Tradency, who was one of the first if not the first players in the Forex algo trading/trade following market, is now making one of the biggest changes ever in its business model.
Since inception Tradency was charging brokers volume fee which amounted to about 2 pips. Tradency however lately realized that changing this model would open its service to much larger crowd and would become more convenient to brokers. Tradency's new business model means that it charges technology fee of a few tens of dollars per active user per month. Simply put if a trader trades just a few standard lots per month the broker in most cases has already covered the cost. Tradency goes as far as to claim that clients who use its technology tend to trade more since they feel more confident to open new trades, when they see what other traders or strategy providers are doing. The platform also helps new traders make their first steps in the forex market, as it enables them to follow other traders and gives the trader a feeling that he/she is not alone. In addition the automation creates trading activity around the clock, even when the trader is not actively trading.
I've had the opportunity to meet Lior Nabat the CEO of Tradency and discuss this new model.
Why are you making this change?
We believe that the business model needs to be transparent and convenient to both brokers and traders. We also realized that as technology provider we shouldn't charge volume based fees (which essentially made us look like an IB) but rather technology fees and that doing so would allow brokers to focus on client acquisition. With the 1-2 pips charge model removed brokers now would be able to market the platform through IBs and thus attract more traders, including to Mirror Trader. For clients the advantage is obvious as often the fee was levied on them by brokers in part or even in full. Without this charge the Mirror Trader will be available for every trader at no extra cost and with the same spread as every other platform and as a result the clients' trading results should immediately improve.
When we calculate the difference in fees we see that brokers will now pay us about a 1/3 of what they paid us until now. This alone is a game changer.
Aren't you afraid of taking a loss on this?
No. We believe that in longer term the new model will open way for many new traders to take advantage of the Mirror Trader offering. We are confident that our existing partners will realize that the Mirror Trader is a great tool to attract new clients and now that the cost barrier is out of the way they will market the platform more aggressively. In addition I think that many new brokers will partner with us and thus attract even more traders. With a larger number of clients this model is a win-win solution for all parties involved including signal providers who will keep earning same fees and become exposed to many more clients.
Additionally this model now opens way for the brokers to promote the Mirror Trader through marketing channels such as White Labels and IBs, as the spread mark-up entry barrier was removed.
What is the response you hear so far from your partners about the change in the business model?
The feedback we got so far is amazing. The brokers understand perfectly the reason behind the change and immediately recognize the potential of this change. I can give you one practical example; the first broker that implemented the new business model generated more revenues in one month than in the 5 previous months and I believe this result is just the beginning for this broker.
What else is new at Tradency?
One of the more important improvements we introduced lately is the ability to execute Mirror Trader trading using same credentials as in trader's usual trading account. So for instance client can log-in to their existing account whether it is ACT, Currenex, Metatrader or proprietary platform and trade with Mirror Trader using same username and password and all trading is executed in same account. There's no more need to open another account just for Mirror Trader. This is much more convenient to clients but also to brokers as they don't need to open several accounts for new clients or maintain different trading conditions (spread mark-ups, etc). Essentially everything became much more simple.
We are also looking into the social networks space and will soon introduce several exciting social features to our platform. For instance signal providers and clients would be able to communicate between themselves, share ideas, trading experience and more. Clients will also be able to share their trading activity with other traders and let users mirror their trades. Since the Mirror Trader platform is already available with many brokers worldwide, I believe that with the social features, we will be able to create the biggest community of Forex traders who will discuss trading ideas, learn from each other and most importantly execute trades of other users.
Will Tradency develop a back-office?
No. Our focus is on providing advanced frontend solutions to brokers, we are offering a platform with many unique features and we prefer to focus on what we do best and make the platform even better by adding the social capabilities in the very near future. We have the ability to integrate with every back office available in the market, for example, Currenex, Metatrader, Leverate and every proprietary platform. This makes our offering much more flexible and enables us to work with every broker. For this reason we are also not planning to open a brokerage. We have no desire to compete with our partners. We prefer to continue being a technology provider and enable every broker to provide the Mirror Trader to his clients.
