Why Do People Trade?
Journal of Applied Finance, Fall/Winter 2008, Vol. 18, Issue 2, pp. 37-50
Posted: 26 Jul 2012 Last revised: 29 Jul 2012
There are 2 versions of this paper
Why Do People Trade?
Date Written: July 28, 2012
Abstract
Besides trading to save, manage risk, and speculate, people trade simply because they find it entertaining. In a survey of 1,300 German discount brokerage clients, respondents who indicate that they "enjoy investing" and "enjoy risky propositions" trade twice as much as their peers. In contrast, standard motives for trading such as saving and rebalancing explain little of the variation in trading activity across investors. Entertainment appears to be a straightforward explanation for why some people trade much more than others and why active traders underperform their peers after transaction costs.
Keywords: Day Trading (Securities), Securities Trading, Individual Investors, Discount Brokers Stocks
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