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MarketsEvent 2000.04

Frequent trading and net returns: A US household-account study

Compare returns before and after costs in actual accounts to distinguish trading frequency from investment skill.

Updated Oct 29, 2026

Do more decisions and trades produce higher net returns?
Verified facts

Trading and performance in actual accounts

Barber and Odean’s 2000 paper analyzed household accounts at a US discount broker. Gross performance differed little between frequent and infrequent traders, while frequent traders lagged after costs.

Sources [1]
Interpretation

Compare retained returns, not conviction

This case cautions against equating more decisions with greater skill. Evaluate results after commissions and bid–ask costs, alongside the reasoning before a trade.

Sources [1]
Limitations

Limits of applying the finding today

The sample came from one US broker in an earlier market environment; current Korean costs and conditions differ. Group differences neither rule out every trade nor establish contrarian success or a particular market bottom.

Sources [1]

Sources

  1. Barber & Odean — Trading Is Hazardous to Your WealthAccessed Oct 29, 2026

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