Online trading

The e-commerce revolution is just beginning

By Shafiq Shabir, Head of Electronic Trading at Intertrader

Shops and restaurants have reopened, the rollout of vaccines continues at full speed, and even overseas vacations appear to be resuming. While it may seem like everything has changed on the surface, the lasting impact of the pandemic is still visible all around us.

Nowhere is this seen better than in the world of online commerce. The new breed of “independent” pandemic investors continue to invest their savings in search of financial gains in the market. The GameStop, AMC and Reddit gatherings that saw retail investors go up against hedge fund shorts no longer appear to be a momentary event in financial markets, but the precursor to a much broader change in the how people invest and access financial markets. .

Reacting to these tailwinds, online trading platforms will need to be nimble in their approach to meet investor demands. Retail investors should prepare for a shake-up in products and features over the next few years as the e-commerce revolution continues to grip the markets.

The rise and rise of social commerce

In the lexicon of Covid-19, we have seen the emergence of “FOMO investing”. Addictive and catchy, Fear of Missing Out (FOMO) has prompted a number of retail investors to invest like never before with the aim of enriching themselves financially in the financial markets.

FOMO investing is driven by a demand from retail investors to follow their peers and get rich through quick trades. Additionally, market noise from commentators on TikTok, YouTube, and the media influences investor decision-making. This trend will only accelerate in the years to come, as those who have caught the investment “bug” fear missing out on potential gains and rely on signals from their peers to achieve those goals. We are witnessing the emergence of an online trading community that is now capable of moving the markets.

Already, this movement is fueling a shift in online commerce. A number of platform providers now allow users to participate in copy trading, which allows regular investors to automatically copy trades from top traders on the platform. Investors can also connect with other traders to chat, exchange advice and benefit from their expertise.

This form of social trading will continue to dominate online trading as everyday investors turn to peers and non-traditional forms of market information for investment advice and ways to realize future financial gains. . This development will undoubtedly become widespread throughout the market in the years to come.

Faster, better and stronger online commerce

Adapting to the needs of investors will also see online trading become faster, better and stronger. Everyday investors will be looking for reliable systems with a user experience that enables faster transactions as well as easier deposits and withdrawals.

This demand for a better user experience from retail merchants will be on the minds of platform providers. Memories of last year’s ‘Covid rebound’ will weigh on the minds of platform providers as they recall the Pfizer vaccine announcement that made e-commerce platforms such as AJ Bell and Hargreaves Lansdown unable to cope with the surge in trade.

In the battle to win and retain clients, everyday investors will remember prolonged outages who want reliable and secure systems from brokers in order to capitalize on market movements. Here, online trading platforms will have to adapt to growing investor demands to ensure a top-notch user experience for retail traders.

The opportunities remain endless for online trading

While we anticipate improvements in the user experience for traders and the growth of social trading in the medium term, the opportunities remain endless for online trading as investors remain interested in the markets. This will also include the need to educate this new breed of traders and support them on their investment journey to ensure informed decision-making – whether it is the basics of trading strategy or ways to mitigate the risks.

Brokers will be keen to keep the new crowd of retail investors engaged and meeting this challenge will separate the best from the rest. Data and automation will undoubtedly be features of this race as the customer journey is simplified for traders and investors demand the latest information at their fingertips before making decisions. In addition, the regulator will also have a role to play in protecting inexperienced retail traders in investing. Too often we only hear the good stories when over 70% of retail investors lose money.

The pandemic has served as lessons for all sectors and it is also showing with e-commerce providers. The phenomenon of FOMO trading during the shutdowns has taught brokers the power of retail trading in financial markets. It is now up to brokers to meet the growing demands of retail traders.

Yet, while it may seem like we’ve already seen a revolution in the past 18 months in financial markets, there’s more to come as platforms and brokers evolve and harness the power of technology to improve market access and trading experience of retail traders.