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It has been a tough few years for the capital markets. Covid-19 led to mass unemployment, reduced economic activities, surges in inflation, supply-chain crises, and uncertainty surrounding policy to name a few. The result has been intermittent and unpredictable bouts of high volatility in the financial markets.
In 2020, record trading volumes and persistently high levels of volatility through the year tested operating models for brokers. In some asset classes, this surge in trading, coupled with work-from-home (WFH) arrangements led to significant pressure on market operations. In the same year, a study revealed some 30 to 35% of buy-side and sell-side firms faced significantly more operational challenges with regard to post-trade activities in cash equities and cash fixed income.
Amid the rise of new variants and lockdown rules being put back in place without any warning, investor sentiment has also taken a hit. Essentially, covid-19 and associated market volatility has raised risk levels for brokers. This seems a consistent trend, as uncertainty continues into 2022.
Low Investor Sentiment Poses Business Risk for Brokers
As covid-19 continues with various intensities across the world, investor sentiment has waned. In a September 2021 survey by IHS Markit, it was seen that investors’ risk appetite was the lowest in 12 months due to concerns over the pandemic stretching into 2022. The gradual tapering of monetary and fiscal policies worldwide from 2021 onwards (especially in the US) has also contributed to this declining optimism. A similar sentiment has been observed among East Asian investors, due to looming uncertainty arising from the rapidly spreading Omicron variant.
This poses a serious concern for brokers across the financial market who rely on risk-taking to remain profitable. This lowering of morale and willingness to take risks could result in reduced profit margins for brokers’ and an increased customer churn over time.
A rise in risk-aversion among traders means that brokers will have to re-evaluate their strategies as well. Building confidence in both potential and current traders has never been so important. Now is the time for brokers to find innovative ways to combat trader apprehension and grow confidence in the viability of trading. So how do you do it?
Autochartist’s Risk Calculator Tool Can Make a Difference
By offering traders Autochartist’s risk calculator tool, brokers can position themselves as valuable partners. This tool helps traders build their risk management strategies and gives them added confidence to make trading decisions, while still keeping the brokers best interest front of mind.
Autochartist also offers other products, such as our volatility analysis tool which shows traders which times have the best volatility to match their trading style. These tools offer a unique way for you to boost trader retention and keep those traders profitable
The Power of Actionable Content
Another way you can boost trader confidence is through actionable content. Information availability has been one of the most valuable assets in the financial markets. Research proves that information has a complex correlation with financial market volatility. During periods of uncertainty, investors and traders demand content that can help them make informed decisions.
With Autochartist, brokers can provide clients with the informative content they are demanding without any of the usual hassles. We offer content for all stages of the traders’ journey, but our winning trade and correlated alert content has proven to be a major asset when it comes to encouraging redeposits and reactivation.
Our content is also available in multiple languages and can be tailored to include high impact news events and overall market analysis. All our content is coupled with a strong trade now button with fully customisable deep links so you can control your traders’ journey.
In the current climate of uncertainty, brokers need to equip traders to manage their risk in a more efficient way, to ensure client retention and success. The time of simple trading signals has passed and the time for a new engagement hero has arrived.
To find out more about how Autochartist can help you build trader confidence and grow your profit margins why not Contact Us to learn more.
