Avoid frequent stock trading
The most active traders earned 11.4% annually while the market returned 17.9%. Most of the gap came from trading costs; before costs, frequent and infrequent traders performed similarly.
What it takes
Free. Resist acting on every piece of market news.
What you may gain
A study of 66,465 US discount-brokerage households during 1991–1996 found annualized returns of 11.4% for the most active group, 17.9% for the market and 16.4% for the average household. Average annual turnover was 75%, meaning roughly three-quarters of holdings were replaced each year. Gross returns differed little across trading-frequency groups; transaction costs explained most of the net gap.
Context & considerations
These are 1990s US data. Chinese A-share commissions and stamp taxes differ, but repeated trading still incurs costs. This is not investment advice.
Research & references
Barber BM, Odean T (2000). Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. The Journal of Finance 55(2):773-806. https://doi.org/10.1111/0022-1082.00226