"A key argument is that individual retail traders may have poor performance even though they trade, as a group, in the right direction. One likely cause of this discrepancy is that retail traders incur trading costs even when they trade in offsetting directions. For example, suppose 12 retail traders buy a stock, while 10 retail traders sell the stock. Our findings show that stocks like this one, which are purchased on net by retail traders, tend to increase in price, which would tend to help the retail traders' performance. Yet the 22 retail traders might have poor overall performance because they incur trading costs on all 22 of their trades, not just the 2 net trades that correctly predict the stock's return."