Schwab's Active Trader survey Overlaps with TradeKing's

It’s a trend—active traders think the market is going to go sideways, but believe the worst of the bear attack is over.  The following is a press release I received yesterday from Schwab.

Oh and the Electronic Investor written by Yrs Trly is finally back in print this week.  The text will be posted here on Saturday though it can be seen now on the Barron’s Online site even if you are not a subscriber.

SCHWAB STUDY FINDS ACTIVE TRADERS ARE OPTIMISTIC ABOUT THE MARKET DESPITE RECENT VOLATILITY

SAN FRANCISCO, May 14, 2008 – After one of the most volatile quarters in recent history, Charles Schwab today released details of the Charles Schwab Active Trader Sentiment Survey designed to take the pulse of nearly 500 individual investors who trade frequently. Among the findings: 

- Nearly half of the respondents (49 percent) were 55 years or older.
- 76 percent expect the S&P 500 to rise or trade sideways in the next six months.
- Eight-in-ten respondents intend to maintain or increase the number of trades they make in the next six months.
- Four out of ten traders surveyed now regularly trade options, 95 percent of which expect to maintain or increase their options trading during the next six months.
- Half of the respondents view volatility as an opportunity in the marketplace.

“Traders are still very engaged with the market and are finding opportunities despite a difficult environment so far this year,” said Richard Levine, vice president of Schwab Active Trader. “These sophisticated, experienced investors have the ability to trade in up and down markets.  We remain committed to helping traders be successful in all market environments by offering powerful trading tools, knowledgeable trading specialists and educational seminars on everything from stock selection to risk management.”

Trader education has become particularly relevant with the growing popularity of options trading among active investors seeking out more sophisticated options strategies.

In fact, the Schwab survey showed that 75 percent of traders who incorporate options in their portfolio do so with the goal of generating income or hedging for risk management. Only one-in-four traders indicated that market speculation was the leading reason to trade options.

“The findings of the survey reveal that investors are starting to embrace options as a way to help protect their investments and potentially profit in an unstable market,” said Randy Frederick, Director of Derivatives at Charles Schwab.  “Active traders are taking the right steps to become informed investors, and they are taking advantage of more advanced tools and strategies.”

Survey Methodology

Survey data were derived from nearly 500 active traders and investors based on responses collected during February and March of this year. The data was analyzed by Directive Analytics and has a statistical accuracy of + or – 4.4 percent at 95 percent confidence level.

Posted by on 05/15 at 01:31 PM

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