Does social communication make investors stay in the market?

This article investigates the impact of online social communication on the survivorship of retail traders in the foreign exchange (FX) market using data from a social trading platform (STP). Analyzing over 1.1 million trading records from 4,731 traders over 18 months, the study finds that traders who actively participate in an online discussion forum (ODF) are 16 to 30 percent less likely to quit trading compared to non-communicative traders. Employing survival analysis, Cox proportional hazard models, and panel vector autoregressive (VAR) models with Granger causality tests, the research demonstrates a positive causal relationship between social communication and trader survival, even after controlling for financial performance and trading activity variables. The findings highlight the significance of social interactions in financial decision-making and suggest regulatory considerations regarding the design of STPs, as prolonged trader survivorship driven by social communication may lead to greater financial losses for retail investors.