This is almost unbelievable that 47% of the total volume is coming from retail investors. With the growing dominance of retail, we are seeing the popularity of retail like subscription pricing models.
Retail traders have become a dominant impacting force in the trading markets. If you want to know how far we have come, let’s take a look at the Options Trading volumes for the week ending on December 4th. Out of the 366M, options contracts traded, about 174M were traded by retail customers. This is almost unbelievable that 47% of the total volume is coming from retail investors. With the growing dominance of retail, we are seeing the popularity of retail like subscription pricing models.
Trends are indicative of evolving markets and industries. As consumer preferences change, industries will usually follow to continue making money. However, sometimes a new market emerges entirely. For example, the subscription-based economy growing today exists due to the telecommunications and entertainment industries. These industries recognized a growing trend among customers for more customizable services and built product packages that emphasized paying for personalized service.
Subscription-based services became popular with the rise of smartphones. As more people started using data while on the go, telecommunication companies began offering different subscription packages based on the customer. Today, when a customer is shopping for a cell service provider, the package options with one provider are endless. You can get a family package, unlimited data, or a fixed amount of data. The service you receive is built heavily upon your needs and preferences.
What consumers appreciated about their cell phone service providers they started expected from other industries. As consumers began demanding newer consumption models, many businesses followed suit and started providing them. A great example is the entertainment industry, specifically television. Before the now conglomerate Netflix, cable companies ruled the home entertainment industry. However, when Netflix introduced the first idea of a streaming service, customers found the perfect alternative to expensive cable. The streaming service was not only cheaper but highly personalized. You built a profile that monitored your show preferences and gave you suggestions, and for consumers, it felt like they were paying something unique to them.
The market trend suggests consumers are expecting more subscription-based services. If you need more evidence, as stated early, you can watch an economy evolve by monitoring the industry changes. More and more industries are involving some form of subscription-based service! For example, Ford is providing its customers with a leasing subscription option. In the United States in 2015, consumers spent 420 billion on subscription-based services. The consumer demand for more personalized services is defining a new business model. It is just a matter of time before more industries start to capitalize.
The bottom line is consumers are expecting more subscription-based services. Even investors and portfolios are expressing the same demand in stock trading. This pressure has led to the rise of some subscription-based trading services. Investors pay a single fee and are allowed to make unlimited trades without hidden fees. Apps like Stash allow unlimited trades for a flat fee of three dollars a month.
Certainly, brokerage giants like E-Trade, Charles Schwab, and TD Ameritrade are not going away anytime soon. However, if the trend suggests anything, it is that consumers will gradually demand more personalized services. So, eventually, these providers may be forced to provide a subscription-based service or be muscled out of the market entirely.
While subscription-based trading is unlikely to replace the market anytime soon, the pressure from consumer demands may lead to more options when it comes to trading accounts or services. This outcome is certainly likely, following the evolution of other industries providing more subscription-based services, like Tradier. Learn more about our commission-free and subscription-based trading options.