The Strategic Role of Digital Trading Communities in Shaping Retail Investor Behavior in Modern Capital Markets

The rapid growth of digital technology has increased retail investor participation through Digital Trading Communities (DTCs), which function as platforms for financial information exchange and social interaction. However, empirical evidence on how these communities influence retail investor behavior and financial decision-making remains limited. This study examines the strategic role of DTCs in shaping investment decisions, risk perception, and personal financial management. A mixed methods approach was employed by combining thematic analysis of discussions in digital trading forums and semi-structured interviews with retail investors, alongside a quantitative survey of 125 active retail investors who are members of digital trading communities. The results show that DTCs facilitate collective learning and help investors interpret market information, thereby reducing uncertainty in investment decisions. However, strong social interaction within these communities also reinforces behavioral biases, particularly herding behavior and overconfidence, which may negatively affect decision quality. This study contributes to the behavioral finance literature by demonstrating how digital community participation simultaneously functions as a learning mechanism and a behavioral risk amplifier. Practically, the findings provide insights for regulators and capital market institutions in promoting digital financial literacy while mitigating behavioral risks in online investment communities.