There is a large amount of speculation on the effect of IBD on trading performance since the introduction of FID. The average trade by the long-term IBD investor on the daily volume and frequency of daily trades suggests that IBD has a good price to earnings ratio. FID has some evidence that IBD has a negative price/earnings ratio with a correlation of -0.44. Since the IBD trader is not making money, the effect of IBD on trading performance would seem to be insignificant over the long term.
The effect on trading volatility also is debatable (see, e.g., Stigella et al., 2011; Zimmet et al., 2013). Trading volatility is determined solely by supply and demand factors and can fluctuate very quickly. In addition, trading is subject to supply shocks so that the cost of trading is a function of fluctuations in that price. The price of bitcoin has risen significantly in recent weeks so that a small decline in trading volatility may have a net negative effect on the cost of trading.
A second potential factor that contributes to the cost of trading is the cost of buying into an existing trading platform. The reason prices are higher for many platforms and even trading desks is more likely to be explained by their higher fees and commissions than increased trading volumes. It is difficult to determine the relative benefits to investors depending on whether an equity or an exchange traded product or an online trading platform is used to trade. Thus market efficiency would have to be estimated to determine whether there is a trade between an equity ETF and a platform. In contrast, the cost of trading between an equity and a trading platform is more likely influenced by the cost of the platform in terms of operational costs and liquidity; however, many platforms are open-ended and therefore may not be cost-efficient.
Investors should avoid excessive risk tolerance
Investors should also take into account the potential cost to themselves through excessive market volatility and the need to be able to manage their own risk profile to avoid becoming overweight in a stock.
The potential impact on investor profits or losses is not immediately apparent. Stock market volatility is one of the factors that drives price movement and market forces, such as stock splits, tend to have an impact on market participants. Therefore stock market volatility may be a factor influencing the ability of investors to make optimal profits or losses. In addition, market forces can have an impact of reducing an investor’s chances of being successful, such as negative market reaction or speculation, to a less than satisfactory
best swing trading technical indicators, best stocks for swing trading 2020, swing trading indicator strategies, swing trading software signals catalog online, short swing trading definition francais dictionnaire