It’s easier than ever for the normal person to trade like the pros on Wall Street thanks to all the tools available. But being able to use these tools also means being open to a lot of risks.
The way investors deal with markets has changed over the years as new tools and ideas have come out. This past year was no different; in fact, it was a great year for small buyers.
In 2024, brokerages, fintech companies, and banks all released a huge number of new goods that changed how regular people could invest their money and make money. It started as early as January, when the Securities and Exchange Commission gave legal approval for spot bitcoin BTCUSD +1.18% exchange-traded funds. This allowed retail investors to buy exposure to cryptocurrencies through their brokerage accounts, instead of forcing them to open a digital wallet to buy crypto directly.
More crypto ETFs could come out after the government gave its okay. This could happen again next year when SEC Chairman Gary Gensler steps down. Paul Atkins, who was chosen by President-elect Trump to replace Gensler, is seen as more open to crypto and in favor of “common sense” rules. This could mean fewer SEC cases against crypto companies going forward.
“I think a lot of those companies are feeling better right now,” said Richard Hong, a partner at the law firm Morrison Cohen and a former lawyer for the SEC. He also said that this might make it easier for financial companies to follow the rules when they do business.
People still expect the SEC to bring cases that clearly show fraud or harm to investors. However, the new head of the agency may be less proactive about pursuing cases that aim to regulate the financial industry, like Gensler’s SEC did with crypto.
Financial companies might have more room to offer their goods to investors after that. But if you’re a private investor, it’s important to remember that, in many cases, you’re the customer and these financial companies are trying to sell you something.
In 2024, a huge number of new investment items came out. Brokerages like Public and Webull started selling partial fixed income. This let buyers buy bonds at a time when yields were at all-time highs without having to deal with investment minimums that kept smaller investors from getting into the asset class. Fintech companies also grew into fixed income by making high-yield bond accounts and automatic bond ladders available.
Wealthfront’s vice president of product, Dave Myszewski, told MarketWatch, “A ladder is a smart way to invest in low-risk Treasurys, but getting access to the strategy used to require a lot of manual work, high minimums, or expensive fees.”
In the past, small investors could buy Treasury bonds. But Myszewski said that Wealthfront’s bond-ladder offering uses new technology to make it easier for small investors to do so.
He said, “We are always looking for turning points in technology that let us build complex financial products through software and lower the cost to consumers by automating the whole process.” “Technology also builds on itself. Once we set up the infrastructure needed for one product, we can often use those technical skills to make new products faster and deliver more products in the future.”
A lot of brokerages also changed their desktop trade platforms in 2024 to add new, more advanced tools. Fidelity, Moomoo (FUTU +0.40%), Interactive Brokers Group Inc. (IBKR -0.85%), and Robinhood Markets (HOOD -0.18%) were some of them. Small investors could use more advanced charting and technical analysis tools on these sites, and they also had better access to market data.
Neil McDonald, CEO of Moomoo, told MarketWatch in the past that the tools brokerages are giving small investors—often for free—are on par with the tools he had as a skilled quant trader ten years ago.
McDonald told MarketWatch in October, “You can do a lot more scenario analysis in a lot less time.” It used to be very, very heavy to do computational. We made it very light so that backtesting can be done very quickly. It used to take me a month to do the work you can do in a day.
He also said, “This is what I had at Citadel and JPMorgan 10 years ago.”
In October, Robinhood announced Robinhood Legend, a more advanced trading tool that you can use in your browser. This platform was different from Robinhood’s simple UX mobile app, but it did serve the purpose of meeting the needs of Robinhood’s more advanced customers.
Steph Guild, who is in charge of investing strategy at Robinhood, says that the company launched Robinhood Legend not just because technology had improved, but also because it saw a need and wanted to meet it.
Guild told MarketWatch that they told themselves, “We can’t give them all these new products and not keep adding new ways for them to look at their portfolios and make better decisions.”
During the COVID-19 pandemic, when people stayed home and invested their government aid checks, Robinhood’s customer base grew by a huge amount. But now, after years, Robinhood has even more customers, and these customers are smarter and want the more advanced tools that Robinhood now provides.
In addition to changes in technology, new financial products have also been affected by changes in asset classes and the way markets are set up. And one of the most popular new ways to invest in 2024 was event contracts, especially ones based on elections.
