Active retail equity traders think the future is bright for equities, despite the ongoing debt ceiling issues and partial U.S. government shutdown.
Nearly 85 percent of active traders surveyed said they are confident that stock prices will either remain at or near their current levels or will rise over the next three to six months, according to a report from Charles Schwab.
An active retail trader is one who trades upwards of a 100 times per year and doesn’t close out his position at the day’s end, according to Kelli Keough, senior vice president of trading services at Charles Schwab. Active traders also trade upwards of 1/3 of their portfolio holdings. This compares to day traders who can trade thousands of times per year, end the trading day flat and trade everything they hold.
In its most recent “Trading Services Sentiment Survey” taken in September, Charles Schwab reports that 44 percent of traders surveyed said that despite geopolitical uncertainty and near-term risks such as the partial U.S. government shutdown, debt ceiling fight and prospect of tapering by the Federal Reserve they have a favorable view of stocks. This is compared to 38 percent who had a favorable outlook on stocks when the survey was last conducted in June.
These traders are similar in some respects to institutional traders in that they are not bothered by market volatility or increased volatility. Like their institutional counterparts, active traders view increased volatility as bringing more trading opportunities, Keough added.
“These traders see volatility as a friend,” she said.
In addition to reporting a positive outlook on the market, nearly all surveyed – 99 percent- describe themselves as having a “moderate to high tolerance” for risk when trading. In fact, more than 21 percent of those surveyed report a higher risk tolerance today than just one year ago.
“Against the backdrop of economic and geopolitical uncertainty, 55 percent of respondents say that the primary reason they trade is to take control of their finances,” Keough said. “With another 41 percent saying they trade primarily to generate income, we continue to see today’s trader taking a hands-on approach to engaging with the markets.”
The report also revealed that traders continue to evaluate trading opportunities while on-the-go or mobile. Slightly over 30 percent reported conducting stock research from a mobile device or tablet. Some traders are also are executing trades in equities and options via their mobile devices, Keough added.
“Clients also use the mobile app to check in on the market and their positions,” she said. “But they will also transact via the mobile device.”
Data from the Charles Schwab Trading Services Survey were derived from responses of participants in the broker’s virtual education event held on September 19.
