ly capricious market. Some industry analysts and regulatory agencies are questioning this effect; McEachern (1999) reported that the Securities and Exchange Commission (SEC) cannot tell any individual what can or cannot be traded using their own money or how quickly or slowly they can trade. But the SEC does have the authority to examine and enforce margin issues, arranging loans among customers to meet margin calls, and collecting assets from others to trade. In general, the literature indicates that day trading, though perhaps not as extensive or widely practiced as is often asserted, is directly linked to market volatility (Fairfield County Business News, 1999; Meyer, 1999).
The potential effect of day trading on market volatility, coupled with related regulatory and oversight questions, suggests that a study of day trading activities is warranted. The research problem to be addressed in the proposed study is an outgrowth of concerns regarding these variables. Phrased as a research question, the problem addressed in the proposed study is:
To what degree and at what volume level do day traders
typically buy and sell stocks in a single day, thus
fostering day-to-day (as opposed to longer-term) market
NFO Interaction and the Spectrem Group, which analyzed the behaviors of day traders (Fairfield County Business News 1999), developed this question with respect to results of a research survey. This study indicated that of the day traders who were polled, only 21 percent have, at one point or another, bought and sold a stock in a single day. Furthermore, the analysis of the study revealed that the average day trader makes about 130 trades in a six-month period, which suggests that the actual population of true day traders is substantially smaller than the literature has indicated.
Four-research hypotheses are proposed herein:
The average day trader is likely to hold a stock
The average day trader make...