 Measuring speculation beyond day trading and bets on lottery-like stocksWerner De Bondt, Rudy De Winne and D’Hondt, Catherine International Review of Financial Analysis, 2024, vol. 96, issue PA Abstract: We offer a new metric of stock market speculative intensity: the proportion of share purchases that are swiftly reversed, i.e., sold within a short time window. An example of this metric is a 14-day trading horizon. We use it to identify retail traders who aim for quick profits. Based on a vast set of trading accounts in Belgium (2003−2012), we observe that the scale of quick round-trip trading is far above what would be seen with a single focus on day trading. Simply put, amateur speculation is not limited to day traders. Measuring speculative trading through quick round-trip transactions delivers a variety of insights. Amateur speculators are more likely to be male, younger, with lower sophistication and lower levels of wealth. They hold concentrated portfolios and focus their efforts on only a few stocks at a time. They earn low returns, and they are prone to the disposition effect. They are liable to bet on lottery-like stocks, and their passion for trading is persistent. Keywords: Amateur speculators; Retail traders; Short-term trading; Day trading; Gambling (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:96:y:2024:i:pa:s1057521924005647 DOI: 10.1016/j.irfa.2024.103632 Access Statistics for this article International Review of Financial Analysis is currently edited by B.M. Lucey More articles in International Review of Financial Analysis from Elsevier |
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