Active trading can lead to high costs and poor returns from "summary" of Random Walk Guide To Investing by Burton G Malkiel
Active trading, or frequent buying and selling of securities, is a popular strategy among investors looking to outperform the market. However, this approach often comes with high costs and disappointing returns. The costs associated with active trading can quickly add up, eating into potential profits and eroding overall returns. One of the primary costs of active trading is commissions, which are fees charged by brokers for executing trades. These fees can vary depending on the broker and the size of the trade, but they can quickly accumulate, especially for investors who trade frequently. In addition to commissions, active traders may also incur other costs such as bid-ask spreads, which are the difference between the buying and sellin...
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