“Trying to predict these short-term moves — or worse, trying to base one’s investment strategy on predicting and timing such moves — has always been impossible, and in the modern landscape of high-frequency trading, massive algorithmic trading schemes, and now the social-media induced get-rich-quick flavours-of-the-minute being touted on Reddit and traded on RobinHood, we would argue that short-term strategies have become more hazardous than ever,” he said.
Playing the game
The participants were in a simulated digital trading environment and were given $10,000 in play money to make their investments.
Those who were awarded points in return for trading (points that had no real value) made almost four times as many trades as the control group.
The OSC is concerned about the increased volume of trades, given that, on average, this has a negative impact on investor returns.
While platforms often offer zero or low fees for trading, there are still benefits to them of higher trading volumes. They may receive commissions from market makers and frequency trading firms for the order flow, and interest on their own investments funded by client deposits.
