By Nick Hall, Co-Founder, Stocknet Institute
2023 has been a turbulent year for retail trading platforms. The exposure of poor practices at platforms that prioritised their bottom line over their customers has damaged the industry’s reputation. In the coming year, it will be especially important for leaders in retail trading to challenge the status quo of risky instant-live platforms and offer more supportive, customer-led alternatives.
The global online trading platform market is projected to grow to an unprecedented 15.34 Billion USD by 2030, but how many new retail traders will actually achieve success? Trading is a serious business that takes hours upon hours to perfect. Straight-to-live-market platforms have become the norm, but they set novice traders up to fail from the start because they skip over that crucial practice stage. Rather than learning how to navigate a turbulent market and hone their skills in a safe practice space first, traders are pushed straight in to face unnecessary risk.
It is the duty of those providing trading experiences to be upfront about risks, and aid in avoiding them. The appetite for better, expert guidance is certainly there. A recent survey by the World Economic Forum found that 74% of retail traders would trade more if they had more opportunities to learn about investing, and 67% said they would invest more if they had more trust in their investing platform. Traders are calling out for help and we as an industry need to provide it to them.
The growing popularity of gamified trading has the potential to tackle this financial literacy gap. Rather than simply giving users unfettered access to markets and letting them figure things out for themselves, platforms can offer virtual skill games and challenges to help educate traders and prime them for success. Through simulated real-world scenarios, traders can work to enhance their skills without incurring substantial financial losses and emotional frustration and even enjoy fun rewards along the way. Common blunders like trading without a strategy, over-trading, not capping losses, and analysis paralysis could all be avoided entirely. With the proper education, support and tools, traders will be better prepared to tackle the complexities of a live market when the time comes.
Encouraging skill development and inspiring confidence in their users must be paramount to every platform’s mission going forward. Right now the industry is saturated by firms in a slow-burning race to the bottom, competing to see who can offer the most basic, cheapest challenge. This needs to change, and fast. 2024 will see a long-overdue return to prioritising trust, transparency, and education, and platforms that offer this will quickly rise to the top. There is a new dawn approaching in the retail trading industry, where firms must do things right, be innovative and transparent, or be left behind.
