Schwab has launched the Schwab Trading Activity Index (STAX), a new proprietary, behavior-based index that analyzes retail investor stock positions and trading activity.
Monthly report, formerly the TD Ameritrade Investor Movement Index (launched in 2013), provides unique insights into retail trading behavior to illuminate what investors were actually doing and how they were positioned in the markets each month.
James Kostulias, Head of Trading Services at Charles Schwab, said the introduction of STAX is a reflection of Schwab’s leadership position in the industry and their deep understanding of trading behavior and sentiment.
“Going forward, we view STAX as a unique proxy for what’s happening across an incredibly diverse mix of retail investors and traders on a month-to-month basis, and we expect it to be a useful resource for clients, academics, media, and anyone else seeking to understand and keep a pulse on retail trading behavior,” he said.
The STAX value is calculated based on a complex proprietary formula.
Each month, Schwab pulls a sample from its client base of funded accounts, which includes accounts that completed a trade in the past month.
The holdings and positions of this statistically significant sample are evaluated to calculate individual scores, and the median of those scores represents the monthly STAX.
The STAX determines a score, generally ranging from 35-70, that serves as a proxy to gauge Schwab clients’ exposure to equity markets.
Over time, changes in this score month-by-month serve as an indirect measure of sentiment, with a higher score indicating greater market exposure and a correlation to bullishness, and a lower score indicating lower market exposure associated with potential bearishness.
For example, if the STAX score rises from 40 to 50 from one month to the next, that would indicate that Schwab’s clients, on a whole, increased their exposure to the equity markets and could mark a rise in bullish sentiment.
The STAX score for December 2023 reads 44.56, an increase from the November score of 43.64.
“The holidays tend to be an optimistic time of year for many, and this year was no exception among Schwab’s clients,” said Joe Mazzola, Director of Trading and Education at Charles Schwab.
