After 2020 we have seen a real boom in the trading sector. Let’s see together what has changed since the post-pandemic
As we know, trading is a highly risky activity, in the sense that you can get hurt very easily and without too much effort. After the pandemic, the living conditions due to the quarantine prompted many "curious" people to approach trading without training of any kind, yet curiosity and the duty to experiment took over when faced with the real risks of this profession.
From saver to trader in a few months?
In Italy we have a very strong culture of savings, a culture that up to now has proved to be fundamental for literally carrying our economy forward. This propensity to save is mainly due to the "caution" component towards the future. With Covid, the slowdown in work, closures and the specter of economic collapse, Europeans have been looking for more immediate and fast earning sources.
Here, standing in front of the PC for various reasons, it appears an advertisement of a company that talks about trading and doing this activity in a profitable way. Meanwhile, the various newscasts talk about an economy going downhill and a financial sector in total disarray with the markets collapsing, while on the other side of the internet various investment "gurus" professed to have made a fortune with cryptocurrencies .
“Why am I scared while someone else earns with cryptocurrencies?”. Well, this is where the risk/wager component comes into play which makes you open the trading account without knowing what you were doing in the slightest, an attitude due to fear for the future, a behavioral error which it would be defined as a real choice dictated by impulsivity. In this pandemic, many have started trading completely lacking basic training to understand what they were doing.
The numbers speak for themselves: the trading boom
Only in May 2020 there was an increase in overall online trading of +211% compared to the same period of the previous year, while the number of traders in 2020 grew by +40% and in 2021 it rose by a further +25%. A real boom that of online trading which has also seen a considerable increase in the number of brokers, i.e. those who offer investment services, some of them, however, blatantly fraudulent as unlicensed to operate in the European territory.
So, just in this period, many have interfaced with this new world, fueling the curiosity of many who didn’t even know what trading was. The propensity of some to "want to get rich immediately" has served many brokers and gurus, usually through misleading advertising, to sell a dream that is truly unattainable in the short term. If we look at the statistics regarding the number of losing traders, we always hover around 80-90%, yet the number of traders (or would-be traders) has increased considerably in the last two years .
Basically, by observing these numbers, the audience of new aspiring traders has increased a lot, but they have approached trading in a wrong way, i.e. more like a gambler who wants "everything and immediately", a choice totally impulsive compared to a more reasonable choice which would see an approach where a person approaches trading because it is seen as a profession. In this regard, I recall that trading is a profession in the banking sector with various specializations in various markets and with various figures that gravitate around this professional figure, such as for example the Quants, the Risk Analysts the Technical Analysts, the Sales, all of whom gravitate around the figure of the trader.
Unfortunately, the terminology used in the trading/investment field seem to resemble that of gambling, and some films show the figure of the trader (many times exchanged with brokers) as someone who makes money easily, in a short time and with “the right tips”. Films such as "The Wolf of Wall Street" where the protagonist makes money in a short time through the sale of securities (that’s not trading) or "The Big Short".
Education - the only way to trade
Considering the fact that specific training is needed to learn a trade, it is essential to understand how trading requires a study phase, as in all jobs. To be a mechanic you need a study phase and a practical phase, the same thing goes for being a plumber, lawyer, doctor, engineer. In short, to work, therefore to carry out a "Profession" you need a "professional" training and professionalism is given by both theoretical and practical training and by the experience of the notions learned directly in the field.
In the world of trading, this aspect is completely overlooked and one is directly attracted by self-proclaimed "Gurus" or "trainers" who do not have an adequate qualification in what they teach, do not have qualifications or references certified by third parties about their skills (professional registers, won trading competitions, etc.), but they only have excellent marketing solutions that press on the urgent need to make money in a short time.
You will never find a serious and professional trainer who presses on these marketing levers, indeed a real trainer has proof of his activity which is certified by third parties and not in a self-referential way. Basically, many of those who have tried to train have found themselves in front of people completely devoid of experience, skills and qualifications, precisely because the initial approach to trading was that of "everything all at once".
Trading first requires adequate training time and then practice possibly with personalized supervision by a professional willing to do so. In essence, trading is a job like any other and the study and training phase will be fundamental in future results both in terms of time and the quality of one’s work.
Original article published on Money.it Italy 2022-06-30 13:00:00. Original title: Trading, come è cambiato dopo la pandemia?
