aversion, reference points, risk-seeking behaviour and the certainty effect influence trading decisions.

Technical analysis can help traders identify market trends—but does it actually generate profits? Explore Mitra (2011)’s research on moving-average trading strategies in the Indian stock market, predictive ability, and transaction costs. A simple guide for new traders to understand what technical analysis can—and cannot—do.

Discover Kyle (1985), one of the foundational papers in market microstructure. Learn how insider information, order flow, liquidity, noise trading, and price impact interact to shape stock prices—and why understanding how markets process information can help new traders make better decisions.

Jegadeesh–Titman (1993) revealed a powerful market pattern: stocks that performed well in the past 3–12 months tended to keep outperforming, while recent losers continued to lag. This momentum effect challenged traditional market efficiency and highlighted the role of investor behavior, information underreaction, and persistent price trends.

Brock, Lakonishok & LeBaron (1992) tested simple technical trading rules such as moving averages and trading-range breakouts using nearly 90 years of Dow Jones data. They found that buy signals were followed by higher returns than sell signals, challenging the idea that stock prices move entirely randomly and suggesting that historical price patterns may contain useful information.