An examination of the relationship between the disposition effect and gender, age, the traded security, and bull–bear market conditions

We analyze how gender and age, internal characteristics of retail futures traders—one that remains fixed while the other changes over a lifetime—and the security being traded and bull–bear market conditions, two external factors, are related to the disposition effect by separately tracking their trade-by-trade transaction histories over a period of close to six years on the Taiwan Futures Exchange (TAIFEX). We show that women and mature traders, compared with their male and younger counterparts, exhibit a stronger disposition effect. The effect is also stronger among traders who trade financial-sector futures contracts than among those who trade electronic-sector futures contracts. We further demonstrate that a bear market sees a stronger disposition effect.

► The disposition effect is related to a trader’s gender, age, the specific type of futures traded, and market conditions. ► Women and mature traders, compared with their male and younger counterparts, exhibit a stronger disposition effect. ► Traders who trade financial-sector futures contracts exhibit stronger disposition effect. ► A bear market sees a stronger disposition effect and this occurs mainly among men and younger traders.