Who Trades Profusely? The Characteristics of Frequent Trading Individual Investors

18 Pages Posted: 13 Mar 2018

See all articles by Daniel W. Richards

Daniel W. Richards

York University - Faculty of Liberal Arts & Professional Studies

Gizelle Willows

University of Cape Town (UCT), Faculty of Commerce, Graduate School of Business, Students

Date Written: December 19, 2016

Abstract

Research has shown that investors trade too frequently and that this overtrading lowers investment return. This paper examines the characteristics of those investors that trade frequently. Using over three years of trading data of 7200 investors at a brokerage firm in the UK, descriptive statistics and multiple regression analyses were able to identify the predictive characteristics of investors that trade often. Most noteworthy is that trading frequency is positively skewed resulting in a small proportion of investors doing the majority of the trading with the highest cumulative value. These frequent trading investors tend to be male, younger and make use of multiple mediums of trading to trade. These mediums include the internet, the telephone, an advice team and use of stop losses.

Keywords: trading frequency; gender, age; trading medium;

JEL Classification: G11, G12

Suggested Citation

Richards, Daniel and Willows, Gizelle, Who Trades Profusely? The Characteristics of Frequent Trading Individual Investors (December 19, 2016). Global Finance Journal, Vol. 35, No. 2, 1, Available at SSRN: https://ssrn.com/abstract=3134230

Daniel Richards (Contact Author)

York University - Faculty of Liberal Arts & Professional Studies ( email )

Toronto, Ontario M3J 1P3
Canada

Gizelle Willows

University of Cape Town (UCT), Faculty of Commerce, Graduate School of Business, Students ( email )

Cape Town, Western Cape
South Africa

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