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Popularity of trading platforms soars amid COVID lockdowns
Increased spare time during COVID lockdowns has exponentially boosted the popularity of trading platforms, with new investors eager to capture some of the market gains.
Popularity of trading platforms soars amid COVID lockdowns
Increased spare time during COVID lockdowns has exponentially boosted the popularity of trading platforms, with new investors eager to capture some of the market gains.
The world’s biggest trading platforms enjoyed record growth in 2020, on the back of swelling stock market volatility, increased spare time during COVID lockdowns, cryptocurrency trading and a surge in demand for commission-free trading, new research has revealed.
But despite an already successful start to 2021, experts are predicting “continuous unprecedented growth” this year in the wake of the WallStreetBets saga.
“Moving into 2021, investors are bound to continue signing up with trading platforms, thanks to growing interest in the stock market and unique products like commission-free trading alongside increasing financial literacy,” Justinas Baltrusaitis from TradingPlatforms.com said
According to TradingPlatforms’ latest data, social trading firm eToro was the winner in 2020, after it added 5 million new users, consequently increasing its customer base by 38.46 per cent from 2019.
Robinhood, the platform currently at the centre of a trade war between new and old money, upped its user base by some 3 million, a growth of 30 per cent from 2019.
But Robinhood’s growth has continued into 2021, with the platform adding another 3 million new app downloads in January despite the contention surrounding its halting of GameStop stock trading.
Elsewhere, Plus500 added 1.05 million users, while Capital.com grew 3,600 per cent to hit 766,703 users in 2020.
Overall, TradingPlatforms reported a tenfold increase in searches for ‘Stock trading apps’ in the US between 24 and 30 January.
On a global scale, the phrase saw an eightfold increase, with Iceland registering the peak popularity score of 100. Australia ranked with a score of 36, just behind the United Kingdom on 39.
Earlier this week, RMIT’s senior lecturer of finance, Dr Angel Zhong, told nestegg that as financial tactics such as short selling capture the imagination of millions of young people worldwide, Aussies too are jumping on the trend and flocking to trading platforms.
But while local trading platforms such as Superhero attract a lot of users, there are pros and cons to becoming a part of this now popular trend.
“Increasing stock market participation is beneficial for the economy to facilitate flow in the capital markets. Lower-cost trading platforms make trading easily accessible. However, low-cost trading platforms may lead to impulsive trading. And on some platforms, you will need to pay extra to get thorough company research to make informed investment decisions.
“As such, the danger is that some investors will not undertake adequate research before trading. Furthermore, some platforms offer copy trading, in which you can easily replicate others’ trading strategies without undertaking proper research,” Dr Zhong warned.
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