Five trends shaping digital platforms for retail trading

By Daniel Stack, AlphaStream

When ETrade began offering retail customers internet stock trading in 1996 it processed 1,300 trades in its first week. By May of that year it was up to 11,000 trades a week. The rest is history, as they say. Markets have rallied and bust across several cycles since 1996 but the interest in stock trading has never gone away. Today, remarkably, the share of wealth invested in equities using digital platforms (like ETrade) is now around 20% and growing. The buzz headlines profiling meme stocks reflects a wider, more serious societal shift and reliance on digital platform for consumers. 

Reflecting on current events and the market summersaults over these past few weeks, AlphaStream hosted a conversation at Fintwit Conference in Las Vegas with Cobra Trading, moomoo and Benzinga – three leading US consumer-focused digital platforms – on what the future of platforms will entail. 

Stock trading isn’t going away. Quite the opposite, it is continuing to grow in popularity. Market cycles haven’t dented the momentum of this trend as the retail investor share of total U.S. equities volume recently hit 23%.

There are many kinds of investors. Can one platform rule them all? Or is there a platform for every kind of trader? The answer, it seems, is that it depends. “There will never be one platform that fits everyone” reflects Ryan Krebs, President of Cobra Trading. As markets continue to evolve, investors want advanced features, more information and better service. Trading platforms such as Cobra Trading and Benzinga offer specialist, niche tools and information for the most active traders. Whilst, on the other hand, Carolyn Bao, VP Marketing at moomoo, believes “the 80-20 rule still strongly applies” with platforms like moomoo and Robinhood appealing well to a mass market consumer with well tested, one-stop-shop features for all investors (including the most active traders). 

Innovation is constant. The last few years has included enormous innovation in both user experience (UX) and product. Mobile trading has sky-rocketed with simple, intuitive user journeys that make it easy for investors to access the markets. Neal Hamilton, VP Growth at Benzinga, points out how product innovation is also continuing to be driven by the evolution of markets. He asks, “How many investors can afford 100 shares of Amazon? Not many.” Innovation like fractional shares has led to new products and broader access to financial markets. 

Education matters A LOT. “Everyone’s learning journey starts at different points…and education should be accessible to all” reflects Carolyn Bao. Investing in the markets is competitive, and learning will always be an essential component in enabling people to have an edge. Digital platforms are embracing this and offering education in the form of short articles, videos, classes and other formats to help investors along the learning curve. 

Community is a competitive edge. “Bringing chat rooms, Discord, and voice onto digital trading platforms is a must have. Hedge fund and money managers have operated this way for years with a morning markets brief phone call every single morning” reflects Neal Hamilton. Investors have always relied on insights and information to make their decisions on where to invest. Ryan Krebs reflects that “It’s common that among our longer-term, more successful [traders] customers is they trade together instead of doing it on their own.” Enabling social and community directly within platforms continues to be a top demand from investors. 

– Daniel Stack, AlphaStream

Learn more about the future trends shaping digital platforms and watch AlphaStream’s recent conversation.

Article sources:

Marc Rubenstein, Dotcom 2.0, 

eToro, 2021 investor prospectus.