Fidelity Investments®, a leader in helping individuals research and invest in the financial markets, today released research that shows active investors and active traders1 derive on average 18 percent of their annual income from trading activities, but more than three quarters (78 percent) say they enjoy trading for other reasons. The survey also reveals the traits these traders consider key to their investing success, and what they would do differently if they could start over.
Beyond investment gains, traders find motivations in the following activities:
- Fifty-four percent enjoy discovering new opportunities (“the thrill of the hunt”).
- Fifty-three percent enjoy learning new investing skills.
- Many also enjoy engaging in social activities, including more than half who share news of their investing “wins and losses” with friends and family (59 percent share wins, 52 percent share losses), and half who seek guidance from trading peers.
“This research confirms the obvious satisfaction traders receive when generating cash from their activities, but it also highlights their desire to learn new skills and to share, teach and mentor others,” said James C. Burton, president of Fidelity's retail brokerage business. “As a leading online broker, Fidelity understands traders' range of motivations and offers specific tools to help them achieve their objectives, including an online Learning Center, institutional-grade backtesting2, and innovative stock and ETF research.”
Keys to Investing Success
Fidelity asked what traits traders thought were most responsible for their investing success, and the top three answers were:
- Consistency (53 percent): being able to set a strategy and stick to it without getting emotional
- Curiosity (45 percent): always reading, watching and researching
- Flexibility (45 percent): adapting strategies to changing market dynamics
The recognition of when to adapt strategies was evident during the past year. For example, while the majority (54 percent) say they are long-term investors, the trend is toward shorter-term investing, with almost half (46 percent) describing themselves as short-term investors today versus just 37 percent a year ago.
Traders say that if they could start over, their top three changes would be to:
- Seek more formal training
- Conduct more research on specific stocks
- Develop better exit strategies, including when to use stop loss orders and when to take profits
The survey also found that 4 out of 10 traders (39 percent) say avoiding critical losses is more satisfying than maximizing returns.
On Fidelity.com in 2011, unique visitors to Fidelity's research pages increased 17 percent, compared to 2010.
“Investors are making great use of our detailed research pages and conditional orders, showing they are engaged and following their own advice on how to hedge against market volatility,” added Burton. “In addition, the survey found that of the traders who changed their trading frequency in the past year, 87 percent said market volatility was the reason.”
The survey also found that financial discipline starts at an early age and helps the respondents become successful traders:
- Sixty-two percent say they were more entrepreneurial than their peers in childhood
- Eighty-three percent say they were more disciplined with money than their peers in their teenage years
- Sixty-seven percent say they began earnestly saving for retirement before most of their peers in young adulthood
About the Study
Versta Research, an independent research firm, conducted the “Beyond ROI” research study online for Fidelity Investments between Sept. 22 and Oct. 3, 2011 with 519 total investors who have a self-directed brokerage account, and who trade stocks, ETFs and/or options. Respondents included 309 active investors who trade 36-119 times per year and 210 active traders who trade 120 or more times per year.
About Fidelity Investments
Fidelity Investments is one of the world's largest providers of financial services, with assets under administration of $3.4 trillion, including managed assets of $1.5 trillion, as of Dec. 31, 2011. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.
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1 Survey respondents included 309 active investors who trade 36-119 times per year and 210 active traders who trade 120 or more times per year.
2 Investors in households that place 120+ stock, bond, or options trades in a rolling twelve-month period, plus $25,000 in assets across their eligible Fidelity brokerage accounts are eligible for Wealth-Lab Pro®.
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