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Retail investor quarterly trading trends

Pulse by Capital.com

An analysis of Q1 2023 trading data from Capital.com

peter hetherington

CEO, Capital.com

Our traders experienced another turbulent quarter – from a white-knuckle ride into the new year, fueled by fears of how hard the global economy would fall, to the uneasy sight of big banks in turmoil.

Analysts’ initial expectations for the economy’s landing were for it to be ‘hard’ or ‘soft’. But the consensus soon changed after the release of revised data that pointed to chances of a ‘no landing’ scenario being on the cards. This backdrop of shifting economic stats made taking stock of our traders’ reactions a fascinating venture, as you can imagine.

We observed a notable rise in positions opened on interest-rate-sensitive markets, such as forex, equities and gold. Moreover, there was next-to-no variance in stop-loss and take-profit use from the previous quarter’s record highs. This indicated a continuing air of cautiousness among our traders, who understand that protecting against losses is just as important as realising gains.

Another twist in the road in the last quarter was the collapse of Silicon Valley Bank. This event catalysed the renewal of our traders’ interest in banking stocks, to which UBS’s proposed acquisition of Credit Suisse also contributed.

As a business, we continued to make adjustments to improve how we support our traders. One of note was providing greater transparency on our overnight funding adjustments. Though this may seem like a small change, its outcome is significant, as it better equips our clients to choose how they trade and for how long they hold their positions.

Trading volumes reached more than $300bn in Q1 2023,12% higher than Q4 2022. The biggest contributors were the Middle East and Australia, where overall client trading volumes were up by 40.8% and 53.8% respectively in Q1 compared to Q4 2022.

For more information about Capital.com and our products and services, Visit our website.


Across the markets

Our platform gives traders access to more than 3,000 instruments from across the globe, including stocks, exchange-traded funds, forex, commodities and indices. As at the end of Q1 2023, Capital.com Group had more than 550,000 new accounts opened globally.

We have group entities globally, including in the UK, Cyprus and Australia, which are authorised and regulated by the UK’s Financial Conduct Authority, the Cyprus Securities and Exchange Commission and the Australian Securities and Investments Commission, respectively.

Highlights from this report

Key insights drawn from Capital.com trading data in Q1, 2023

After being unable to capture significant trader interest since Q4 2021, USD/JPY became one of our first most-traded markets in Q1, potentially due to the volatility caused by Japan’s central-bank action.

We noticed a marked uptick in GBP/USD activity. This came during a period of slowed dollar growth and a seeming restoration of confidence in the post-Truss/Kwarteng era.

Long gold positions were popular among our traders. But this soon changed after Powell’s testimony to the Senate committee in early March. Retail trading volumes for gold CFDs then dropped a staggering 88% in one day, and our traders reduced their long positions on the commodity from 61% to 59%.

After a bout of banks breaking down, borrowing, and eventually collapsing, our traders turned their attention to global banking stocks. This renewed interest was particularly noteworthy after the fall of Silicon Valley Banks (SVB) on 10 March. Prior to the collapse of SVB and the rout across the banking sector, Capital.com traders have typically paid little attention to this segment of the market.

In terms of single-stock popularity, Tesla (TSLA) held its top-traded position for a fourth consecutive quarter. Also in the top five were meme stock Bed Bath & Beyond (BBBY), e-com giant Amazon (AMZN), and tech titans Nvidia (NVDA) and Apple (AAPL). AMC Entertainment (AMC), Coinbase (COIN), GameStop (GME), Meta Platforms (META) and First Republic Bank (FRC) comprised the last five of the top ten.

We observed insignificant changes to stop-loss use from the previous quarter’s record high of 12.9%, indicating that our clients continued to see the value in exercising caution while trading.


Trading stats

Stop-loss use remains at record levels

Use of our platform’s stop-loss (SL) and take-profit (TP) tools hit record highs at the end of 2022. So we were pleased to see that our traders had continued to carry out a risk-aware approach into Q1. This was shown by an insignificant change in stop-loss statistics, with stops applied 12.80% of the time in Q1 2023 vs 12.99% in Q4 2022.

Regular stop-loss orders get automatically triggered upon an instrument’s price reaching a specified level. Despite this, they aren’t infallible – especially during heightened market volatility. In such cases, an instrument’s price can significantly pass the stop-loss level in moments, causing the trader’s order to be executed at a worse level than specified. The result of this can be a greater-than-expected loss.

This is why we offer our traders the option to set a guaranteed stop-loss (GSL), which guarantees to exit the position at the exact price set, irrespective of volatility. This feature involves us undertaking more risk, meaning we charge a small fee if the GSL is triggered (GSL fee = GSL premium * position open price * quantity).

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