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When the fury of trading takes hold of the millennials and generation Z

New trading applications that democratize access to financial markets are facing great success with younger generations. In spite of the uncertain economic context, many millennials and young people of generation Z have started trading through these applications during the confinement, but this is not without risk and controversy.

Three million new users in six months! That is the impressive record set by Robinhood, a new trading application that is all the rage across the Atlantic. Founded in 2013 by Vladimir Tenev and Baiju Bhatt, two former members of the Occupy Wall Street movement who wanted to democratize access to financial markets, Robinhood offers a fun, intuitive, and interactive interface to perform transactions exempt from the usual brokerage fees. With this application, investing in the stock market becomes as easy as child’s play, and each transaction is even greeted on the screen by a shower of confetti! With its revolutionary approach to trading similar to a game, Robinhood has attracted 13 million users since its launch, most of whom are under the age of 35, and was valued at $8.6 billion last summer.

 

This millennium craze for trading has strengthened considerably with the pandemic, with young people spending more time on screens and the need to find a hobby driven by the hope of making quick profits in the context of a sluggish job market. This situation has fully benefited the new players of trading that are Robinhood and its competitors, and since March 2020, the figures are dizzying: the assets deposited by Robinhood users have been 17 times higher than in the fourth quarter of 2019. From February to March 2020, activity grew by 60%, with an average of 4.3 million daily transactions, and the application has succeeded in attracting half of the new investors. Other trading applications with similar concepts, such as eToro or Raging Bull, have met with the same success, offering a new approach to financial markets adapted to millennials and Generation Z: easy use, total or partial exemption from the usual brokerage fees, and highlighting the most successful users to the community as real influencers, at a time when Twitter and other social networks are capable of strongly influencing stock prices. Subscribers can exchange with each other and copy portfolio models to hope to replicate their performance, without the need for complex knowledge of financial mechanisms. In the first quarter of 2020, the Robinhood, eToro and Raging Bull trading applications achieved growth of 300%, 220% and 158% respectively, attracting a large number of first-time investors. In March 2020, 56% of new Robinhood users were investing in the stock market for the first time and most of them were under the age of 35. In the months following the outbreak of the pandemic, the average age of individual investors decreased between 10 to 15 years.

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