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Who Is Successful in Foreign Exchange Margin Trading? New Survey Evidence from Japan

Author

Listed:
  • Bernd Hayo

    (Marburg Centre for Institutional Economics (MACIE), School of Business and Economics, Philipps-Universität Marburg, 35037 Marburg, Germany)

  • Kentaro Iwatsubo

    (Graduate School of Economics, Kobe University, Kobe 657-8501, Japan)

Abstract
We use a 2018 survey of FX margin traders in Japan to investigate which key factors influence their trading performance: socio-demographic and economic situation, investment strategy and trading behaviour, and/or financial literacy. We study this question using general-to-specific modelling and impulse-indicator saturation. First, the data show that variables from all three groups are significant predictors of traders’ performance. Second, we find that older traders and those without a specific trading strategy demonstrate lower performance. Performance is higher for those who trade greater amounts, rely more on fundamental analysis, and report having profitable FX trade skills. Third, respondents’ subjectively stated claim of having FX trade skills is based on a more advanced understanding of FX trading and a reliance on professional advice. Neither objective financial knowledge nor over/underconfidence play a noteworthy role in the performance of margin traders.

Suggested Citation

  • Bernd Hayo & Kentaro Iwatsubo, 2022. "Who Is Successful in Foreign Exchange Margin Trading? New Survey Evidence from Japan," Sustainability, MDPI, vol. 14(18), pages 1-14, September.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:18:p:11662-:d:917068
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    References listed on IDEAS

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    More about this item

    Keywords

    foreign exchange margin trading; investor survey; foreign exchange trading profits; financial literacy; Japan;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G40 - Financial Economics - - Behavioral Finance - - - General

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