Publication date: Apr. 24 2024

Flow Traders: The Role of a Market-Maker

Throughout history, the stock market has experienced periods of calm and moments of heightened activity. While this may seem ordinary, for Flow Traders, the level of activity in the markets holds significant importance.

Influence of volatility on Flow Traders

In short: Flow Traders is a market-maker. In that function, Flow Traders always calculate the theoretical value of a listed product and issue continuous bid and ask prices for that product. It is thus the liquidity provider of the trade and counterparty to investors. They do this globally and for almost all major products such as stocks, funds, futures, etc. Flow Traders is well positioned globally and therefore an important link in international stock market trading. They earn from the spread (risk premium) between the bid and ask price at which private investors and institutional parties can trade on the stock market.

Flow Traders therefore thrives on lots of frenzy and lots of stock market trading. The level of frenzy is reflected in the Volatility Index (VIX). At times when the VIX is falling or at low levels, we always see this reflected in Flow Traders' weak share price.

Price development of Flow Traders: analysis and trends

However, periods of calm are often followed by moments of heightened activity. When the Volatility Index (VIX) rises due to increased market tension, it is common to see Flow Traders' share price respond positively.

It's essential to understand that there are no set rules or guarantees in the unpredictable world of the stock market. While the scenario mentioned above is based on past observations, it's crucial to remember that the past doesn't always dictate the future.

If we look at the course of Flow Traders' share price over the past eight years, we see a clear trading range between the €16/€19 zone and the €35/€38 zone. This range is related to the quieter and more hectic times on the international stock markets.

The last ride up to the €38 mark was during the COVID period. You probably remember it; great panic worldwide lots of frenzy in the markets and lots of trading. When COVID seemed under control, a "relatively calm period" followed. We saw the share price collapse to even the lowest level ever just below €16.

Currently, we are seeing the VIX pick up a bit. Global investors are displaying increased anxiety, leading to a rise in nervous trading activities across the board. Flow Traders is an important player and we see that the price is once again holding up well in the lower zone between €16 and €19.