31 Aug 2021 #Bitcoin
In the last two years, we’ve witnessed the rise of the retail trader as a genuine force in financial markets, where the collective flow of capital can move in unity and influence price and sentiment at any given time. The trend to trade Equity and Crypto has been heavily skewed towards momentum strategies and buying strength, selling weakness. While in FX markets, retail are predominantly mean reversion players. While their influence on the $6.6 trillion a day (turnover) FX markets is minimal, the opposite is true in equities and retail can aggressively influence single stocks when the flow is one way and targeted.
Flow aside, we’ve all seen changing trends among retail traders, with behaviours evolving not just in the product mix, with Crypto and meme stocks getting incredible attention. But since March 2020 there's been a significant rise to trade less vanilla trading instruments and towards the use of optionality and derivatives, such as CFDs as vehicles to express a view. One thing is clear though, the financial literacy of the trading public has radically shifted and a broadening demographic are genuinely fascinated in trying to profit and grow wealth from the financial markets.
As we look forward, market participants are constantly evaluating what could be the next trend that will get the attention of retail traders. It could be an appetite for an emerging market thematic or towards a higher volatility sector, where expected returns are high. Or a trend towards a specific asset class, again, where the prospect of compelling returns contrasts to the perceived risk. Perhaps it will be technological advances that installs a belief that a trader has an increased edge.
While this will be fascinating to watch, perhaps the real change we should be looking out for is changing trading behaviours – the systems and processes through which people trade, and the methods by which they enter and exit the market, as well as identifying and managing risk and emotion.
At Pepperstone, we’re seeing an evolution of our own among our global client base – that is, traders migrating towards automated or systematic strategies – where essentially traders are seeing the benefits of removing their own discretion in trading decisions and designing or downloading computer programs that enter and exit positions based on a set of pre-defined rules or conditions. These programs will be largely based on technical indicators, but they can be quant-based and range in the level of complexity.
This is a trend we believe is set to continue where the use of an algorithm or an automated process could play a major role in the future of retail trading. It will be a gradual process, rather than a sudden explosion in popularity like we’ve seen in Crypto, but our analysis suggests more and more traders will see the attractions of automating their trading.
For context, in July 2021, 39.07% of all client trades (across our full suite of products) were transacted by an automated system or an Expert Advisor. In July 2020 this percentage was at 30.3%. So if the trend continues, which we believe will be the case, we could see over half of our daily transactions placed using an automated strategy within 12-18 months. Interestingly, the duration of hold times for positions executed through an automated system dropped 7% and 44% over the past 12 to 48 months respectively, to a median duration of 100 minutes per trade. This is interesting as FX, gold and equity index volatility, the core factor that determines one’s time in the market, was well below average in July. The reduction in hold times suggests clients trading systems are becoming ever more sophisticated.
The 2021 UK Investment Trends report showed the most important factor (from respondents) that could further their trading education, was content on automated strategies – with 40% of respondents saying they wanted content on automating strategies, this outcome was some 3ppt above the next most requested factor. Our own client survey and with a sample size of 1883 clients, showed 34.4% of respondents intend to automate their trading decisions in the future.
Why not start your journey into automated trading – for many when you start exploring this world and community it will challenge the way you think about trading.
Take a look at Pepperstone’s Trading Simulator, Strategy Tester and Language Editor today and start your journey towards automated trading.
|#||Crypto||Prediction||Accuracy||CVIX||Price||24h||7d||Market Cap||Volume 24h|
|1||BTC||Bitcoin predictions||78.4%||36||$43 085.96||-1.06%||-0.99%||$811 219 237 866||$31 154 347 636|
|2||ETH||Ethereum predictions||72.8%||51||$2 995.89||-2.88%||-0.73%||$352 615 203 825||$19 398 346 385|
|3||ADA||Cardano predictions||66.8%||75||$2.19||-2.78%||4.85%||$70 222 973 640||$3 116 899 060|
|4||USDT||Tether predictions||96%||1||$1.000508||-0.01%||0.06%||$68 577 822 872||$71 068 899 614|
|5||BNB||Binance Coin predictions||68.8%||65||$341.32||-2.13%||-7.03%||$57 388 122 424||$1 555 748 368|
|6||XRP||XRP predictions||72.8%||49||$0.937804||-0.90%||1.05%||$43 811 978 119||$3 027 320 393|
|7||SOL||Solana predictions||69.6%||66||$140.97||2.76%||1.92%||$41 927 787 826||$2 899 305 540|
|8||USDC||USD Coin predictions||91.2%||1||$1.000382||0.02%||0.01%||$31 131 613 966||$3 198 579 010|
|9||DOT||Polkadot predictions||68.8%||69||$28.28||-3.69%||-2.07%||$27 931 334 671||$1 725 163 950|
|10||DOGE||Dogecoin predictions||66.4%||70||$0.203144||-1.88%||-4.12%||$26 705 464 939||$865 252 649|
|11||LUNA||Terra predictions||67.6%||59||$38.33||7.47%||37.20%||$15 331 923 428||$1 698 547 134|
|12||AVAX||Avalanche predictions||58.8%||85||$68.09||0.67%||14.92%||$14 998 801 484||$1 254 781 240|
|13||UNI||UniSwap predictions||65.2%||70||$22.95||-6.14%||7.70%||$14 034 322 529||$1 164 508 712|
|14||BUSD||Binance USD predictions||92%||1||$1.000300||0.02%||0.02%||$13 519 244 531||$5 111 421 269|
|15||LINK||Chainlink predictions||63.6%||70||$23.60||-5.17%||-1.55%||$10 736 258 209||$1 106 679 987|
Get cryptocurrency price predictions, forecasts with analysis and news right to your inbox.
© 2015-2021 Crypto-Rating.com
The usage of this website constitutes acceptance of the following legal information. Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website, including information about the cryptocurrencies and bitcoin is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Crypto Rating shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about cryptocurrencies. The entire responsibility for the contents rests with the authors. Reprint of the materials is available only with the permission of the editorial staff.