Survey: Even In A Ripping Bull Market, New Stock Traders Are Struggling

The combination of an economic lockdown, three rounds of government stimulus payments and the rise of trading apps like Robinhood created a perfect storm for a boom in retail trading activity in 2020. A new survey of more than 2,000 trading app users conducted by Travis Credit Union revealed some insight into the identity of these new retail traders, how they have performed up to this point and which trading apps are their favorites.

The survey found that a sizable 57% of people using trading apps started trading within the past year. Likewise, 57% of those surveyed said they believe the boom in retail trading activity is good for the market, whereas only 10% of trading app users see it as problematic.

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While the number of retail traders has skyrocketed in the past year, the survey found many of these new traders aren’t putting much money into the market just yet. In fact, 69% of trading app users say they have invested less than $5,000, while about 25% have invested $500 or less.

Most Popular Apps: Robinhood has been the controversial poster child of the pandemic-fueled trading app boom. Even after Robinhood got a lot of negative press related to restrictions it implemented on GameStop Corp. GME trading in February, Travis Credit Union said 39% of trading app users still prefer Robinhood’s app over the competition. The Morgan Stanley MS E*TRADE app was a distant second at 19% followed by WeBull at 12%.

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The survey revealed some potentially troubling trends as well. One out of four traders surveyed said they have little or no education in investing strategy. In addition, while the SPDR S&P 500 ETF Trust SPY has generated a total return of 61.9% over the past year, 39% of trading app users said they did not turn a profit in the past 12 months, and 5% of users say they lost “a lot” of money in the market.

Benzinga’s Take: The middle of a ripping bull market is the easiest possible time to make money investing. If you are one of the many new retail traders who has struggled to turn a profit in the past year, there’s no better time than now to seek the advice of a professional financial advisor when it comes to managing your portfolio.

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