Individual Investors’ Stock Trading Behavior at Amman Stock Exchange

Abstract

Many studies investigated the factors that affect investments in stock trading in developed and developing countries, but the investors' characteristics are still not well documented. The Amman Stock Exchange being a small exchange does not use stock trading programs that require advanced mathematical models. Most stock trading is executed the traditional face-to-face way. Therefore, stock trading depends on individual traders’ judgments. Investors’ trading behavior is influenced by several behavioral factors. The present paper seeks to identify these factors and their influence on investors' financial exposure. Towards this end the multiple regression technique was utilized. Four explanatory variables were identified. The investor’s age, his/her use of the internet and his/her formal level of education were statistically significant (at 1% or 5% level) with positive signs. The broker variable was highly significant (less than 1% level) and had a negative sign implying the need for professionally trained and experienced analysts to win clients’ trust.