Life is all about change. Our bodies change as we age. Our personalities are different with each decade. Even our spouses, children, and neighbourhoods change over time. Sometimes we mourn the change, others we are gladdened by the change. However, one thing we can’t be certain of is that change is ahead. The tricky part is learning how to adapt to that change. Trading, as in life, is no different.
The major trading changes
In a word, the major change is that trading is now accessible. Accessible to a new cohort of people who can access fractional share purchases, from ‘commission free’ brokers and trade nearly instantly. Traders can herd together via social media apps and cause huge surges in share prices.
The key takeaways
- Go with the flow. When something is red hot, de-leverage, widen that stop and get out of the move well before you get caught on the inevitable collapse.
- Expect wild volatility to appear every now and then. Is it the meme stocks? Is it Tesla? Is it Berkshire Hathaway A shares? It will be something and when it flies it will cause pain.
- Don’t hold trades. The army of new traders will have to learn the same lessons that seasoned traders have. Trading is hard and many, many people will end up buying in at the very top.
- Expect the de-leveraging drive for retail to continue. Leverage is a killer and the bane of the retail trader. So, advise all keen non-trading, but trading, friends to only invest in cash. You will save them a lot of heartaches.
- Expect more scams to try and take people’s money as they point to ‘astonishing opportunities’ in the stock markets.
- Expect more mobile trading. People want to trade now. At work, in bed, on the bus, and at all times.