Institutional investors were often on the other side of the trade and were able to benefit from subsequent price rises.
Onishchenko believed there were several reasons why retail investors made that mistake.
"First of all, retail investors don't have sufficient knowledge about how a share is being valued and they use shortcuts in their investment decision-making process.
"They use the easily available information to make their decisions. I don't think they realise they anchor to the past year price."
She said when retail investors logged into their brokerage accounts they could see the current quote for the share price and alongside the 52-week high price.
"We suspect that is where this anchoring decision is coming from.
"They look at the past 52-week price high and they see where it is traded today and if it approaches this 52-week high they think 'oh it has gone too far, we need to sell it' and they ignore any good news which comes out at that time in the market.
"Their attention is being grabbed by some information which is not necessarily relevant to the value of the share today."
Conversely, for a stock trading well below its 52-week high, retail investors failed to sell the stock in response to bad news.
Onishchenko said retail investors appeared not to pay much attention to news which might change fundamental information about the company.
"It's a bit more complicated to know how this particular news is going to impact a company's cashflow therefore they use some other metrics which they believe are good enough to make an investment decision.
"It is much more complicated to follow the company like professional analysts do. They watch the company on a daily basis, they know how the sector trades, they know the competitive advantage of the business and they know how this particular news is going to influence the share price and whether it is actually going to change the fundamental view of the company and if they should sell it or hold it anyway even in the presence of the bad news - it is much more complex and beyond retail investors' expertise."
Onishchenko said there were two ways these biases could be overcome.
"We would really encourage brokerage firms to educate investors before they open their accounts. They could have to go through several short videos exposing them to what are the behavioural biases that we suffer from when we make our money decisions and how it influences us.
"So they become aware and when they learn what they could have done wrong, then they won't do it next time."
She said the other option was to get help from a professional investment adviser.
"If they don't have an education then approach an investment adviser. It would be much better for them, because otherwise they will consistently lose when they trade."
Onishchenko said the research came about after NZX chairman James Miller came to Otago University to carry out some guest lectures.
"We had a chat and I said to him we have several ideas but we don't have the data.
"He was very excited to hear that and very interested in research related to retail investors in New Zealand and he was very supportive. He suggested his own ideas and he gave us the data."
The researchers will also use the data to undertake several other projects including looking at how retail investors trade during extreme market conditions. It will look at two events: the Global Financial Crisis and trading during Covid.
"We want to know whether retail investors panic sold when the market was falling and how much losses they suffered and we will also look at how retail investors traded during the Covid period - how their trading was altered when there announcements about the lockdown , about reopening of the economy and all those events related to Covid."
She said they hoped to have the research completed in early 2022.
