Do Digital Investment Technologies Shape Retail Investors’ Behaviors?

Digital investment technologies (trading apps, platforms, investment forums, etc.) play an increasingly important role in the functioning of the stock market. They serve as market devices that construct the market and make people more rational (Muniesa et al., 2007). However, as rationality can be local, a variety of other than “Homo Economicus” types of actors can emerge. For example, Abolafia (1998) outlined two types of professional traders who use different decision tools: chartists, who rely on graphs/price fluctuations, and fundamentalists, who rely on information about a companies, their market positions. This study, in turn, aims to outline the types of retail investors, i.e. lay participants of the stock market.
According to Knorr-Cetina (2003, 2015), due to financial markets having flow architecture they should be viewed as “scopic” systems, the dealing and information subsystems of which visually “collect” and present the market on the screens of participants’ devices. Thus, current research views investment behavior as a combination of (1) trading, and (2) information search and analysis practices. The data for the empirical part of the study comes from a nationally representative survey on the topic of digitalization (2024, N=10038, 14+). The sample is comprised of individuals who partake in securities trading (n=313, 18+). K-means cluster analysis showed there to be three types of retail investors. First are the advanced investors (18% of the sample), who actively engage in most types of trading as well as information search and analysis practices. Second are the socially active social network investors (31%), who trade via mobile apps and rely primarily on social networks (e.g. YouTube, Telegram, etc.) and discussions with friends and acquaintances. Third are the passive mass investors (52%), who rarely engage with the stock market, trade only via mobile apps and almost never use any means of information search and analysis.