July 5, 2022

Amateur Investors Rode the Bull Up. Now the Bear Looms.

Though the stampede to open new brokerage accounts has abated, retail trading activity remains well above prepandemic levels — a testament to the sheer number of people who took up stock trading as the coronavirus upended normal life. Retail brokerages saw two to three times as many account openings in 2020 compared with the year before — a pace that accelerated through the first half of 2021, according to estimates by JMP Securities.

Thomas Mason, a senior research analyst at SP Global Market Intelligence, said that despite the market’s recent tumbles, retail traders aren’t necessarily panicking. “They seem to be reallocating, shifting out of high-risk growth stocks into less risky investments,” he said.

Even if their tastes have changed, they are a slice of the trading population that’s still showing an appetite: As of the end of April, TD Ameritrade, part of Charles Schwab, said its retail customers were still buying more stocks than they were selling, according to its Investor Movement Index, which measures retail investors’ behavior and sentiment, based on a sample of accounts that completed trades in the past month. Their interests have been shifting toward less volatile names and more stable holdings like shorter-term bonds, the firm said.

Ms. Hellmann, who started actively trading in the early days of the pandemic, said she was sticking with it, learning more and refining her approach as she goes along.

She often rises at 3 a.m. and turns on CNBC to begin plotting her strategy for the day, which involves studying stocks’ price movements, a process she compared to learning to catch a softball — watching its arc, then trying to figure out the physics of where it will land. “That is what I’m doing with price and volume,” she said.

Article source: https://www.nytimes.com/2022/05/18/your-money/stock-market-crash-trading-retail.html

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