There have been a myriad industries impacted by COVID-19 and the resulting national lockdowns that have kept people confined to their homes. The financial industry has been one of the worst affected, with global markets falling roughly 30 percent since the beginning of the year.
That uncertainty and negative economic outlook, coupled with the fact that people need to find new ways of living from home, has seen a rise in the use of applications and digital services/solutions.
With more people turning to apps, there has been a significant rise in the use of online trading apps for those wanting to stay in the economic loop.
Port in the storm?
“Online Trading & Trading Apps are seeing as much as 300% growth in user base & volumes compared to previous Quarters – as many day traders and speculators and first-time investors are looking to capitalize on the market volatility which is highest since 1930s,” says local site Forex Brokers.
The comparison platform has noted that there has been a surge in new user sign-ups and trading volumes across major trading apps offering equities, commodities, forex and cryptocurrencies since the start of the year.
“Global FX Market Intelligence and Research website Finance Magnates indicates that Online Retail FX & CFD volumes on FX and CFD Trading Apps reached their highest in the first quarter of 2020 when compared to the previous 2 years,” Forex Brokers explains.
“Most popular CFD, Forex Trading Platforms and Apps in South Africa & worldwide have been seeing growth in new signups from people looking to trade in high volatility instruments like oil & currencies,” the educational Forex site adds.
Perhaps unsurprisingly, the world of cryptocurrencies is booming of late, with the ever-volatile Bitcoin leading the charge, according to Forex Brokers.
“Bitcoin has also seen big interest and take-up, with many first-time traders seeing this as a big opportunity to cash in on what they expect to be another crypto rush,” it says.
“Five Major Global Bitcoin exchanges including SA based Luno are reportedly seeing major increases in signups, and trading volume, while popular crypto social trading platform Etoro reports over 200% increase,” the site highlights.
Several reasons for growth
As Forex Brokers notes, many might ask why this is the case. According to its research, the reasons behind this growth are sevenfold.
One key aspect is the prediction that a number of volatile situations are converging across the globe. Outside of the COVID-19 pandemic, there is also an oil price war between Russia and OPEC, as well as an expected shrink in global trade this year. This has led the IMF to believe that the world economy is headed towards its largest recession since the 1930s.
“This has triggered a sharp increase in volatility and panic in the global markets and prompted investors to search for safe havens for investment which has caused huge sell offs in major global stocks, many commodity prices have fallen due to plummeting demand and currency pairs of emerging economies are falling due to risk aversion,” Forex Brokers adds.
The retail sector is also having an impact, with retail online trading apps seeing a consistent rate of growth and interest over the past decade.
“The recent economic events are proving a major catalyst for online trading, prompting retail investors to research, investigate and invest through online trading mechanisms,” notes Forex Traders.
The other contributing factor is the value that online trading itself affords.
“In today’s volatile times, investors need faster execution & better price discovery which is only possible through online platforms. And online trading platforms are capitalising on this as traditional investors leverage online trading platforms for faster reaction,” the site explains.
“Most trading apps in South Africa allow registration within a few minutes, thus making it easy for first time retail investors to invest and trade in stocks, commodities and currencies,” Forex Traders concludes.
It seems evident then, that more people will be leveraging the value of online services and solutions in these testing times, regardless of what form they take.
Now if you’ll excuse us, when need to check out our crypto wallet.