Just a few years ago, trading was a manual and very tedious process. Those days are, of course, long gone. With the rapid rise of easy-to-use platforms and the availability of multiple resources to guide retailers, including the vast influence of social media, we now live in an age where investing has become the norm. In recent times, the world has witnessed the onset of the covid-19 pandemic, which has changed the trajectory of investing in general. During the pandemic, more and more people seem to be changing their interest in trading the financial markets. A study by Bloomberg Intelligence found that retail market volume for the year rose 20%, outpacing both banks and hedge funds.
The Spike – What’s Behind?
Online trading came on its own after 2010 thanks to automated software, user-friendly charting tools and advanced interfaces. When it comes to investing, CAPEX, one of the world’s leading brokers, operated by Key Way Markets Ltd in the MENA region, always believes in the power of knowledge. In doing so, CAPEX is changing the way retail traders in the Middle East invest while making online commerce more accessible, transparent and secure in the region.
CAPEX offers advanced and intuitive trading platforms, as well as commission-free leveraged products such as StoX, for more suitable trading conditions. As a result, the markets have witnessed huge interest from retail investors; primarily interested in crypto trading which has seen an increase in price, as well as trading new companies that go public with IPOs.
Access to information is another reason why e-commerce is growing by leaps and bounds. Through CAPEX Academy, the team educates new investors and helps them gain a comprehensive understanding of the multitude of factors that affect the market, giving them the knowledge they need to make more informed trading decisions. With so many events unfolding and markets changing every day, the more knowledge an investor has about the factors affecting market positions, the more empowered they will become as an investor.
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 appeared in the market, driven by retail investors active on the Reddit social platform, under the sub-reddit known as rWallStreetBets. It was about buying stocks that the big institutional funds, the hedge funds, were selling short to reverse this downward movement and force the institutional funds to close their positions with losses.
As a result, GameStop saw a massive 1,500% increase, and AMC saw similar growth. The rWallStreetsBets subreddit has taken a mass stance that is seen as anti-system. The funds have been accused of unethical behavior, putting pressure on companies that would be forced into bankruptcy.
On the other hand, there was great controversy over whether the rWallStreetBets practice would constitute market manipulation and was investigated by regulators. In the end, there were no significant legal consequences, and the result was deemed satisfactory for rWallStreetBets since these stocks, although outside recent highs, remained in the upper range, with average gains between 600% and 800% of starting levels.
The ease of communication offered by social media and current technology with online trading instruments has empowered retail traders who have risen through the ranks of investors. In the future, the difference between strong hands and soft hands in the market, which has always existed in the market so far, will decrease. When it comes to evaluating and analyzing the markets, the opinion of retail traders who are gaining traction will have to be taken into account.
Another important growth trend that started last year and is expected to grow strongly is the intense buzz around Bitcoin and cryptocurrencies. When discussing cryptos, the topic will seem incomplete without the mention of Elon Musk. The move by him and other tech companies to bitcoin has pushed cryptocurrency into unprecedented territory. Markets have seen this disruption coming for more than five years. Yet, it is not specifically about so-called cryptocurrencies, but about the technology that supports blockchain. Technology development activity in the cryptocurrency industry has increased by more than 530% over the past five years.
This indicates why companies are constantly and increasingly investing in research and development in this sector. Inventions in this field cover business tracking, finance, mobile wallets, and e-commerce. Cryptocurrency, tokenization, and more importantly, blockchain technologies are becoming increasingly common in network and computing applications, security, industrial applications, and securities.
As cryptocurrency was expected to transform the way everyone does business, significant changes are already underway, for example in the banking sector. Given the very particular characteristics of these digital assets, due to their security, their user-friendliness and their limited supply in addition to the technology that supports them, it is foreseeable that the positive performances observed in recent months will continue with the rise in power of information and retail traders.
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