A study of behavioral factors and the effect of conservatism bias on investor's trading behaviors

Implication of classic finance and rational investors had been the crucial basics of finance. The context of Classic finance explains rules which investors were dealt with in a rational market.The assumption of rational investors, as a simple model of human behavior, is the main foundation of classic finance and almost all the classic financial theories such as portfolio theory, capital asset pricing model, efficient market theory, agency theory and etc., are affected by.But in recent years, the emergence of phenomena such as speculative bubbles in the stock market, excessive price volatility, as investors over react or under react to new information, and many other anomalies that are against efficient market theory, create a new paradigm known as “behavioral finance ". Behavioral models investigate investor’s bias in response to the reality and suggest that the reaction of investors to the information can be different.This research studies one of the effective behavioral factors on trading strategies with the aim of knowledge for understanding momentum or reversing prices.