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The rise of online trading and unusual market influencers

CAPEX.com’s overview of the post-pandemic spike in trading patterns

The market volume of retail trading for the year went up 20%, surpassing both banks and hedge funds Access to information is one reason why online trading is progressing by leaps and bounds An influential factor contributing to shifts in market positions is market sentiment

A few short years ago, trading used to be a manual and highly tedious process. Those days are, of course, long gone. With the rapid increase in easy-to-use platforms and the availability of multiple resources to guide retailers, including the vast influence of social media, today, we live in times where investing has become the norm. In recent times, the world witnessed the onset of the covid-19 pandemic, which changed the trajectory of investing at large. During the pandemic, more people seem to switch their interest in trading the financial markets. A study by Bloomberg Intelligence revealed that the market volume of retail trading for the year went up 20%, surpassing both banks and hedge funds.

The Spike – What’s Behind It? 

Online trading came on its own after 2010 due to automated software, user-friendly charting tools, and advanced interfaces. When it comes to investing, CAPEX, one of the leading global brokers, operated by Key Way Markets Ltd in the MENA region, always believes in the strength of knowledge. In doing so, CAPEX is changing the way retail traders in the Middle East invest while making online trading more accessible, transparent, and secure in the region. 

CAPEX offers advanced and intuitive trading platforms, plus zero– commission-based leveraged products such as StoX, for more suitable trading conditions. Consequently, the markets witnessed huge interest from retail investors; mostly interested in crypto trading that has seen a boost in prices, as well as trading new companies going public with IPOs.

Access to information is another reason why online trading is progressing by leaps and bounds. Through CAPEX Academy, the team is educating new investors and helping them form a comprehensive understanding of the multitude of factors that affect the market, thus equipping them with the knowledge they need to make better-informed trading decisions. With so many events taking place and the markets changing every day, the more knowledge an investor has about factors affecting market positions, the more empowered they will become as investors.

Recent Triggers 

Certain events can trigger price fluctuations and momentum swings in the market. Another influential factor contributing to shifts in market positions is market sentiment, and in the recent past, we have witnessed many triggers that have created massive waves.

During the first quarter of this year, a new phenomenon emerged in the market, driven by retail investors active on the social platform Reddit, under the subreddit known as r\WallStreetBets. It involved buying shares that large institutional funds, hedge funds, were selling in short positions to reverse this downward movement and force institutional funds to close their positions with losses.  

As a result, GameStop experienced a massive increase of 1500%, and AMC witnessed similar growth. The subreddit r\WallStreetsBets adopted a mass position that was considered anti-system. The funds were accused of unethical behavior, putting pressure on companies that would be forced to go bankrupt. 

On the other hand, there was a great controversy about whether the r\WallStreetBets practice would be constituted as market manipulation and was the subject of an investigation by regulators. In the end, there weren’t any significant legal consequences, and the result was considered satisfactory for r\WallStreetBets since these stocks, although off the recent highs, have remained in the upper part, with average gains between 600% and 800% from the starting levels. 

The ease of communication provided by social media and current technology with online trading instruments has empowered retail traders who have escalated through the investor ranks. In the future, the difference between solid hands and soft hands in the market, which has always existed in the market until now, will decrease. When it comes to assessing and analyzing the markets, the opinions of retail traders who are gaining ground will have to be considered. 

Another significant growth trend that started last year and is expected to grow strongly is the intense buzz about Bitcoin and cryptocurrencies. While discussing cryptos, the topic will seem incomplete without the mention of Elon Musk. The move by him and other tech companies towards Bitcoin pushed the cryptocurrency into unprecedented territory. The markets saw this disruption coming for more than five years. Still, it is not specifically about the so-called cryptocurrencies but the technology that supports the blockchain. The technology development activity in the cryptocurrency sector has grown more than 530% in the last five years. 

This indicates why companies are constantly and increasingly investing in research and development in this sector. Inventions in this area cover tracking activities, finance, mobile wallets, and e-commerce. Cryptocurrency, tokenization, and most importantly, blockchain technologies are becoming increasingly common in networking and computing applications, security, industrial applications, and securities. 

Since cryptocurrency was expected to transform the way everyone does business, significant changes are already underway, for example, in the banking sector. Given the very special characteristics of these digital assets, due to their security, their usability, and their limited offer in addition to the technology that supports them, it is foreseeable that the positive performance witnessed in recent months is bound to continue with the rise of information and retail traders. 

Find out more at ae.capex.com.