Investing.com survey confirms Reddit et al. as standard for retail traders

Rick Steves

Some within the industry have been saying that the social media trading frenzy is coming to an end, AMC aside. We’ll wait and see. 

According to a survey conducted among 1,302 U.S. investors by Investing.com, over 20% said they use Reddit to make an investment decision.

More than 17 percent of investors born from 1928-1980 have also used Reddit to actively drive financial decisions and nearly half of investors above 40 years old have been on Reddit or downloaded the app since the Gamestop craze.

Jesse Cohen, senior analyst at Investing.com, said: “It’s not at all surprising, given the recent Reddit WallStreetBets Meme Stocks saga, which dominated markets earlier this year. The sharp spike and huge gains in those names drew investors – young and old alike – to the WallStreetBets forum to find out what stock everyone was coordinating to buy next.”

More than half of respondents have used some form of social media platform to research an investment decision, the survey found, with over 20 percent using Twitter, 17 percent using Stocktwits, and 7.5 percent using Facebook. Nearly half of those who have used social media to drive investment decisions ended up buying Gamestop or AMC stocks.

Most respondents have only recently started using Reddit for that purpose but they plan to continue doing so during the coming year.

“The dramatic rise in retail investing seems like it’s here to stay, and that should bode well for social media platforms like Reddit. These social media forums are replacing traditional financial news outlets as the place-to-go to research and make informed financial decisions”, the Investing.com analyst added.

Earlier this month, Capital.com reported that more than 63 percent of all new trades executed by UK traders in the prior two weeks have been in financial derivatives linked to shares in the US cinema chain AMC Entertainment (AMC).

“With the crash in crypto during May, you might be forgiven for thinking that the new breed of traders has struggled to get the lottery ticket fix in financial markets. But fear not – as crypto has waned, the so-called meme stocks have come back from hibernation”, said David Jones, Chief Market Strategist at Capital.com.

“Markets can be difficult enough to explain at the best of times but trying to apply logic to AMC which is up around 3000% this year – depending on where in the day you are looking at the price – is a little futile. It’s the concerted effort of thousands of small investors banding together to put one over on Wall Street.

“So far, they have been well-rewarded and who knows when the music stops? It’s a new phenomenon for 2021 and it is fascinating to watch, just don’t expect to be able to call the top in this one. We may have already seen it, but then again perhaps it doubles in price once more. The volatility is really off the charts and chances are, a little like the cryptocurrency rout in May, when the price turns then a lot of fingers will get burnt”, said Mr. Jones.

Some within the industry have been saying that the social media trading frenzy is coming to an end, AMC aside. We’ll wait and see.

Read this next

Retail FX

Malaysia regulator exposes OctaFX clone, shady FB profiles

Malaysia’s financial regulator today warned online investors about the risks of following investment tips made on social-media platforms.

Digital Assets

Crypto trading volume spikes at Swiss bourse amid FTX collapse

The shockwaves from the historic collapse of Sam Bankman-Fried’s crypto empire are still being felt across the industry, but some trading venues are actually doing better because of it.

Executive Moves

CMC Markets adds Camilla Boldracchi to institutional sales

UK’s biggest spread better, CMC Markets has promoted Camilla Boldracchi to take on an expanded role within its institutional sales desk.

Institutional FX

FXSpotStream reports $1.48 trillion in monthly volume for November

FXSpotStream’s trading venue, the aggregator service of LiquidityMatch LLC, reported its operational metrics for November 2022, which moved higher on a yearly basis but reflected weak performance across executed trade volumes when weighed against the figures of the prior month.

Retail FX

Interactive Brokers’ client activity drops 30% YoY

Interactive Brokers LLC (NASDAQ:IBKR) saw 1.95 million daily average revenue trades, or DARTS, in November 2022 compared to 1.96 million transactions in the prior month.

Digital Assets

The rise of Crypto ETPs in traditional exchanges as crypto winter deepens

Institutional investors are increasingly looking at traditional regulated exchanges as their first route into digital assets amid market turmoil caused by the crypto winter and the collapse of several big names within the space, including FTX. Acuiti and Eurex surveyed 191 buy and sell-side firms on their views of the digital assets markets in order […]

Digital Assets

TP ICAP’s crypto arm receives FCA’s go-ahead

UK interdealer broker TP ICAP has received a regulatory go-ahead to launch its cryptocurrency services in the UK. The bid shows that the recent collapse of FTX exchange has done little to damp the interest of big names in running their own crypto business.

Industry News

Coin Signals founder to pay $2,847,743 after prison sentence over crypto Ponzi scam

The U. S. District Court for the Southern District of New York has ordered Jeremy Spence, founder of Coin Signals, to pay $2,847,743 in restitution to victims of a fraudulent virtual currency scheme.

Digital Assets

CME Group goes DeFi: Reference rates and real-time indices of Aave, Curve, Synthetix

“These rates are designed to provide traders, institutions and other users transparency and price discovery across a much broader range of tokens, allowing them to confidently and more accurately value cryptocurrency sector specific portfolios and manage price risk around various blockchain-based projects.”

<