How a retail surge boosted trading
Commission-fee trading drew in new investors. The pandemic crash and subsequent rally kept them buying and selling.
This story is part of "The rise of retail investing," a Protocol Manual. Read more here.
The stock market boomed in 2019 — but you wouldn't know it from looking at trading volumes, which were static for most of the year. Then came the coronavirus pandemic. First the market crashed, then it rebounded. The rapid movements were enticing for individual investors who suddenly saw potential for big gains in day trading. Shares kept rising, and so did market volume.
Tellingly, the swelling number of trades outpaced the growth in shares changing hands. Since institutional investors typically trade more shares at a time than individuals, it's a clear sign that retail investors were flooding into the market and making more small bets.