A new survey of over 7,200 United Kingdom retail investors took a deeper look at when investors are doing their trading, and the results of those trades.
The survey was published in the Journal of Behavioural and Experimental Finance, with study co-author Dr Daniel Richards from the School of Accounting at RMIT University in Melbourne.
Key findings from the study include:
Investors on the stock market are most likely to sell their losses on Monday morning, despite that being a bad time overall to sell
Gains were sold during the week
Market returns are generally higher on Fridays than Mondays, indicating that sell-offs by individuals are motivated by mood, rather than hard data, while organisations rarely sell on a Monday
The research suggests that investor susceptibility to bias against selling losses is reduced when we have time to think about our investing choices
Individuals sell differently to organisations
Individuals trade high at the start, middle and end of the day, coinciding with arrival, breaks, and leaving work
Monday mornings and losses both have negative connotations, says Richards, so they ‘take out the trash’, resetting their coming week.