Online trading

How a new generation of investors is changing online trading

Online trading platform applications have brought a new generation of investors to the stock market. Thanks to apps like Robinhood and All of Us Financial, the casual investor is no longer tied to using bank-run brokerage firms.

But after controversy over Robinhood’s handling of the Reddit-fueled GameStop stock spike, the market is opening up to new apps to manage transactions.

One of them is Gatsby, an app focused specifically on options trading. It’s an example of how the e-commerce ecosystem is changing, becoming not only more competitive, but also broader.

Apps are not limited to stock trading

Apps like Gatsby focus on options trading, which is a form of trading where users reserve the right to buy stocks in the future. The buy decision is based on whether or not you believe the stock price will rise or fall, also known as a call or a sell.

When you buy the option, you dictate the price at which the stock will be purchased when the option expires.

So if you buy an option with a bid set at $100 and the stock is at $110 when it expires, you earn the net difference. The price of the option itself varies depending on the terms of the option and is usually less than the value of the stock itself.

That’s the appeal of call options: with the same dollar amount, you can potentially increase the net gain of your investment.

Options trading is a risky long-term investment strategy that is often overlooked by amateur investors. What Gatsby does is remove the barrier to entry for options trading with his simplified version of the practice. The app allows users to simply purchase the put or call option and wait for the terms of the option to expire.

Online investors are looking for a combination of community and gamification

As the GameStop rally has shown, when trading is combined with a robust online community and the lure of gamification, online traders, even people who have never considered trading before, respond in droves. .

This is something the creators of Gatsby and other recent trading apps have taken to heart.

In Gatsby’s case, the simplified investment model he offers is enhanced by the way he brings gamification to the stock market. The online community that Gatsby cultivates allows users to collaborate on monitoring stock market trends and place bets on puts or calls accordingly. As we’ve seen with how the Reddit community has banded together to buy GameStop, AMC, and Nokia stock, this is one factor that could yield huge profits for a cohesive community of investors.

In addition to offering users the opportunity to come together to share their speculations, which has the potential to prove very profitable for them, Gatsby further incentivizes its platform by combining the absence of commissions or contract fees and offering rewards for purchase options.

Online traders want more than just another way to do what Wall Street does

As the hype around Robinhood turns to disillusionment, casual investors are looking for alternatives. This fall from grace is not only due to Robinhood’s handling of the GameStop surge that drew heavy criticism and a class action lawsuit, but a deceptive business model.

Forbes previously reported that “Robinhood was designed to profit from selling its clients’ trading data to the same Wall Street sharks who have spent decades – and made billions – outmaneuvering investors.”

The new generation of trading apps takes this disillusionment to heart, focusing on giving users an alternative they can trust. Gatsby, for example, deals exclusively with its users with money from stock trades, eliminating the need for a traditional brokerage firm in options trading. By doing so, Gatsby can make a profit without selling data on Wall Street.

The high-risk, high-reward world of options trading is opening up to a new generation of investors, signaling another significant development in the democratization of the stock market. As consumers continue to make their demands clear, I believe we will continue to see new apps emerge that engage more with their customers than with the big banks and Wall Street traders who have monopolized the market for so long. .