This study investigates the role of contextual cues in memory-based decision-making within high-stakes trading environments. Using trade records from a large Chinese brokerage firm, I show that an everyday contextual cue—geographic location—triggers the recall of previously traded stocks: when an investor returns to a city she has visited before, her probability of retrading stocks associated with that city rises by 2.1 percentage points under the most saturated specification (up to 12.2 percentage points under less saturated ones). The effect displays the signatures of similarity-based recall: it is diluted by intervening trading experiences, decays with the age of the memory trace, survives when the city is not the investor's home, is not explained by mechanical recency, and is present for orders submitted via both smartphones and PCs. I then examine an extreme-event cue, COVID-19 quarantine, and find a smaller and less robust effect; the interference and decay signatures are absent precisely for these strongly encoded traces, as the memory account predicts. Memory-cued transactions underperform: stocks bought upon the cue earn about 50 basis points less per week than stocks bought for other reasons on the same day. The study provides causal field evidence for memory-based theories, particularly similarity-based recall, in real-world trading.

This study investigates the role of contextual cues in memory-based decision-making within high-stakestrading environments. Using trade records from a large Chinese brokerage firm and a novel dataset on COVID-19 quarantines, we find that quarantine periods trigger the recall of previously traded stocks, increasing the likelihood of subsequent orders for those stocks. The observed patterns align more closely with similarity-based recall than with alternative channels. Welfare analysis reveals that these memory-induced trades lead to an annualized loss of approximately 70 percentage points for the representative investor’s portfolio. We also find evidence at the market level: when the geographical distribution of quarantine risks is recalled, the probability of recalling the cross-sectional stock return-volume distribution from the same day increases by 1.6 percentage points. This study provides causal evidence from a real-world setting for memory-based theories, particularly similarity-based recall, and highlights a novel channel through which COVID-19 policies affect financial markets.