The U.S. Active Trader Market: Report Preview

The following is a short excerpt from an Active Trader report to be published on the week of February 27.  

One of the most revealing findings in the Aite Group investor survey was the high percentage of Americans holding financial assets who trade securities online. At the highest level, Aite Group partitions U.S. households as: 

• Traders: 54% are individuals who “trade or have traded online”
• Future traders: 24% are investors who “don’t trade now but would like to learn to do so”
• Passive investors: 22% are investors who “don’t trade now and don’t intend do so in the future”

Additionally, the trader group is split into four segments: active investors, active traders, more frequent traders (MFTs), and inactive traders:

• Active investors: Place one to 35 trades per year
• Active traders: Place from 36 to 120 trades per year
• More frequent traders (MFTs): Place more than 120 trades per year; this segment alone is responsible for more than 90% of retail trades placed
• Inactive traders: Reported being traders, but did not place trades in 2011 

Figure 1: The U.S. Investor and Trader Market by Activity Level, 2011 

QUANTIFYING THE ACTIVE TRADER MARKET

Figure 2 quantifies the U.S. self-directed trader market, with the left column showing those who placed at least one trade in 2011. The middle column, “traders in transition,” includes individuals who were not active in 2011 and those who expressed trading a particular asset class but gave no broker name (or gave the name of a broker that does not offer the said asset class). The number of unique U.S. households with trading activity in 2011 ranges between 11 million and 13 million. This total cannot be found by adding the totals for each asset class, however, because most individuals trade more than one asset class. Including traders who are in between brokers (“traders in transition”) and future traders, the pool of unique U.S. retail traders reaches approximately 27 million households.

While still in the lead, traditional stock trading is becoming less of a norm―ETF trading has gained second place in popularity and options trading a not-so-distant third place. Also important to note, more future traders indicated a desire to start trading options rather than ETFs. 

Figure 2: Self Directed U.S. Trader Population by Asset-Class Choice, 2011

This report draws its conclusions from a wealth of information gathered through two proprietary Aite Group surveys (one quantitative and one qualitative), and from the firm’s considerable knowledge base. Aite Group U.S. investor survey: Aite Group conducted an online survey of 1,014 U.S. investor households during the month of December 2011. The survey included multiple questions on key subjects, including preferences related to online trading, financial firm selection, and financial holdings.

RELATED READING

For more in depth information on this subject, Aite Group subscribers and qualified members of the press have access to the following:

See Aite Group’s report, Active Trader Market: Changing Currents, Rising Tide, February 2012.