Digital investing tools may push retail investors toward frequent, herd-like trading

A review of 94 studies finds that easy access to information and trading can also fuel overconfidence, impulsive decisions and social-media-driven behavior.

Abstract editorial illustration accompanying the article: Digital investing tools may push retail investors toward frequent, herd-like trading

Editorial illustration — not from the study.

Researchers reviewed 94 academic works published between 2000 and 2023, including journal articles, conference papers, working papers and books. They examined how digital technologies affect retail investors’ behavior and synthesized the findings in narrative form.

The review reports that easier access to financial information and trading can support investment decisions but also create risks. It links digital investing environments with information overload, overconfidence, impulsive and frequent trading, and social-media-driven shifts in investor sentiment that may contribute to herd behavior and poorer returns.

How digital tools shape trading

The review reports that digital technologies affect retail investors at several stages of investing: gathering information, making decisions and executing trades. Internet services, smartphones, social media, social trading platforms and trading apps expand access to market information, opinions and trading avenues.

According to the review, this access can also bring information overload and overconfidence. These pressures may encourage impulsive, speculative and frequent trading. Social media can influence investor sentiment and behavior, potentially contributing to herd behavior and suboptimal returns. The review does not establish one numerical effect across all investors or technologies.

Why investor caution matters

Digital tools make it easier for retail investors to obtain financial information and act on it, but the review suggests that convenience does not always lead to better decisions. The authors advise investors—especially those without financial expertise—to be cautious about relying heavily on digital sources or executing trades quickly through online platforms. Recognizing cognitive biases may help investors understand how technology can affect their trading behavior and returns.

What the review can show

This is a systematic literature review, not a new experiment or analysis of one investor dataset. The researchers searched academic databases, screened studies and their bibliographies, and synthesized the selected work’s findings, methods and limitations in narrative form. The review included 94 academic works, mainly covering research published from 2000 to 2023.

The authors note that relevant studies published in languages other than English may have been missed and that the literature may be affected by publication bias toward positive findings. They also say that investor behavior after adopting digital financial technologies remains an area for further study. Because the review combines different types of research and technologies, its conclusions describe broad patterns rather than a single effect that applies equally to every retail investor.

// Source

The International Journal of Interdisciplinary Cultural Studies · 2026 · DOI: 10.18848/fccber41

View paper (DOI)Open access versionPublished 2026-10-13

Authors: Saba Fatima, Syed Afzal Ahmad

Institutions: Integral University

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