Teaching trading psychology and behavioural biases through simulation-based experiential learning in accounting and finance education

Behavioural finance is increasingly embedded in accounting and finance curricula internationally, yet comparatively little guidance exists on how to teach it effectively. This study addresses that gap by examining the extent to which simulation-based experiential learning enhances students’ perceived understanding of trading psychology and their recognition of the behavioural biases underlying their trading decisions. Drawing on Kolb's experiential learning framework, a structured teaching strategy integrating simulated trading, reflective surveys, trade-data analysis and guided self-diagnosis was implemented within a postgraduate finance module. Using a within-subjects design with 72 international postgraduate students, the study investigates susceptibility to self-attribution, overconfidence and loss aversion, and measures changes in perceived understanding before and after the experiential intervention. The results show that a substantial proportion of students exhibit all three cognitive biases during trading, and that the experiential learning sequence is associated with statistically significant improvements in perceived understanding across all three biases. Student evaluations indicate high levels of engagement and satisfaction, particularly among those with prior real-world trading exposure. These findings offer accounting and finance educators internationally an evidence-informed and practically replicable framework for making trading psychology discernible, meaningful and pedagogically actionable for students.