Our brains tend to work in predictable ways when dealing with numbers. For example, if you’re trying to set a price at which you will sell your stocks, you’re more likely to set that price at a round number ($1.00 or $1.50 rather than $1.37) or at a number that means something to you personally (perhaps $1.86 if you were born in 1986).
Finance professor Nikola Gradojevic is studying how this and other psychological barriers influence investors’ behaviour and affect their decision-making, as well as effects on public policies. “This topic falls under behavioural finance, one of my areas of interest,” says Gradojevic.
He’s also conducting research on aspects of high-frequency trading. According to Gradojevic, many investors trade their stocks infrequently: they buy or sell once a week or less often. Other investors, usually those who trade stocks professionally, use computers to make thousands of trades each day. While the stock prices only change a tiny amount each time, a high-frequency trader hopes to profit from the volume.
Gradojevic hopes to learn more about how these two types of traders affect each other. For example, does the high-frequency trader actually “steal” some of the potential profit from the low-frequency trader? Or can a low-frequency trader who suddenly buys or sells a large amount of a particular stock affect the profits of the high-frequency trader?
Gradojevic grew up in Serbia and completed an undergraduate degree in electrical engineering there. He was awarded a full scholarship to complete a master’s in economics at the University of Essex in the U.K. and Central European University in Hungary, and then earned a PhD in financial economics from the University of British Columbia. He’s taught at Lakehead University and other institutions around the world.
“The future of education is multi-disciplinary,” he says. “You need to be able to approach real-world problems from many different angles, not just to tightly focus on one specific feature.”