What folks don’t understand about Stock Trading platforms and Capital Markets…
Like we saw for UPI Payments, seeing many news and media posts covering the market share of stock trading platforms based on active users that exchange publish. That’s just one of the many ways of looking at this industry, not the only way.
Like we saw for UPI Payments, seeing many news and media posts covering the market share of stock trading platforms based on active users that exchange publish. That’s just one of the many ways of looking at this industry, not the only way.
1. Exchanges publish data of Active Users, where the definition is at least one trade in the last 12 months.
These are not unique users, if a user has transacted on 2 platforms - same gets counted twice. If a user has an active portfolio and yet hasn’t made a trade in the last 12 months - it’s not counted.
These are not unique users, if a user has transacted on 2 platforms - same gets counted twice. If a user has an active portfolio and yet hasn’t made a trade in the last 12 months - it’s not counted.
2. Many investors have more than 2 accounts, they segregate long-term and short-term investments separately.
Many traders maintain 2-3 accounts, one of them is primary. And many individuals have a HUF account for tax saving, that’s their second account, and so on.
Many traders maintain 2-3 accounts, one of them is primary. And many individuals have a HUF account for tax saving, that’s their second account, and so on.
3. Marketshare can have many slices - by demat, by investors, by traders, by trading volumes, by AUM, by revenue pool and so on.
4. We run @DhanHQ, that is just a small ~2% market share by active users. It’s small, yet meaningful (for us) because Dhan is building for only power traders and long-term investors.
Our TAM (or target audience) is just 3.5Mn to 4 Mn traders who have been trading in markets for a while or about 10 - 12 Mn long term investors, in both cases who move to Dhan for its experience, execution speed and overall customer experience.
Out of 100 users who come to Dhan, more than 85% have moved from other platforms to us., Dhan isn't built for first time investors or traders.
Our TAM (or target audience) is just 3.5Mn to 4 Mn traders who have been trading in markets for a while or about 10 - 12 Mn long term investors, in both cases who move to Dhan for its experience, execution speed and overall customer experience.
Out of 100 users who come to Dhan, more than 85% have moved from other platforms to us., Dhan isn't built for first time investors or traders.
5. Have said earlier that Dhan being in this list is just a coincidence. With large players getting into broking like J**, P****P*, CR** and likes… including some of existing large players who target first time investors & traders, or people who do online transactions via UPI… it’s a matter of time that we will be off this top 10 list.
Dhan will focus only on power traders / super traders and long-term investors. No plans to make Dhan a mass market product, we have resources to spend and grow fast, but we don't as it Dhan isn't meant to be a niche platform.
You can't grow this segment by spending (or burning) money on advertisements!
Dhan will focus only on power traders / super traders and long-term investors. No plans to make Dhan a mass market product, we have resources to spend and grow fast, but we don't as it Dhan isn't meant to be a niche platform.
You can't grow this segment by spending (or burning) money on advertisements!
6. With declining numbers, are other large platforms losing the market or market share? Answer is no, not exactly or rather that's not the only way to look at it.
Many platforms gain users in bull-run and see their best of the times in terms of user-acquisitions, then followed by a dull phase.
There is also an annual cycle of churn, so if a platform adds significantly more users in a 12-month cycle, it will churn then in the next 12 months. Those who gain now, may lose in the coming months. This is now the nature of the industry, across all players.
Many platforms gain users in bull-run and see their best of the times in terms of user-acquisitions, then followed by a dull phase.
There is also an annual cycle of churn, so if a platform adds significantly more users in a 12-month cycle, it will churn then in the next 12 months. Those who gain now, may lose in the coming months. This is now the nature of the industry, across all players.
7. All traders or investors leaving the market, no - they are not!
They may have left a platform, but they are very much in the market - and may be on the platform of their choice.
India has still a long way to go ahead in adoption of traders & investors when compared to UPI or Bank Accounts. We will get there, slowly and steadily.
They may have left a platform, but they are very much in the market - and may be on the platform of their choice.
India has still a long way to go ahead in adoption of traders & investors when compared to UPI or Bank Accounts. We will get there, slowly and steadily.
Bit old thread on similar lines on this topic..
https://x.com/BeingPractical/status/1835309632581230790
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