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The Number Of Day Traders Increased Significantly Due To Covid Pandemics

The epidemic has resulted in a rise in the number of individuals who have become day traders for the first time, a trend that has been fueled in part by social media influencers who are pushing young people to buy and sell stocks and currencies.

More than a fifth of people in the United Kingdom have traded stocks since the Covid-19 crisis started, with half (50 percent) of those who did so earning money, almost a quarter (22 percent) losing money, and the remaining quarter (23 percent) making a profit.

number of day trader

In recent years, hundreds of investment influencers have appeared on social media platforms such as Facebook, Instagram, Reddit, TikTok, and YouTube, urging others to invest in get-rich-quick schemes by uploading pictures of themselves displaying their riches.

Their participation has assisted in increasing the number of young people who have made investments throughout the epidemic, with many choosing to invest in stocks and shares for the first time while stranded at home during repeated lockdowns.

Stock prices for both American companies skyrocketed when regular individuals coordinated their purchases online, driving up prices - in part to catch hedge funds off guard, many of which have suffered massive losses as a consequence - and sent their shares soaring.

The survey on day traders also discovered that half of the individuals who traded stocks during the epidemic started trading Forex for the first time in their lives. One of the main reasons which made the past stock investors switch to Forex trading was the FX broker’s incentives. One of the examples of this can be an XM Forex broker. The mentioned broker started to furnish its customers with an XM bonus, which includes an incentive without depositing money, also known as a no deposit bonus. According to the survey, it was shown that three out of five investors were driven to begin investing so that they might make higher returns than they were earning on their cash accounts, and almost a fifth were inspired to do so in order to save for a down payment on a home.

How Covid Affected The Market’s Volatility

Currency markets have been severely affected by the COVID-19 epidemic, with the pound dropping by 15% versus the US dollar since 2020 began. The ensuing volatility has produced a difficult valuation situation that hasn't been witnessed in a long time. 

COVID-19's effect on major FX markets has been examined in the sections below, starting with spot markets and working our way up to option markets. The extra care that must be taken in reporting values and constructing hedging strategies is emphasized. The use of cross-currency basis swaps and prospective advantages from hedging using options, according to Templerfx, has opened up a variety of risk management possibilities, such as competitive financing, for end-users via derivative markets.

Due to an increase in client activity, sell-side liquidity providers profit from higher hedging traffic via electronic inter-dealer platforms. This is due in part to the fact that during the market downturn, their customers' holdings tended to move in the same direction, leading the banks' internal matching rates to diminish. Inter-dealer broker voice broking has not proved as robust in distant or virtual work settings, according to recent market comments.

Market players have seen a considerable widening of spreads as well as low liquidity for bigger ticket sizes, despite the widespread belief that the FX market is strong and can withstand a major increase in activity.

A widening of liquidity providers' stated spreads and reduced liquidity levels for certain amounts are among the challenges facing buy-side traders. Due to a lack of cash, they are spending more time just getting things done. In certain developing market currencies, the sell-side is making similar observations, noting large spreads and dwindling liquidity in specific instrument types or currency pairings.

How Covid Affected Trading Sector

The Covid-19 epidemic has had devastating effects on people's health and well-being. There was a 7% reduction in global goods trade flows in 2020. Several aspects of the pandemic threaten international commerce, including the direct health effects and related behavioral changes, the implications of governments' efforts to contain its spread, and the impact on third-party nations of the epidemic.

Although the epidemic is expected to have a negative impact on commerce, it may go either way at the national level. It's difficult to predict how a country's import demand - defined as the gap between local demand and supply - would be affected by either factor. A nation's own demand for imports from a particular country will be impacted by the pandemic in a variety of ways, depending on how demand and supply variables in the third country are affected.

If you choose China as your "hub," you will already have access to Chinese monthly trade data up to December 2020. One further benefit is that China is the world's biggest exporter and has business ties to every other economy. Covid-19 struck China hardest in the first quarter of 2020, just as the rest of the globe was beginning to feel the effects of the virus.