Moderating roles of external locus of control and knowledge expertise on the relationship between superstitious belief and stock trading performance

Abstract

     The role of superstitious beliefs on stock trading performance was explored. Survey data were collected from 226 respondents, consisting of independent stock traders who attended a national investment fair in Bangkok (n = 145) and professional stock traders at two leading financial institutions in Thailand (n = 81). The respondents were obtained through convenience sampling. The results from partial least squares regression analysis showed that the contribution of superstitious beliefs on stock trading performance was strongly moderated by the external locus of control and knowledge expertise in stock investment that individuals exhibited. In particular, the positive association between superstitious beliefs and stock trading performance only presented in individuals with a high external locus of control, but for those with a low external locus of control, higher superstitious beliefs were associated with lower trading performance. Moreover, the positive association of superstitious beliefs only presented in those with high knowledge expertise in stock investment; for those with low knowledge expertise in stock investment, more superstitious beliefs lowered trading performance. The overall findings support the role of superstitious beliefs in helping individuals enhance confidence and a sense of control. However, superstitious beliefs can be harmful when individuals just cling onto it but do not develop sufficient knowledge and skills that are more important for them to achieve the desired goal. In this case, superstitious beliefs may be nothing more than "blind faith" that rarely brings sustainable success to individuals.