Overconfidence Bias And Trading Volume From Indian Stock Market By Vector Autoregression Testing

Overconfidence means excessive trading which is opposite concept of standard finance based onrationality phenomena and does not support Efficient Market Hypothesis. Therefore, the locus of the study is based on the interaction between trading volume and overconfidence bias. Empirically, daily data is used toprovide link between trading volume and return. The study used VAR Model and concluded that the past market returns influence trading activity of individual investor. Thus, we can conclude that overconfidence investors trade more than the others. The results hold key implication for investors, brokers, and policymakers for taking better trading decision.