Who Is Currently Trading The Stock Market? What’s Pushing Many To Trader?
There has been a surge in stock trading that has left many experts wondering who the new entrants are. The question on the lips of many analysts is: who are these people who have developed an interest in the stock market?
It has now emerged that it is just the ordinary people flocking the stock market and snapping up stocks of popular companies such as Apple and Tesla. The U.S. stock market alone has shot to the $30-trillion figure.
Although the global economy went down on its knees because of the coronavirus lockdown, data from trusted stock brokers show that there is an increase in the number of new account openings.
What could be the reason behind this surge in the number of new stock trading account? Some experts attribute the sharp increase in stock market trading to the trading apps availed by the top trading platforms in the world, which has made stock trading easier.
Another reason new accounts are being opened is that in late 2019, there war a price war that pitted companies like Robinhood and Charles Schwab against each other. These wars brought commission charges down to zero as brokerage firms looked for alternative ways to make money. This made many investors consider stock trading as a very lucrative venture.
After the plunge of the interest rates, Federal Reserve and other central banks have tried everything possible to keep the economy running. With almost nothing left on Federal bonds, the stock market seems to be the only next best option.
No wonder equity prices seem to defy gravity even during the coronavirus recession, which is regarded as the worst since the Great Depression. After its downward spiral early in the year, the S&P index the U.S. biggest companies has suddenly bounced back and is now at the same level where it was late last year.
One leading online stock broker explained that, because of lockdown, many people with disposable income are staying at home, so they are looking for ways to have their money working for them. There’s no better way of doing this than investing in stocks.
As mentioned earlier, online stock trading has been made easier courtesy of the trading apps. Investors simply need to download the brokerage apps on their smartphones, and they’ll be good to go. Currently, there are more than 2.5 billion smartphone users globally, making online stock trading quite easy.
The best online trading platforms are reaping big, reporting that there are millions of new retail traders opening new accounts. For example, brokerage firms such as TD Ameritrade, Interactive Brokers, and Charles Schwab reported adding more than one million retail traders in the first three months of the year. This is an increase of 4% from last year.
A popular brokerage app known as Robinhood reported in June that it added more than 3 million client accounts this year. This now brings its total subscription to over 13 million.
Many small scale investors are trading from the comfort of their homes. This accounts for some increase in the number of those currently trading at the stock market.
Another boost to the stock market came from the U.S. government’s injection of over $2 trillion to the economy, and it is expected that the government could increase its support to more than $4 trillion before the coronavirus crisis is over. This will further boost the economy and, by extension, the stock market.
Some top stock brokerage firms believe that gamblers who can no longer bet on sports because of social distancing have resorted to stock trading. This transition is easy because the gamblers already have smartphones, so all they need to do is to download stock trading apps.