Over the last few weeks, here are a few things which caught my attention in the news and out of the OTA Research Center:
Firstly: The GameStop Government hearings have continued with 3 hearings so far in the US House Committee on Financial Services, titled, “GameStopped: Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide?” In the last hearing in particular, the new Securities and Exchange Commission Chairman Gary Gensler testified on a wide range of topics and questions relating to the whole GameStop short squeeze saga including:
- Gamification and User Experience
- Payment for Order Flow
- Equity Market Structure
- Short Selling and Market Transparency
- Social Media and its role
- Market “Plumbing” for Clearance and Settlement
- System-Wide Risks that are present
It was a very extensive conversation. Amongst many other things, in particular, Chairman Gensler singled out the gamification of smart phone trading and investing apps as something they would be looking at very carefully to consider new regulations and are considering publishing a regulatory notice seeking additional information on the use and impacts of gamification.
Indeed, that is an important conversation. At OTA our focus is on what we call edifying not gamifying … edifying trading and investing technology not gamifying it … aligning trading and investing technology with embedded education, embedding the rules, steps and strategies of a defined methodology which takes a responsible approach to risk management. That’s what our award winning platform called CliK is, which is a first of a kind, all in one, education, analysis and trading platform built on solid foundations of risk management.
Secondly: Out of the OTA Research Center we published some interesting articles. In particular, I had a great dialog with Professor Peter Swan of the University of New South Wales in Sydney Australia who had released some research in 2016 which seems to be missed by the mainstream media and the government hearings. Typically, those quote an older study which concluded that retail traders and investors generally lose money based upon a particular methodology of analysis.
Yet, Professor Swan and his colleagues used a very different methodology and concluded a very different reality, that traders and investors fall into two camps … uninformed followers who follow the market trends and informed contrarians who buck the market trends. They found that households performed better that institutions because professional traders and investors tend to be uninformed followers and retail traders and investors tend to be informed contrarians. They also concluded that women are better retail traders and investors than men because they tend to be more contrarian!
A recent survey of over 1000 OTA students in April 2021 indicated that 22% are female. While we are happy in that being a significant proportion, we also think it should be more, which is why we are launching our Women in Trading and Investing initiative. The research of Professor Swan and colleagues aligns with our experience over so many years with so many students at Online Trading Academy. Compared to their uneducated counterparties, educated retail traders and investors who are informed about contrarian methodologies can have a very different experience than commonplace perception and commonly cited research. These are the kinds of biases, misconceptions and myths that our OTA Research Center is dedicated to shine a light on progressively as we curate diverse sources of research, tap into our research capabilities and data and collaborate on new research to contrast educated retail traders and investors with their uneducated counterparties. Our purpose is not to engage in the academic debate of who’s right and who’s wrong, just to allow people to be more informed in weighing it up for themselves.
Thirdly: In the news stream about retail trading and investing one thing that caught my attention was a fantastic article in Esquire Magazine dated May 13th 2021 titled, “The Fortunes Won—and Lost—in the Mind-Boggling Rise of r/WallStreetBets” in which the author provides a comprehensive overview of the whole saga so far. I found it a great read.