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US day trading is easing as investors “move on to other things”

US day trading is easing as investors “move on to other things”

The bargaining boom it took in the Wall Street storm in early 2021 has cooled dramatically as U.S. authorities lift the social barrier and allow amateur investors to spend more time away from home.

An armed trader equipped with free commercial applications driven When “meme” stocks peaked in the first few months of this year, in such a strong move, it pushed for a congressional investigation into key market issues such as trade liquidation and the links between brokers and market makers.

But as large parts of the U.S. economy began to reopen, data began to fade away the hunger for the same kind of lively trading that caused volatility in many stocks in January and February.

“The rise has been impressive, but the decline has also been spectacular,” said Steve Sosnick, CEO of Interactive Brokers. “Casual investors or investors who have confused gambling with investment have moved on to other things. More people have returned to the office… And the truth is, investors have other things to do with their money.”

In U.S. options markets, where traders make risky bets on stocks and other asset movements, the six-month low fell to 15.5 per cent from the general volume of trading associated with retail investors in early May, close to 20 per cent. January. In April, total trading volumes in the retail brokerage sector fell 26 percent from March, according to Piper Sandler’s analysis.

At the same time, the proportion of trade brokers targeted at major retail brokers, relative to the overall volume of the U.S. capital market, fell 10 percentage points to 18 percent between December and March, despite a new round of stimulus funds hit by U.S. banks. accounts in the latter part of that period.

The slowdown in the DIY trade is changing at the beginning of the year, as it was hotly debated on Reddit and other forums and was a joke on social media when shares like GameStop were sent up by domestic investors. The movements were so powerful caused great losses Melvin Capital hedge fund, backed by a well-known manager Steve Cohen. The conference has held numerous hearings around the section.

The cooling in equity trading has coincided with a sharp rise in cryptocurrency activity, with major exchange volumes hitting a record $ 1.7 billion in the last month, according to CryptoCompare data collected by The Block Crypto. However, analysts have said that the lack of data on cryptocurrency trading makes it difficult to determine the extent to which users of traditional retail trading platforms have switched to digital assets.

Goldman's 50-day retail sales price chart drops The show's best-selling sales begin to fall after the dramatic rally

Stocks in favor of retailers have lost traction in recent weeks. Goldman Sachs ’well-known retail sales baskets, including those of Tesla, Apple and Zoom, have fallen more than 12 percent since the March peak.

Speculative trading in high-risk penny stocks, which are traded outside most national stock exchanges and are active in day-to-day trading activities, has fallen from February highs. Non-bank market volumes fell by half to 928 billion shares traded in April, compared to February highs, according to data from the Financial Industry Regulation Authority.

In the aftermath of a serious market crash in early 2020, stocks have been on a smooth path, and “it’s usually time to get more retail interest,” said Brian Nick Nuveen’s investment strategy.

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However, equities have shaken up this week with Nasdaq Composite, which has a high index with technology names backed by retail investors, up 2.6 percent on Monday and another 2.7 percent on Wednesday. Both days have been among the worst benchmarks this year.

Nasdaq has now fallen about 6 percent from its record on April 29, while the broadest S&P 500 is down about 2 percent from its May 7 peak. If these losses accelerate significantly, investors may start to see increased trading margin leverage using leverage, said Randy Frederick, vice president of trading and derivatives at Charles Schwab. Brokers urge customers to place more guarantees to deal with the trade and keep it open. But a sudden quick call could exacerbate the market’s decline as investors sell other assets to meet broker demand.

The level of margin debt in brokerage accounts almost doubled between March last year and this year, the highest ever, according to Finra data. The data do not differentiate between amateur and professional investors, but “retailers. . . they will probably tend to stretch themselves too far, “they can be put in danger,” Frederick said.

Table of share of brokerage trades, compared to the general volume of US equity (%), the professions registered by retail brokers are less strong

Although frenetic activity has eased, volumes are still elevated from a long-term perspective due in part to innovations in the retail brokerage industry, analysts said. One of the key elements was the move by most U.S. brokers to leave commissions in late 2019, which has helped drive the rise in activity during the pandemic.

“As we saw in the pandemic, [retail investors] it can be a huge force, “said Katie Koch, head of basic equity at Goldman Sachs Asset Management. The post-pandemic amateur trade” may not be at the same level of hyperactivity. But I hope activity continues to rise. “

Additional report by Eric Platt

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