Indeed, based on captured data on all executed trades on Capital.com between 1 April 2022 and 30 June 2022, 38% of traders on the platform carried out short-position trades in Q2 2022, which was 34% higher compared to the previous quarter, according to the latest ‘Pulse’ report by the trading and investing platform shared with Finbold on July 27. Moreover, the study found that during the period in question, short-selling was marginally more profitable (32.1%) than long-position trades (28.7%). As per Capital.com’s Chief Market Strategist David Jones: Jones also opined that the increasing number of short-position traders in the second quarter indicates a change in investor sentiment as markets become more pessimistic.
Commodities, FX, and Indices were the most shorted in Q2
It’s also worth mentioning that the Pulse study disclosed further information indicating in Q2, foreign currency markets were active, with traders from all over the globe shorting the chances of the US dollar in comparison to other currencies, most notably the Japanese yen. The most common pair of currencies traded worldwide was the US dollar against the Japanese yen (USD/JPY), except the United Kingdom and Africa. Commodities and indices were the other two markets with the biggest shorting activity in the second quarter. When compared to long positions, shorting the Nasdaq 100 (US100) was more successful in the second quarter, generating a more significant proportion of profits (33.7%) than long positions (32.6%). During that period, the commodities market that saw the highest short selling was the oil market. The percentage of oil CFDs sold short increased from 35% in the first quarter to 41% in the second quarter when traded on the Capital.com platform worldwide. Since the number of short positions in oil has been growing, market participants may be anticipating a decline in benchmark oil prices during the next three months. If inflation keeps putting pressure on the global economy, that might further feed through to the price of oil weakening Jones noted.
Crypto 2nd least profitable for short selling
Interestingly, cryptocurrency and stocks were the least profitable short-selling strategies, according to the data. While long positions in the cryptocurrency market were the least profitable. Last, the report states the three instruments with the lowest use of stop loss were all cryptocurrency CFDs as it appears crypto traders took more risks in Q2. Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
