Day trading frenzy to continue after the pandemic: Survey

Day trading frenzy to continue after the pandemic: Survey
Betterment surveyed 1,500 investors to analyze which pandemic-fueled behaviors are likely to continue, like day trading and meme stocks.
JUN 25, 2021

As the nation reopens and moves toward a sense of normalcy in the wake of the pandemic, surveys are still analyzing the behavior of the new investors who flocked to online brokerages in 2020

Day trading expanded in 2020 as shelter-in-place orders kept investors who were stuck inside and on screens all day looking for new ways to fill their time, according to a survey conducted between April 26 and May 3 of 1,500 investors released Thursday by Betterment

Half of the survey's respondents said they day trade investments, and nearly half of those day traders (49%) have been doing it for two years or less.

While most day traders indicated that their main reason for picking up trading was that they believed they could make more money in a shorter period of time (58%), many (43%) also indicated that it was because it is fun and entertaining. 

Of those who look to day trading for fun, more than half (52%) said it was to make up for the fact that the bulk of their other hobbies weren't available as a result of COVID-19.

These day traders also acknowledge that the pandemic played a key role in their market activity, with 54% saying they trade more often as a result of the pandemic, while 58% said they expect to day trade more as normal activities return and COVID-19 restrictions are lifted. Only 12% said they expect to trade less.

The rise of day trading was also fueled by people investing their stimulus checks. In fact, 91% of respondents said they received government stimulus checks aimed at helping the economy recover from COVID-19-related lockdowns, and 46% said they invested at least some of the latest checks, according to the survey. 

Increased day trading also moved issues around financial education front and center. While 61% of respondents said they rely on financial news websites to pick stocks to buy, 42% say they are influenced by social media, resulting in the power of meme stocks.

More than half (58%) are using less than 30% of their portfolio to actively trade individual securities or stocks. Nearly two-thirds also allow an adviser, either online or human, to manage a separate part of their portfolio.

A wave of young retail investors in the U.S. explored trading for the first time in 2020. More than 10 million new brokerage accounts were opened last year, according to the J.D. Power 2021 U.S. Self-Directed Investor Satisfaction study. 

As a result, more online brokers are interested in widening their reach to young investors by attracting them to learn about financial services before they even have a driver’s license. 

However, this new generation of investors also helped spark the GameStop trading frenzy earlier this year, drawing new attention to the financial literacy threat America has faced for years.

Latest News

RIAs need to visit universities to attract students
RIAs need to visit universities to attract students

RIAs need to find universities that offer financial planning programs and sponsor or host events, advisor suggests.

Orion deepens Capital Group alliance with ETF portfolio tie-up
Orion deepens Capital Group alliance with ETF portfolio tie-up

The leading wealth tech provider is helping more advisors access active ETF models through its exclusive partnership.

JPMorgan client who lost $50M amid dementia battle denied trial
JPMorgan client who lost $50M amid dementia battle denied trial

Case of once-wealthy family highlights risks, raises questions on firms' duties to sophisticated investors suffering cognitive decline.

Stifel loses huge $14.2 million arbitration claim linked to star Miami broker
Stifel loses huge $14.2 million arbitration claim linked to star Miami broker

“The evidence in this case was overwhelming,” says an attorney.

$9B Gateway Investment Advisers names Julie Schmuelling president
$9B Gateway Investment Advisers names Julie Schmuelling president

The move marks the culmination of a decade-long journey for the new leader at the Ohio-based RIA and Natixis affiliate firm.

SPONSORED Leading through innovation – with Tom Ruggie of Destiny Wealth Partners

Uncover the key initiatives behind Destiny Wealth Partners’ success and how it became one of the fastest growing fee-only RIAs.

SPONSORED Client engagement strategies, growth and retention in the down markets

Key insights from Gabriel Garcia on adapting to demographic shifts and enhancing client experience in a changing market