How technology and self-directed learning are motivating retail traders
Starting in 2020, pandemic lockdowns forced people to stay at home, changing the way they work, live and play. Stuck indoors with time on their hands and searching for new online pastimes, many people turned to a host of online endeavours, including learning. According to the Adult Participation in Learning Survey – conducted annually by the Learning and Work Institute – over 43% of the 5,000 people surveyed participated in some form of ‘lockdown learning’. Interestingly, the survey revealed that 55% of lockdown learners learned independently with 24% preferring to learn through apps, websites and social media.
Given this trend towards self-learning, it is perhaps unsurprising that online retail trading platforms and mobile apps — offering people the convenience to trade and learn on-the-go using demo accounts — should also grow in popularity among people keen to learn more about trading and investing.
According to an Investment Trends Report, learning a new skill was one of the key factors driving new traders to explore online trading and investing platforms during the pandemic — with new investors attracted by the ability to invest small amounts (46%) and the desire to learn a new skill (44%).
“The pandemic has further accelerated the appeal of online learning as more people work from home and clamour to learn new skills. The popularity of retail trading apps, which allow users to conveniently trade from anywhere, has climbed as a result,” explained Kypros Zoumidou, Chief Commercial Officer, Capital.com.
The way people consume information is changing
The onset of Covid may have accelerated the adoption of self-directed learning and given traders an additional reason to learn how to trade, but it is essentially the ubiquity of mobile internet usage and the proliferation of smartphones which had a lasting impact on online trading. The widespread use of smartphones and mobile internet has affected the way in which people consume news and information. According to App Annie 2021 data, Global consumers spend an average of 4.2 hours per day using apps on their smartphones. In some markets, the average is even higher, topping more than five hours.
“A big part of trading and investing is about building confidence through research, education and learning. In a world powered by digital information and mobile technology, doing most things online, including learning, has become intuitive. With hectic work-life schedules there is little appetite to sit in a physical classroom and commit large chunks of time to one single endeavour,” said Zoumidou.
Retail traders and investors often use a variety of resources to help them to learn and stay informed, much of which centres around information, news and educational content that is free and widely available through online mobile resources.
According to a recent global survey of 3,923 traders conducted by Capital.com, 65% of people who trade or invest online say they prefer to consume trading information through their mobile app. Social media channels are also becoming a growing source of information for traders. Data from Capital.com shows that traders often use Facebook (28%), Telegram (27%), Twitter (19%) and Instagram (20%) to obtain trading information. Only 23% don’t use any form of social media to obtain trading information.
While it’s not easy, it is true that more or less anything can be learnt online, often for free or at minimal cost, including how to trade. Having said that, trading online comes with higher risks and may result in the loss of capital. This is why it is important that people take the time to educate themselves on the risks and the basics of the markets and trade using a demo account before attempting to trade live or invest for themselves.
The next frontier
Now that technology has opened up the markets and allowed anyone with a mobile phone to gain access, how will it change and evolve again to help this new generation of self-directed traders? As investors and traders gain greater access to financial markets through mobile trading platforms and become more empowered, self-directed learning will become important — technology and education appears to be the next frontier.
“A big part of trading and investing is about building confidence through research, education and learning. If you aren't fully informed, then you shouldn't trade,” said Daniela Hathorn, Market Analyst at Capital.com.
But trading goes beyond education — it's also about psychology. Looking ahead, traders and investors might benefit from technology that can effectively combine educational resources like news, analysis and explainers with machine learning technology that can help them identify unconscious behaviour and habits.
Psychological biases that can present themselves when people trade include overconfidence bias — the sensation of believing the hype around an investment — and memory bias, which is when a trader gives too much credence to recent events. Meanwhile, disposition bias can cause investors to sell assets that have increased in value, while keeping assets that have dropped in value. It influences us to retreat our original trading strategy, which usually leads to risk management mistakes and larger, unexpected losses.
“As human beings we are affected by psychological biases, this is the same for traders and investors. These biases can make it difficult for traders and investors to make investment decisions that are objective and rational,” added Hathorn.
Retail trading apps that harness technology to build best-in-class platforms that put education and learning at the centre of everything will likely appeal to a generation of new traders, namely those eager to ‘learn’ more about trading as well as ‘unlearn’ common psychological habits standing in the way of their trading strategies.
“Convenience is key to learning but to really make a difference to a trader’s learning, the experience must be personal,” said Zoumidou.
To help people learn on the go, Capital.com offers free online courses, articles guides, webinars, and analysis directly on the Capital.com app and website platforms. In addition, Capital.com is always improving how it serves its clients and is developing new solutions prompting traders to carefully consider what they are doing and the decisions ahead of them.
“Our aim is to educate, but we recognise that each of us learns in our own way. By utilising technology to understand client behaviour, we can ensure that each individual is served educational content in a format and style that can work best for them,” added Zoumidou.
For a full range of Capital.com’s free, online trading courses, visit https://capital.com/learn-to-trade
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors, not necessarily Capital.com or any of its affiliates, subsidiaries, officers, or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Past performance is no guarantee of future results.
