LAUSR

Abstract This study establishes a link between the disposition effect present in the transactions of exchange-trade certificates (ETC), investor education and different dimensions of trading experience. Using transaction-level data of 35,508 individuals from a major Portuguese financial institution spanning from 1998 to 2017, we show that ETC investors exhibit, on average, strong disposition effect. Individuals are 151% more likely to sell an ETC when that financial instrument trades at a paper gain than when it trades at a paper loss. The level of education of individuals attenuates the disposition effect, with individuals holding a university degree presenting weaker disposition effect. The number of transactions of securities (and of derivatives in particular) and mutual fund trading experience also lessen the disposition effect. Nevertheless, neither education nor experience fully offset the disposition effect. Finally, the impact of experience as a moderator of the disposition effect is stronger amid most educated individuals.