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I. 93% of traders quit within 5 years. (1)

II. There are traders that continue trading beyond the 10-year mark yet are unprofitable. (1)

III. Traders suffer from (3) money-losing habits: Sell winning investments while holding losers (disposition effect); Engage in naive reinforcement by learning from pleasurable past behavior & avoiding mentally painful behaviors; & Tend to hold undiversified portfolios. (3)

IV. Traders overestimate their skillset on average as "better-than-average" which leads to overconfidence & increased trading volume. (4)

V. Sensation seeking leads to  “overestimation” of skills and overconfidence in trading. (5)

VI. Overconfidence is linked strongly to whether or not an investor chooses to trade at all, & the majority of traders who begin overestimate their capabilities. (5)

VII. Traders fail to understand how expensive trading is and how impactful cost is on their profitability(6)

VIII. More than 75% of retail options trader volume is now in 0DTE contracts, which lose on average. (6)

IX. The disposition effect is present for individual and institutional investors (mutual funds, corporations, dealers, and foreigners). Individuals have the strongest disposition effect. (7)

X. Individual investor trading results in systematic and economically large losses. (7)

XI. The aggregate portfolio of individuals suffers an annual performance penalty of 3.8 percentage points. (7)

XII. Limiting trading hours mitigates retail investors’ tendencies to trade “too much,” leading to
improvements in portfolio performance.

XIII. A one-hour decrease in waking trading hours is associated with a 3.9 percentage point increase in investment performance. (8)

XIV. Retail investors with smaller account sizes cannot predict future price movements correctly, in the
sense that they buy future losers and sell future winners

XV. Retail traders are more likely to trade at round price increments or more prone to overreact to high market volatility. (10)

  1. Do Day Traders Rationally Learn About Their Ability? (2017) | Barber, Lee, Liu, Odean, Zhang

  2. Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors (2000) | Barber, Odean 

  3. The Behavior of Individual Investors (2011) | Barber, Odean

  4. Overconfidence and Trading Volume (2007) | Glaser, Weber  

  5. Sensation Seeking, Overconfidence, and Trading Activity (2009) | Grinblatt, Keloharju

  6. Retail Traders Love 0DTE Options... But Should They? (2023) | Beckmeyer, Branger, Gayda

  7. Just How Much Do Individual Investors Lose by Trading? (2008) | Barber, Lee, Liu, Odean

  8. Trading Hours and Retail Investment Performance (2023) | deHaan, Glover

  9. Understanding Retail Investors: Evidence from China (2021) | Jones, Shi, Xiaoyan, Zhang, Zhang

  10. Retail trading: an analysis of global trends and drivers (2022) | Gurrola-Perez, Lin, Speth

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