The world of online trading has changed indelibly from what it was in recent history. Several technological innovations, driven by major societal shifts have changed the way people approach and think about important topics such as financial freedom, risk and return, and how success is defined as an investor. Keeping abreast of these developments and understanding the intricate interplay between social dynamics and economic cycles is key to making informed decisions in fast-paced – and often volatile – market conditions.
Commenting on this is Tickmill Managing Partner, Roger Eskinazi who says that online trading; like many other sectors, is just as susceptible to social, economic, and political movements as other sectors. This reality, as he explains, has become “ever more pronounced in today’s always-on, interconnected world, where market developments are framed by both macro- and micro-economic factors, often simultaneously.
Successful online traders are therefore holistically informed individuals, who have broad oversight of current affairs and how these issues will be brought to bear on financial markets. Although past performance and market history will continue to be a golden thread and reference point for traders, what’s happening on the ground in real-time should play just as much of a significant role in how traders make decisions.”
AI-powered tools will transform investment thinking
Providing insight into the primary trends driving trading decisions, Eskinazi says that with artificial intelligence (AI) being the buzzword of 2023, the year ahead will see greater levels of AI adoption in online trading circles. According to Google Cloud research, as much as 50% of trading systems and data providers, have now incorporated AI-powered services into their offerings.
In South Africa, platforms such as Tickmill are part of the constituent that has embraced the possibilities of AI. For example, Tickmill’s Acuity Trading Tool draws on national and international news features, diverse data sets, and natural language processing to provide traders with an accurate overview of market sentiment. Among other uses for these kinds of tools, AI can help traders identify opportunities as and when they arise.
As Eskinazi adds: “Hate it or love it, AI is here to stay. Our job as online traders is to find ways to use AI to gain a competitive edge. AI will, however, never be ‘human,’ and has several obvious shortfalls in its lack of understanding to understand complex processes that underpin basic human behaviour. It is, however, a powerful tool to have in your investing toolbox – an add-on that can bring a new, fresh perspective to your forecasts and investment decisions.”
Greater mobile penetration will increase market reach
Mobile connections in South Africa are at an all-time high. And, according to a recent report focused on Sub-Saharan Africa and conducted by the Global System for Mobile Communications Association (GSMA), several leading mobile network operators have renewed their commitments to closing the remaining coverage gaps.
Vodacom, for example, plans to invest over $3 billion towards upgrading network resilience and coverage in rural regions in South Africa over the next five years. Apart from the obvious benefits this offers online traders in terms of choice and convenience, it’s also worth contemplating the impact of this on the democratisation of trading.
With greater mobile penetration in South Africa, comes an inevitable lowering of barriers to entry into the marketplace. People in outlying or rural areas for example, can now be welcomed into the fold, providing more South Africans with the opportunities that only a select few previously enjoyed.
The broader implications of this on important national objectives such as financial inclusion are encouraging. “In 2024, we will likely see more trading platforms creating mobile apps for their users. We’re also likely to see platforms that have apps, creating more user-friendly interfaces and prioritising the user experience even more than they have done in previous years.
This is all good news for aspiring traders who enter the investment world using a mobile device. Through mobile apps, we have the potential to reach more people, address more knowledge gaps, and provide a higher level of technical support,” says Eskinazi.
Young investors will drive change
The country’s titans of industry have their sights set on the Millennial and Gen-Z generations, which have now entered the fray of financially active South Africans. The maturation of these younger generations will undoubtedly play a pivotal role in shaping the future of numerous spheres within finance, including how investment decisions are made and the sentiment around investment behaviour in general.
These emerging generations; as numerous sources continue to demonstrate, are markedly different from their older counterparts in several ways. For example, findings by youth market expert, InSites Consulting, reported that ‘Zoomers’ are more inclined to self-educate on matters relating to personal financial management.
These young people are also frontrunners when it comes to investing in emerging innovations such as cryptocurrencies, demonstrating their openness to new financial instruments.
The report also found that members of Gen Z are deeply concerned about issues relating to social justice, sustainability, and economic development. To cater to the needs of this rising generation of investors, online trading platforms need to frontline the importance of social impact.
As Eskinazi concludes: “As these younger generations come of age, their influence on various facets of finance will become clearer and will continue to reshape investment norms and sentiments. As we prepare to usher in a new era in investing, platforms like Tickmill will continue to empower these new investors to make wise, informed decisions that set them up for future success and allow them to contribute meaningfully to a more socially conscious financial landscape.