Amateur investors lost big during pandemic

New research by London Business School academics Dr Svetlana Bryzgalova, Professor Anna Pavlova and PhD candidate Taisiya Sikorskaya, and reported by Bloomberg, shows amateur investors lost more than US$1 billion trading options during the pandemic.

The authors identified several factors leading to the losses, including a possible failure by novice investors to fully account for indirect trading costs when trading through zero-commission platforms such as Robinhood.

“The more they trade, the more they lose because of these bid-ask spreads - every time, they have to pay the round-trip trading costs,” Professor Pavlova told Bloomberg.

Read more about the research on Bloomberg.