Experts Online: An Analysis of Trading Activity in a Public Internet Chat Room
Bruce Mizrach () and
Susan Weerts ()
Additional contact information
Susan Weerts: Rutgers University
Departmental Working Papers from Rutgers University, Department of Economics
We analyze the trading activity in an Internet chat room with approximately 1,300 participants. Traders make posts in real time about their activities. We find these traders are more skilled than retail investors analyzed in other studies. 55% make profits after transaction costs, and they earn $153 per trade. Traders hold their winners 25% longer than their losers. They have statistically significant alphas of 0.41% per day after controlling for the Fama-French factors and momentum. 38% of profits persist in the next year. Traders improve their skill over time, earning an extra $189 per month for each year of trading experience. They also gain expertise in trading particular stocks. Traders who raise their Herfindahl index by 0.1 raise their profitability by $46 per trade. 42% trade both long and short, with equal success rates, and almost double the profit per trade when short.
Keywords: behavioral finance; familiarity bias; day trading; experts; disposition effect (search for similar items in EconPapers)
JEL-codes: G14 G20 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Published in Journal of Economic Behavior and Organization 70, 2009, 266-81.
Downloads: (external link)
Journal Article: Experts online: An analysis of trading activity in a public Internet chat room (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:rut:rutres:200412
Access Statistics for this paper
More papers in Departmental Working Papers from Rutgers University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().