Emotion regulation and trader expertise: heart rate variability on the trading floor

Fenton-O'Creevy, Mark; Lins, Jeffrey; Vohra, Shalini; Richards, Daniel; Davies, Gareth and Schaaff, Kristina (2012). Emotion regulation and trader expertise: heart rate variability on the trading floor. Journal of Neuroscience, Psychology and Economics, 5(4) pp. 227–237.

DOI: https://doi.org/10.1037/a0030364

Abstract

We describe a psychophysiological study of the emotion regulation of investment bank traders. Building on work on the role of emotions in financial decision-making, we examine the relationship between market conditions, trader experience and emotion regulation whilst trading, as indexed by high frequency heart rate variability (HF HRV). We find a significant inverse relationship between HF HRV and market volatility and a positive relationship between HF HRV and trader experience. We argue that this suggests that emotion regulation may be an important facet of trader expertise and that learning effects demonstrated in financial markets may include improved emotion regulation as an important component of that learning. Our results also suggest the value of investigating the role of effective emotion regulation in a broader range of financial decision-making contexts.

Keywords: Emotion Regulation, Financial Decision-Making, Market Volatility, Trading, Heart Rate Variability

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