Stock Trading Ideas are Too Complex for Individuals?

Many individual stock traders often find it difficult to get into the game, especially when they compete against institutional traders and professional traders. The fear and confusion of many individuals leaves them disinterested or hesitant to trade stocks. It inhibits them from even trying to increase their money on the stock market. Financial advisers and experts sometimes merely recommend that individuals simply invest in mutual funds or index funds. In their opinion, stock trading ideas are too complex for individuals.

Two professors named Brad Barber and Terrance Odean recently conducted a study of individual investors. They found that generally the stocks that individuals buy underperform. Yet, the stocks that individuals sell will then go on to outperform. In addition, it was discovered that increases in the frequency of stock trading by an individual will result in increasingly worsening results.

Photo source Jun Acullador