Online trading is booming thanks to Covid

Millions see it as a way to make extra income.
Image: Shutterstock

Online trading volumes are through the roof since the onset of the Covid lockdowns, and there’s no sign of a slowdown, says Daniel Kibel, CEO of CM Trading.

“Whenever there’s a spike in stock market volatility, we see a corresponding spike in trading volumes. The last 18 months have been extraordinary for online trading. People are looking for additional sources of income and online trading is an obvious solution because it’s something that can be done after working hours or in the evenings.”

A report by Deloitte shows 10 million Americans opened new brokerage accounts in 2020, which has been dubbed ‘the year of the retail investor’. Fuelling this growth are easy-to-use investment apps that have been integrated into payment apps, and the ‘gamification’ of broking apps. These newcomers are having an outsized influence on the market and it would be foolish to dismiss them as clueless and gullible, says Deloitte.

Kibel says there is no typical profile of an online trader, as clients are drawn from all age groups and demographics.

“What is unusual about Africa is the number of women who are doing online trading. They make up about 50% of our clients.”

CM Trading was established in 2012 and has offices across Africa, the Middle East and parts of Europe. In Africa, it has won a string of awards over the years, from Best Financial Broker in Africa to Global Business Review’s Best Performing Broker in Africa 2021. It has been licensed as an online broker by the Financial Sector Conduct Authority (FSCA) since 2012.

It is an online derivative brokerage offering numerous trading products, such as forex, commodities, indices, cryptos and the ability to purchase individual stocks such as Amazon, Apple, Alphabet and Microsoft, as well as indices such as the S&P 500, FTSE 100 and JSE Top 40.

CM Trading offers clients a type of derivative known as contracts for difference (CFDs), which track the price movements of actual financial instruments without having to own the underlying asset.

The company has invested heavily in technology to ensure orders are filled instantly and without price slippage. A library of educational material from charts to fundamental analysis, supported by daily news reports and expert webinars, are designed to give investors and traders an edge over the market.

Starting small

“The beauty of online trading is that you can start small and build up the size of your trades as you gain confidence in your ability to read markets and profit from them,” says Kibel.

Demo trading – where you can place trades using fictitious capital – is how most traders get started, but there’s nothing to compare with the thrill and anxiety of placing a trade with real capital at stake. “You can make a loss on a demo trade and sleep easy at night because you haven’t really lost anything, but when it comes to your own money – even if it’s small – then the experience becomes more real,” says Kibel.

Copycat trading has become a popular method of kickstarting clients on their road to financial independence.

This is where you can mimic the trades of more experienced and successful traders, though you should not rely on this as a way of making profits on a sustained basis. Experienced traders can expect a percentage of losing trades, and some trading styles are better suited to different market conditions.

Copy trading is available not just for forex, but other instruments such as indices, commodities, equities and bonds.

“There is no substitute for putting in the work, studying the market, understanding what you are doing, and having the confidence to stick with your trading style,” says Kibel.

Rising markets – such as those experienced over the last 18 months in the aftermath of the March 2020 Covid crash – have made it easier for traders to make handsome profits, but things become trickier in sideways or falling markets.

“This is why we continually emphasise education and staying abreast of market trends. Our view is that we want our clients to be in this for the long haul. The better informed they are about the market, the more profits they are likely to make, which is why we continually push our daily market reviews and trading signals, which we can push out instantaneously to our clients. And all of this is available for free.”

Successful traders

There is abundant research to shows that traders who stick to a trading plan – such as exiting a trade at a predetermined profit or loss level – tend to have greater longevity in the markets. This is especially true when positions are leveraged (effectively, multiplying the gains or losses with borrowed money).

What does the future hold?

“I’m excited for the future, given the growth we have experienced over the last few years, and where this is taking us, but I also look to the future with some trepidation, particularly how the next few years will play out as we come to terms with Covid as part of our daily routine,” says Kibel.

“As we have seen over the last 18 months, there are always great opportunities in the market and I expect we will continue to see a new generation of traders and investors seeking financial self-reliance and independence turning to online trading as a way to achieve their goals.”

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