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G-2023-51

Fast and furious: A high-frequency analysis of Robinhood users' trading behavior

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A growing body of recent literature analyzes the reaction of Robinhood (RH) investors to price movements at the daily frequency. As these investors tend to be more connected to the markets than traditional retail investors, we expect they react faster to new information and exhibit intraday trading behavior different from their daily trading behavior. We thus analyze RH investors' reactions to intraday hourly and overnight price movements. Differently from the previous literature, we find that RH users strongly favor big losers over big gainers. In line with our expectation, we also find that they react rapidly, typically within an hour, when acquiring stocks following extreme negative returns. Further analyses suggest greater (lower) attention to overnight (intraday) movements and exacerbated behaviors during the COVID-19 pandemic. Moreover, these trading behaviors vary significantly across firm size and industry, with a more contrarian strategy towards larger-cap firms and a heightened activity on energy and consumer discretionary stocks.

, 24 pages

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