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Capital.com Market Report: Shorting Was More Profitable in Q2

Capital.com has released a quarterly report showing that the number of short-position traders jumped significantly in Q2 of 2022. The Pulse Report shows that 38% of traders in Q2 2022 used the platform to make short-position transactions. There were 34% more short sellers than in the previous quarter, making this the most since Q1 2020.

Short trading was more profitable in Q2

Short trading is a strategy that gives traders the opportunity to attempt to profit from a decline in the value of an asset. Capital.com publishes the Pulse report every quarter, analyzing the trading behaviour of retail investors across all of the markets that it is active in. Every trade that was made on the Capital.com platform between April 1, 2022, and June 30, 2022, was logged in the Pulse report. Over 6 million customers have signed up for an account with Capital.com.

The report suggests that throughout the period, short-selling was slightly more profitable (32.1 percent) than long-position trading (28.7 percent). The Pulse research also found that the UK, Africa, and Asia had the largest percentage of short transactions, at 41%.

On the other hand, Australia had the lowest percentage of short trades, at 34%. The relatively strong performance of the Australian stock market index so far this year may be one possible reason for this phenomenon. It wasn’t until May that the Australian ASX 200 index began to decline. In addition, shorting the Nasdaq (US100) was more successful in Q2 than long positions, with 33.7% of trades ending in profits, compared to long positions, which had 33.6%.

Most traders shorted the US dollar and oil

Capital.com reports that speculators around the world were shorting the prospects of the US dollar versus other currencies, particularly the Japanese yen. The USD/JPY pair was the most actively traded currency pair across the world, with the exception of the UK and Africa. Kuroda, the governor of the Bank of Japan, has steadfastly refused to tighten monetary policy. Compared to the United States, Japan’s inflationary pressures are relatively low.

The report also shows that oil was the most shorted commodity during the period. According to the data, oil CFDs on the Capital.com platform were shorted 41% more in Q2 than in Q1. This may not come as a surprise to many traders. The number of traders who believe the market has reached an overheated state has recently increased significantly. The Russian invasion of Ukraine saw oil prices surge by 70% early this year. Since its trough in April of 2020, the price of oil has increased by more than 500%.