A year ago shares in struggling US video game store GameStop were worth just $3.25 a pop, yet at the end of last month they had reached $482. This stupendous surge was created by thousands of armchair traders, organising themselves on internet forums such as Reddit, who were attempting to outwit hedge funds who had placed massive bets on the chain's decline in a process known as short-selling. This has resulted in billion-dollar losses for some hedge funds, and big profits for traders who cashed out before the stock fell back to less than $100. Many of these speculators were using a new generation of share-trading apps, such as eToro, Robinhood and Trading 212. Have these services tipped the scales of financial power in favour of the little guy?
LONDON/PARIS - A self-employed trader in France accumulated stock futures worth $6.6 billion in a single day, trading records show, raising questions among investors about how he could build up such a large position despite having only 20,000 euros in his account. Financial industry safeguards have been tightened in the 10 years since rogue trader Jerome Kerviel lost 4.9 billion euros ($5.7 billion) at French bank Societe Generale and internal controls at financial firms are meant to prevent individual traders taking such large positions. But Harouna Traore was able to buy 43,941 S&P500 futures contracts worth $5.3 billion and 34,388 Eurostoxx 50 futures contracts worth 1.2 billion euros on June 29 last year through London broker Valbury Capital, trading records reviewed by Reuters show. When contacted, Traore, 41, referred to a court document reviewed by Reuters in which he confirmed the trades and said they had resulted from a mistake because he had initially thought he was trading on a practice platform where trading limits did not apply, rather than, as it turned out, a live one. He is now suing Valbury Capital in a French court, alleging the broker has kept the $11 million of gains from his trades.
Shut down March 23 by the COVID-19 infections of two people, the physical trading floor of the New York Stock Exchange (NYSE) will reopen May 26 but with "vital new safety measures." NYSE president Stacey Cunningham said in a Wall Street Journal op-ed the exchange will only reopen its facility to "a subset of floor brokers" while most of the rest will continue working remotely. She said floor brokers will return in small numbers first and will be required to wear protective masks on the historic trading floor. On the other hand, the majority of traders "designated market makers" that oversee trading of 2,200 NYSE-listed companies will continue to work remotely. "Bringing our physical trading floor back online will begin the process of returning the NYSE to the highest level of service for investors and listed companies," she said.
Intelligent investors have discovered how social media can help identify, understand, and address clients' needs. The goal is to be aware of what the masses are looking for from a particular company. Being involved in social media gives traders a way to have their fingers on the pulse of how their target customer and existing client base react to certain news or market events. When a trader can do this while the competition lags on their digital transformation, they can gain the advantage. In fact, the ability to take this understanding of their customer and the market and predict what is likely to happen can generate real gains for clients, going beyond expectations.