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#1 02-06-2020 12:56:09

johnedward
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How are brokers going to retain new clients after this virus mess?

How are brokers going to retain new clients after this virus mess?


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The recent virus outbreak caused an increase in volatility in the financial markets. In particular, it woke up the relatively calm forex market, injecting it with a high dose of volatility.

This newfound volatility has jumpstarted interest in forex trading, and brokerage firms have witnessed the return of dormant traders and a wave of new investors.

If this trend is favorable to the industry and to the brokers operating in this space, will these new traders remain in place as volatility decreases?

Virus opportunities cause traders to rush to forex brokers

Australia's ASIC (Australian Security and Investment Committee) recently brought up the CFD (contract for price difference) market.

The report they issued, based on traders at 11 Australian brokerage firms, representing 83% of the market, suggests that new account creations soared in the month of March.

During March, an average of 4,564 new accounts was opened each day, representing a total of 129,152 traders. During the months leading to March, only around 1,454 new accounts were opened each day. ASIC also observed the awakening of many dormant trading accounts.

VantageFX, a local forex brokerage firm says: "We've observed a surge in both new traders and returning clients."

"A contributing factor is the people who have to work from home, or who are looking for additional income streams, following the economic difficulties resulting from the virus situation. Also, the recent spikes in volatility are also seducing a large number of traders."

Exceptional performance for brokers in the first quarter of 2020

In Australia, GO Markets, ACY Securities and VantageFX are among those who are reporting soaring new account creations. that have recorded a strong increase in customer accounts and trading activity. However, this trend is visible in many other countries.

Israeli brokerage firm Plus500 reported their total number of traders at over 193,500. This is a 97.5% increase from the first quarter of last year.

XTB reported net profit of approximately 39 million, up 21% from 2019. Trading volume increased 89% from 2019 to $247.9 billion. The average number of active traders was 45,559, more than double the average of 21,950 in Q1 2019.

Are newer traders here to stay?

2 months ago, the markets experienced a significant increase in volatility. Since then, volatility has decreased, but overall it remains above normal. As the threat of the global virus situation continues to decline, volatility will continue to return to quieter levels. Therefore, will this renewed interest in the markets disappear?

Are these new traders bored sportsmen or casino players? Is it a matter of exciting cryptocurrencies that are entering newly volatile markets? The financial markets have attributes that likely interest sports betters. So rather than being able to bet on a series of basketball games that are played just a few times a week, people can participate at any time of the day.

Trading is the natural evolution for a poker player, combining risk, but also intelligence and research. Casino clients could be attracted by the transparency and clarity offered by the markets which are monitored by a regulated exchange.

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