4 Major Social Trading Trends Caused By COVID-19
The COVID-19 Pandemic has caused widespread chaos and instability into the world’s various financial markets since the virus first hit widespread media attention in February 2020 and a direct result of this has been a large number of individuals simply staying at home, rather than risking the great outdoors. As a natural consequence of the boredom that comes from being stuck indoors, more people are getting involved in trading now more than ever. A study by Paderborn University in Germany found that retail investment trading increased by 13.9% for each doubling of COVID-19 cases.
The stay at home boredom has also provided new opportunities for beginner traders to become involved in social trading, which allows these beginners to observe trades by experts and to copy, or mirror all or some of these trades; allowing them to understand what goes into a successful trading strategy. Four major social trading trends have been caused by COVID-19.
The power of social media has now been long understood, with a tweet by billionaire Carl Icahn inflating Apple’s worth by $13 Billion in a matter of minutes during 2013. Despite this, there has still been a level of snobbery within trading when considering the applications of social media in trading. The COVID-19 pandemic has begun to change things, with a 23% increase in social media use being directly linked to the pandemic.
This increase in social media use and the lack of physical office spaces to work from has led to many traders and trading companies being more open to utilizing social media and therefore, social trading as a legitimate trading strategy. The Financial Times have also reported that many Forex professionals are beginning to feel more confident in the applications of social media to trading activity.
Cryptocurrencies are quickly starting to become a more popular and reputable form of investment, particularly as a result of the COVID-19 pandemic. Cryptocurrencies were among the first asset classes to bounce back from the resulting market crash and as a direct consequence of this, more people are thinking of investing in cryptocurrencies now more than ever, with a 29% increase in consumer trust in cryptocurrencies since between 2017 and April 2020. Furthermore, 15% of Americans now own some form of cryptocurrency.
Despite the increase in popularity with cryptocurrencies, new investors in the market are likely to find difficulties navigating the often volatile and uncertain cryptocurrency market. Even the most experienced and savvy investors in this market are often taken by surprise. This gives social trading a great opportunity to carve out a niche in cryptocurrencies and this trend may well have been caused by COVID-19.
One of the biggest problems faced by the investment and trading arenas has been getting millennials involved in the practice. There has been a lot of resistance to investing and trading by this age group, with the biggest roadblock for millennials taking up the practice being the confusing nature of the investment market. In fact, 69% of millennials have stated that the reason they don’t invest is due to the confusing nature of the practice. Additionally, 48% of millennials feel that they lack the money to invest.
Despite this trend, COVID-19 seems to be changing things. 25% of surveyed millennials have stated that the recent financial crash has motivated them to begin their investment journey and the beginner-friendly nature of social trading means that these investors will be able to have someone “hold their hand” whilst they learn the ropes. The combination of social trading and the COVID-19 pandemic will greatly increase the number of millennials investing.
One of the benefits gained by social trading during the COVID-19 pandemic is that more and more people are beginning to take note of the fact that the expertise of others can be a great way to make money during a time of great market volatility. During 2020, one of the ways to identify a successful COVID-19 trader is them simply staying within a profit during the year and these people have used their own strategies that include safe-haven assets and shorting the market.
These strategies have turned people into superstars during the COVID-19 pandemic as beginner investors, or even experienced investors turn to successful individuals for help.
Some examples of these superstars can be found below.
6.4 Million Instagram Followers.
Useful Information on Cryptos and Stocks.
372.6k Twitter Followers
Provides Reports and Advice on Trades.