South SFV Today

In a recent study conducted by Ed deHaan, a professor of accounting at Stanford Graduate School of Business, and Andrew Glover of the University of Washington, it has been found that having more time to trade may not necessarily be beneficial for retail investors.

The research focused on the impact of trading hours on the performance of retail investors in the stock market. Contrary to the belief that extended trading hours could level the playing field for retail traders, the study revealed that having limited access to the market could actually lead to better-performing portfolios.

According to deHaan, retail traders who do not participate in the morning trading rush tend to fare better. The study analyzed data from households in different time zones across the United States and found that as traders moved west across each time zone, there was an improvement in portfolio performance.

While some may argue that longer market hours offer more opportunities, the research suggests that increased access could potentially lead to financial losses for retail investors. DeHaan highlighted the importance of understanding the risks involved in active trading and recommended a more cautious approach, such as investing in diversified exchange-traded funds for more reliable returns.

The study also emphasized the behavioral biases that investors may face when trading individual stocks or cryptocurrencies, likening the investment process to gambling. DeHaan advised investors to be prepared for potential losses and to approach stock trading with a mindset similar to that of a casino.

In conclusion, the findings of the study caution against the assumption that extended trading hours would benefit all retail investors. Instead, it emphasizes the importance of informed and strategic investment decisions to safeguard the financial well-being of individuals in the stock market.