Has online trading contributed to market volatility in recent years?

[Prospector]

Maybe this is a poll subject, but the access (usually ) to online trading means that I react more promptly to market issues, then I would ever have done if I had to ring a broker and pay $70+ for them to transact a trade.

So maybe, online trading has contributed to market volatility? What do others think?

 

[Uncle Festivus]

Yes, and the ability to short with CFD's must have a big influence on volatility. Market gyrations are not 'smoothed' out like in the old days when you had to phone your broker to find out what was happening.

 

[IFocus]

Not sure if some one in a trading pit screaming sell is any different in speed to some one punching a keyboard key to sell and just screaming.

Crowd behavior seems to just be crowd behavior, the 87 crash didn't have the direct access for the public we do now and that seemed to do a pretty good job speed wise.

May be the difference is its just a bigger crowd and hence more volume

Focus

 

[tcoates]

Dont think so. I could trade online in 2000 and earlier and dont think that it was that volatile then?!? Margin lending now are prolly all the rage now (and associated with that margin call). Think the recent activity is more a result of over-reaction to news (that can be accessed more easily) without first thinking of the impact - thinking seems to be the after-thought. I could be wrong. Also, people are so used to prices going up now, that when something does happen it a case of...



The times are definitely changing

Tim

 

[Reealjrd]

Hello Friends,

I have read all the threads posted. I would like to share my trading strategy which i am having. I started trading 5 years back i used to trade according to my strategies and not depend on others. I developed my trading strategy when had some losses. But i didn't switch over to other brokers or complain about it to others. Because this is our fault. The market news and news from the brokers will disturb your trading and you will miss manage your account and loss your money.

So it is better to trade with calm and patience. You are investing your money which you have earned through your hard working and your family and childrens are dependent on that money only. So trade with patience and calm. As i applied the same strategy that is why i am in the market trading. And now i don't have any problem with my broker he is now providing some news facilities. Because of which i am with the market 24*7 and lossing my single trade. I have seen many brokers but now i am trusting only on this broker and using its all the features. So you can also try.

 

[skyQuake]

Retail traders being caught on the wrong side of moves, forced margin liquidations, stops run etc... Definitely moving the markets

 

[doctorj]

If online trading were to be a substantial cause of the volatility, then retail trade would have to contribute to a fair chunk of the overall volume.

According to the 2006 ASX Shareholding Survey, 46% of Australian adults own shares directly, through managed funds or self-managed super. On average they trade 8 times a year for an average trade parcel of $14,200.

I don't see that contributing a lot of volatility; I suspect increased leverage is likely to play a larger part.