By financen | May 26, 2020 - 5:00 pm - Posted in Online Trading

Coronavirus has affected the whole world in some way or the other, and the financial sector is no exception. In present times, the volatile trading market is going through a lot of ups and downs.

Aussie trading app Stake was recently launched in New Zealand and the UK. The platform has since then witnessed trades worth more than $250 million. By March, the volume increased more than nine times than that of December. Customers are now investing more money per trade and the average trade size has also doubled in the recent months. With the great results, other trading apps like Trade Republic and Robinhood have also raised significantly large funding rounds. However, while March boomed for Stake, a drop off was observed in April. It was still higher than December and January though.

The market was rebounding at 11% roughly this month, but the oil price collapsed below zero in the second half of April and the Dow was closed at 2.4% lower, which was even worse than the first of April. Many customers reverted to investing in big technology firms in the US before this happened. They went for Tesla, Microsoft, and Apple, over inverse ETFs.

Analysing the Trading Market

Analysing the trading market is difficult due to its ever-changing climate and short-lived reactionary statements. However, while coronavirus is concerned, experts are thinking that big trading volumes may indicate a new generation of investors in today’s trading market. The trade volume growth is extraordinary, and there have been 20,000 new sign ups welcomed by Stake this year. So, the new propositions are expected to be interesting.

In July, Stake is set to officially roll out its brokerage packs, which so far was available for free for users to try. This three tier offering, the first of which is free, further aims to diversify the platform, making it easier for novice traders to start out with fractional shares, as well as for seasoned investors who trade on settled funds.

After the $67 million investment announcement was made, Trade Republic stated that it was set to release a series of saving features over the span of the coming months. The fact that Trade Republic has focused on saving features has raised many eyebrows among the various wealthtechs. They have till date, firmly defined their offerings as the “safer, long-term option” compared to other “game-playing” trading apps.

The combination of long-term portfolio offerings and quick-win investments can lead the path towards further consolidation in the fintech sector. This phenomenon has already been seen in infrastructure providers and Fintechs buy bank.

In the immediate economic climate, the prospect of rolling out saving products could reap some quick gains as competitors in some countries take a big step back.  There were about 180 saving products pulled from the market in the UK between the beginning of March and April this year.

For instance, Canadian based Fintech Wealthsimple has seen less than 5% of its customers modify their portfolios during the coronavirus uncertainty. It also has a trade offering in Canada, which makes it another player which aims at bridging the gap between long term investments and trading. The Fintech company has acquired over 7000 new users on average per week, with half of them being under the age of 34.

However, Deloitte’s director Alexander reminds everyone that Fintechs were struggling to get attention from prospective customers before this pandemic induced surge. Thus, it is difficult to gauge how well trading Fintechs have done during this pandemic, until the lockdown ends and economies around the world recover. As such there are many users joining Online Broker such as IQ Option, to reap the benefits of this “Coronavirus” surge.

Thus, in the short-term, there are many trading Fintechs which are currently doing very well, due to the reactionary nature of the market. These can change however as old challenges start to creep back in, in the Post-coronavirus period.

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Due to the coronavirus pandemic and the resultant uncertainty looming across the globe, the market is highly volatile. A huge boost in trading volumes is witnessed as investors scramble to move away from their respective positions, amidst fears of a global recession. The popular online trading platform Plus500 Ltd, doubled its customer base in the first three months of 2020, which means a whopping six times rise in its revenue. The number of active customers increased from 97,921 to 194,024.

The first-quarter revenue of Plus500 Ltd. soared as customers traded in the highly volatile market. Plus500 is a company based in Israel and is best known for sponsoring Spain’s Atletico Madrid Soccer team. It deals with CFD’s or contracts – derivatives, which are hugely banned in the United States. These are used by traders to wager on stocks, commodities, and bonds.

Plus500 Ltd. is a mobile trading platform which enables customers to make leveraged bets on different financial markets, which include currencies and oil as well.

Plus500 jumped close to 500% in the 1st quarter. The broker reported a huge revenue of $316.6, in the first quarter of March 2020. This exceeded the expectations of the analysts hugely who had put forward a figure of $185m up from $53.9 which was noted in the same time, the previous year. This amount is said to be almost 90% of the company’s total revenue in the year 2019.

According to Plus500, this surge was due to the significant increase in volatility throughout the global financial markets. This has resulted in higher levels of customer trading activities along with increase in new customer acquisition.

The Remaining Quarters of 2020 – An Expected Surge

It is expected that the profits of 2020, will be substantially ahead and beyond expectations, though it is quite a challenge to make predictions amidst the pandemic. According to Asaf Elimelech, Chief Executive – “As we remain at an early stage in the financial year, and there are global markets uncertainties as well as ongoing regulatory changes, it remains difficult to predict the outcome for the full year,”

Several professional traders with day jobs have multiple personal accounts on the trading platform and on rival platforms. This is an effort to earn some additional money after their office hours. Plus500 does not reveal any details about the traders who sign up to the platform. With the cancellation of most sporting events across the globe, more and more people are now turning towards financial betting as an option to earn money.

Plus500 has given an upbeat forecast and hinted that the current surge, which was seen in the first quarter of 2020, will be repeated in other quarters as well!

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