The stock market dipped sharply in March once the lockdown started. But what followed was beyond the expectations of trading experts. The stock market rallied as a record number of retail investors entered the market. The influx was mainly due to the millions of Americans who now had more time than ever to focus on trading and learning about the market.
COVID-19 had a positive impact on stock trading as it swiftly accelerated the participation of day traders. Apart from the time that people had, another reason contributing to this remarkable turnaround in the market was the rise in app-based brokerages’ popularity.
Commission-free trades, updated information about stocks and the stock market, and quick analysis of a trader's history became the core reasons why more people wanted to enter this market. Front CEO, Bam Azizi, thinks that now is as good as a time as ever for newbie investors to get their feet wet in stock trading.
With the emergence of app-based brokerages, investors now have quick access to trading. However, with this easy, instant access to the stock market comes potential pitfalls for inexperienced investors. Without access to intelligent insights or digestible data, most new investors invest with their gut, choose hot stocks of the moment, or are dangerously influenced by examples of irresponsible investing online.
Impact of app-based brokerages on trading
It was evident that the market would change once new investors started coming in. While no one knew exactly what to expect from the market, it's no surprise that the temporary influx of stimulus check cash in Americans' pockets coupled with pandemic boredom brought a flood of new investors into the stock market. Thanks to app-based brokerages, individual investors, both veterans, and amateurs, could play the stock market game with the click of a button on their phones..
However, experts are concerned about new investors seeing retail investing as a short-term gains play rather than a vehicle for long-term investing. This could mean a lot of new investors will crash and burn from impulsive or overly active trading, which can be encouraged by some trading apps.
Bam Azizi hopes that Front can help this new class of investors invest with confidence by putting the data they need at their fingertips. App-based brokers aren't going anywhere and young investors will continue to turn to these modern solutions to invest, which is why people can't get their hands on Front fast enough. This wave of new investors needs more than just the keys to the car, they need to learn how to drive.
The job of these apps is to make the process of investing easier. It doesn't matter whether you are a veteran or an amateur; every investor needs access to investing insights to make informed decisions. For the first time, the Front app gives this information to everyone, in an easy-to-understand way, 24/7.
Importance of app-based brokerages
When Bam came up with the idea for Front, he only had one thing in mind: to help people build more secure financial futures, regardless of their investing experience. While he knew that his business idea was unique, he never expected that Front would become one of the most highly-anticipated investment advisory apps in 2020. Only a month since their beta launch and already a waiting list of 20,000, it's clear that investors can't wait to get their hands on a tool like Front.
There are reasons why it became so popular. There's no other app that effectively captures so many data points on a company and their stock, leverages AI-driven technology to power predictive algorithms, and, most importantly, makes it easy-to-understand by turning all this information into one simple number: the FISCO value. Veterans know to study a company's profile before investing, but newbie investors may not want to spend so much time. And that's where app-based investment advisory platforms like Front come into play. With data-driven insights on the risk and potential of particular investments, it helps you decide whether you should or shouldn't invest in a specific stock.
Doubting your decision may often lead to impractical trades. But, with investment apps like Front, you'll have the information you need, presented simply, to make quick, informed investment decisions. It considers factors like company financials over time, recent stock performance, news and sentiment to assess risk, FISCO-enabled predictive models, and compatibility with a person's existing investments. With all this information now accessible via an app on your phone, there's no better time to start learning how to invest. And, brokerage apps paired with Front can make a significant difference.
In an interview about how app-based brokerages are changing the face of the stock trading industry, Bam said, "The primary goal of my app is to give young investors the tools and insights they need to make better investment decisions. Once you start investing with Front by your side, you'll become a more confident investor. You'll have the data you need to choose smart stocks and the tool to find investments that make sense for you.”
The future of app-based brokerages
With the tremendous rise of app-based brokerages and the mobile-first preferences of millennials and Gen Zs, one thing is certain: the upward trend of new, young investors using apps to invest and trade will continue. Investors want updated information about the stock market, and they prefer apps that bring all their trading apps in one place. Fortunately, Front offers all of this and more, right out of the gate. From Robinhood to TD Ameritrade, it keeps all your trading apps under one roof.
According to Bam Azizi, there is a big difference between investing with data and investing with your gut. App-based brokerages give easy access, but only Front provides all the essential data you need to make smart trading decisions instead of trading emotionally, which does nothing but increase the risk of incurring losses.