Don't believe everything you hear about retail traders

With the integration of Ameritrade now complete, the trading business at Schwab has greater breadth and depth than ever before. Schwab has more than 35 million active brokerage accounts with upwards of $9 trillion in client assets. On any given day we see an average of approximately six million trades. In fact, as of September 2024, Schwab is number one in daily average trades among firms that report that figure publicly, typically facilitating about double the trades of any such competitors.

As we announced in October last year with the launch of Schwab Trading Powered by Ameritrade™ we’re setting a new standard in retail trading with a remarkably powerful set of tools and experiences—from our industry-leading suite of thinkorswim^® platforms to our robust education hub and coaching services to expert client support.

Trading Services is a critical part of Schwab’s business and drives a meaningful share of the company’s revenue. But beyond that, the size and diversity of our retail trader client base puts us in a unique position to have meaningful insights into what U.S. retail traders are doing, thinking, feeling, and how they're behaving. We know who traders are, and we know what they’re not. 

The image of traders as cowboys or cowgirls chasing quick profits in a reckless way is outdated. To the contrary: The most successful traders are disciplined, strategic, and data-driven. They rely on rigorous analysis and risk management techniques to guide their decisions. 

Schwab’s Q2 2024 Trader Sentiment Survey indicated that, given their expectations for the economy that quarter, 41% of traders at Schwab planned to spend more time researching trades before executing and one-third planned to spend more time vetting trades with the tools available to them. That’s a far cry from that reckless, impulsive image.

Traders follow strict rules and strategies and aim to mitigate risks and maximize returns. They understand that consistency and caution can be keys to long-term success in the market.

And they go in with a plan. By balancing their time horizon, entry and exit strategies, position size and performance expectancy, they work to minimize the risk of unpleasant surprises. 

To see how a trade plan comes together, check out this information from our education team. 

Traders come to Schwab with a wide range of experience—from total beginners to those who have extensive experience and everywhere in between. Some may start by being self-taught. But almost all traders are continuously seeking out education, information, and opportunities to grow their skills. 

We know from our Q4 2023 Trader Sentiment Survey that more than half of traders frequently use education content or tools before executing trades. That’s backed up by historical data from Ameritrade, which suggests that traders utilize more educational content than any other client segment. They’re also likelier to engage with lengthier content like webcasts. And, importantly, they look to their broker as their number one source of investing education. 

The best traders have a deep understanding of financial instruments, market dynamics, and economic indicators, and they know how to apply technical and fundamental analysis to address the ever-present question of what to buy and when. That requires structured learning and ongoing work to stay up to date. 

Often, people imagine traders trade on a financial “island,” with their trading activity distinct and separate from their broader financial plan, goals and activities. But like many other investors, their overall portfolio includes longer-term investments, and trading is just one part of a larger integrated financial and wealth-building strategy. 

Many, including some traders, assume they must go to one place to trade and somewhere else to manage the other aspects of their financial lives. Thankfully, that’s not the case. This trend is especially pronounced among former Ameritrade clients who transitioned to Schwab; as we recently shared at Schwab’s Institutional Investor Day in May, we saw more than $17 billion of inflows into Schwab’s Managed Investing solutions in 2023 and as of March 31st of this year, 97% of former-Ameritrade, now Schwab Financial Consultants, have enrolled at least one client in these solutions. 

This is one of the key drivers of value we see in the combination of Ameritrade and Schwab. And already, our clients are getting to see what the best of both worlds means and they’re capitalizing on it. 

Several leaders at Schwab have said this lately, and I will reiterate: There has never been a better time to be a retail trader. The accessibility and sophistication of trading platforms, the array of products, the breadth and depth of research and tools available, the efficiency of the markets, and the amount of educational resources and information at investors’ fingertips make today a great time to be a trader.   

It’s also an extraordinary time for Schwab as we lean into what we offer this growing, diverse, and highly engaged community. 

Traders are not cowboys, but this segment of investors and part of Schwab’s business is poised to hit full gallop.