The past decade has seen a dramatic increase in the accessibility of financial services. From online banking to mobile investing apps, more people than ever before have been able to join in. However, we are still far from making it an even playing field, with large institutions such as hedge funds dominating the game to the detriment of the ‘little guy.’
The data bears this out. In the US, for example, the top 10% own 84% of all stocks. Moreover, retail traders consistently lose money to professionals, as evidenced by the fact that less than 1% of the day trading population predictably earns any profit.
Even barring day trading, the average retail investor underperforms the market by about 1.5% per year. One of the critical reasons for this is that large institutions have always had an edge in access to information and technology. As a result, they can afford to pay for expensive data feeds and trade execution tools, as well as the salaries of highly skilled traders and analysts.
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