In a rapidly developing retail trading landscape, Tradency takes its mirror trading concept to a new level, introducing a new addition to its list of products. The company's latest effort is about to democratize electronic trading to a point which few have forecasted possible.
Tradency just unveiled that it has on-boarded a number of hedge funds aiming to deliver the algorithms they use to a much wider audience. For the first time retail traders will have the opportunity to access the proprietary algos used by some of the top performers in the industry to generate profits. The offering will go live with FXDD in July.
Just like big banks have started looking for the retail trader's order flow as it has continued growing over the past decades, hedge funds have began exploring some new opportunities. The blend of Tradency's Mirror Trader and the proprietary trading algorithms which hedge funds have been developing for years bring a new product to the market with a win-win scenario for both traders and the new high-quality Algo Trading providers.
Amongst the growing list of names of hedge funds whose algo trading strategies retail traders are gaining access, include CenturionFX, IntelAgent, Sagat Capital, Tribelet Capital Management and Bluehive Capital.
In order to learn more about this new addition to Tradency's products, Finance Magnates' reporters spoke to the company’s vice-president of sales, Oz Golan.
Finance Magnates: What led the firm to embark on this new initiative? Was there a specific demand in the retail space for such a product?
Oz Golan: Tradency's vision and approach to trading was, since the beginning in 2005, to simplify trading and give retail traders access to valuable and reliable knowledge. The Hedge Funds Algo-strategies service is the natural evolvement of this approach.
We have decided to revolutionize the mirror trading market by offering retail traders the opportunity to trade with the highest quality algos used by hedge funds. Essentially, Tradency presents retail traders with trading accounts of several thousands of dollars, the opportunity to trade algos designated for high-end clients holding minimum account size of several millions of dollars.
This innovative service was made possible as a direct result of the internet Online Trading revolution along with Tradency's advanced technological abilities. These two enable us to offer this attractive and lucrative service to all of our brokers' clients.
As for market readiness, we identified grassroots demand for institutional level, trading information. We see that people are becoming more internet savvy and as a result more eager to receive specific, professionally proven information. This is true for all walks of life and even more so when financial decisions are in questions. This assumption was reaffirmed when we presented this new service to our brokers which was answered by their immediate enthusiasm to implement the service.
Convincing Hedge Funds to Open up to a New Market
F.M: What did it take to bring hedge funds onboard?
O.G: We are proud to have succeeded with this challengeable task. Hedge funds companies, by their nature, are very protective of their hard earned knowhow and assets. What made this task possible is first and foremost an attractive business model for hedge fund companies. For more than 10 years since establishment, Tradency gained recognition and aggregated customer volume of hundreds of thousands of retail traders. The new service provides hedge funds with access to the accumulated value.
Additional factors are our professional reputation which we have nurtured since 2005, along with some long-standing relationships in the financial arena. Evidently, we currently have more than 15 hedge funds on board, each one of them has tens of millions of dollars in assets.
To get hedge funds companies on board, we have put forward the benefits that our advanced technology can offer them. By utilizing the Mirror Trading technology, hedge funds can reach new markets such as the FX retail market and new geographical regions unattainable beforehand.
The power of the retail market is in the big numbers, Mirror Trader exposes the hedge funds brand name and algos to the masses which makes it economically worthwhile. In addition, the hedge fund can use the Mirror Trader's international client base to familiarize their brand and experts to new geographic regions where they have not been exposed to before.
For instance, one of our hedge funds comes from the USA, marketing only to North American high-net-worth market players, by using Mirror Trader it is now able to spread its brand name to European & Asian retail traders.
FXDD is the first broker to launch this exciting new service
F.M: Has the new product already been adopted by clients? Which?
O.G: FXDD is the first broker to launch this exciting new service in the beginning of July. In fact, the great majority of our brokers stated their intention to use this service as they can see the real opportunity in driving up their value per money. The launch plan will be done gradually throughout the coming weeks and months.
The hedge funds algos produce valuable content which is extremely attractive to the end user. This professional content is already in use by brokers in order to construct dedicated marketing campaigns which will accompany the service.
F.M: What is the hedge fund strategies' special appeal to retail traders?
O.G: The hedge funds algo strategies service's appeal to retail traders is quite straight forward – accessibility to the highest quality algos available. Top quality algos are the bread and butter of hedge funds which spend millions of dollars in research and development of premium quality algorithm strategies.
Until this service was launched only investors with a minimum of $1 million were able to invest in these algos. Today it is open for traders with account size of only several thousands of dollars.
This service is innovative and the immediate benefits for the traders are very easy to understand and market, which makes the broker's sales and marketing people job much easier.
Costs of Trading Hedge Fund Algos
F.M: Is the compensation scheme of a hedge fund on Mirror Trader similar to that of its own investors, that is are retail investors paying the same performance fees that the investors in the hedge fund are paying to it?
O.G: We have made the needed adjustments to accommodate the hedge funds methods to the retail FX market. We strongly believe that in the retail game the end-user should not pay high commissions since the money comes from the masses.
In order to appeal to these masses the end user's terms and conditions will stay the same as prior to the launch of the new hedge funds service. Having said that, the new service is a next level mirroring service with an added value and as a result the hedge funds algos will have a higher minimum trade size.
Currently we have more than 15 hedge funds on board
F.M: The initial launch seems to entail 15 participating funds; do you intend to look out for additional partners and what would the criteria be for those?
O.G: Currently we have more than 15 hedge funds on board, with several additional hedge funds algos in recording process. The hedge funds we work with are global companies based in the USA, Europe and Asia. In order to become a hedge fund algo provider the hedge funds and their algos have to go through an internal Tradency screening and monitoring process in order to make sure that they stand with predefined standards.
Until this service was launched only investors with a minimum of $1 million were able to invest in these algos
F.M: As hedge funds' algorithmic strategies come into the fray of social trading, how do you see its impact on the retail space?
O.G: The popular flavor of social trading is all can advise to all, what we do is quite a different flavor – only experts can share their knowledge with all. Quality Signals is the key for Successful algo-trading (system trading) and it’s a clear differentiator between Tradency and other providers.
The information jungle is great for entertainment and lifestyle decision making, but when real money is in question, we believe a different approach is needed. This is why Tradency offers a controlled, protected and monitored algo trading strategies. All information shared within the Mirror Trader platform is generated by tested and proven hedge funds and expert algo providers which are being monitored & regulated continuously.
