Mind the gap: Psychological barriers in gold and silver prices

Lucey, Michael E.; O’Connor, Fergal A.

doi:10.1016/j.frl.2016.03.009

Cited by 23 publications

(8 citation statements)

References 13 publications

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“…Different studies concluded that price barriers or at least significant deviations from uniformity also exist in other asset classes such as exchange rates (De Grauwe & Decupere, 1992;Mitchell & Izan, 2006), bonds (Burke, 2001), commodities (Aggarwal & Lucey, 2007;Lucey & O'Connor, 2016) and derivatives (Schwartz, Van Ness, & Van Ness, 2004;Chen & Tai, 2011;Jang, Kim, Kim, Lee, & Shin, 2015;Dowling, Cummins, & Lucey, 2016;Palao & Pardo, 2018). Overall, evidence of price barriers in various asset classes seems to be fairly robust.…”

Section: Previous Findingsmentioning

confidence: 99%

Are there Psychological Barriers in Asian Stock Markets?

Lobão¹,

Couto²

2019

AAMJAF

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We examine six major Asian stock markets for indication of psychological barriers at round numbers. We test for uniformity in the trailing digits of the indices and use regression and generalized autoregressive conditional heteroskedasticity (GARCH) analysis to assess the differential impact of being above or below a possible barrier. The strongest indication of barriers was found in the markets of South Korea and Taiwan. There is mild evidence of barriers in Japan and Hong Kong and the stock markets of Singapore and China exhibit only weak signs of psychological barriers. These findings challenge the notion that Asian markets are efficient and support the claim that technical analysis strategies can be useful in some of these markets.

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Section: Previous Findingsmentioning

confidence: 99%

Are there Psychological Barriers in Asian Stock Markets?

Lobão¹,

Couto²

2019

AAMJAF

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“…According to the market efficiency hypothesis, numbers should not have a preference for one another, and it is also impossible to have a lucrative strategy. But despite psychological barriers, some numbers will alter the process as soon as they are seen, and a lucrative plan can be developed in this case [12].…”

Section: Clusteringmentioning

confidence: 99%

Behavioral finance research of the Tehran Stock Exchange by mathematical round numbers in the Tehran Stock Exchange’s overall index

2023

RNA

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The formation of market interactions is directly affected by the decision-making of market players. This paper seeks to assess the presence of behavioral finance on the Iranian financial market as a factor influencing market participants' decisions. The current study evaluates the existence of behavioral finance on the Iranian capital market by focusing on the phenomena of "price clustering" in the total index of the Tehran Stock Exchange. It proposes a new criterion for identifying behavioral bias in the financial market. One of the reasons for the lack of uniformity in the distribution of data in the total index of Tehran securities is the propensity of individuals to make individual decisions based on the index of total securities of Tehran. People use the total index as a criterion for making decisions, and when the total index reaches round numbers, their purchasing and selling behavior changes. The results of the study validate the phenomena of price clustering in round numbers in Tehran's total stock index. In actuality, the lack of uniform distribution in the total index numbers of Tehran stock is an appropriate indicator of the existence of behavioral finance on the Tehran Stock Exchange. The main differentiating aspect of this study is the introduction of the overall index as a new measure compared to individual symbols for demonstrating behavioral bias in the financial market, which has been employed in previous studies.

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“…It is worth mentioning at this point that, in their investigation on psychological factors that affect precious metals markets, Lucey and O'Connor (2016) emphasize that 2011 was a year marked with high volatility for both the gold and the silver market. Furthermore, Pan (2018) in his study of bubble periods for precious metals markets, identifies two such periods for the market for silver; that is, the period between January-July 2008 and the period from November 2009 to January 2013.…”

Section: Net Directional and Net Pairwise Dynamic Connectednessmentioning

confidence: 99%