How have the capital markets changed over the years and what is the key to HYCM's success?
The 1970s saw the birth of modern forex markets as we now know them, and in the late 1990s, the first venues began opening their doors to retail clients. After this, we saw a complete global revolution in trading which democratised market access and eventually brought the world’s markets to every smartphone user on the planet.
Throughout the years, our priority has always been to provide a sound trading experience for our institutional and retail clients, as well as providing one of the best informational and analytical support. At HYCM we seek to bridge the gap for investors of all ages and levels of experience. This is why we are committed to offering as wide a range as possible, of both individual symbols and asset classes to ensure that investors from all demographics can find the right assets to express their own directional views.
HYCM offers CFDs in a variety of asset classes, from gold and other commodities to stocks, indices, cryptocurrencies, and of course foreign exchange. HYCM is regulated by 4 different bodies including FCA, has offices in several strategic locations worldwide, and is considered one of the most reliable, and well-established brokers.
As one of the most-established brokers in our industry, what would you say have been the main catalysts for change?
Technology is definitely a major catalyst for change, more specifically, the widespread availability of personal computing and the online revolution. Without these two key components, it’s hard to imagine retail trading being where it is today; this is because these components form the foundation that everything else is built on top of.
Then you have the platform revolution. It’s hard to overestimate what platforms like MT4 and MT5 have contributed to our industry over the years. And again, just like the foundation that these platforms rely on, the platforms themselves went on to become another key component in the retail trading stack, allowing others to build new innovations on top of them.
The explosion in technical indicators, algorithmic trading, the practice of white-labelling, the way brokerages manage risk, are all a result of the technological innovation that has occurred in our space over the years.
Then you have the broader market itself. FX trading exploded in popularity after several market crashes, namely the Dotcom bubble and the financial crisis of 2008. The recessions that followed these events had the effect of shining a spotlight on forex markets as a potential source of alpha. With this increased attention, a regulatory environment has evolved to prevent excesses, weed out certain predatory practices, and ensure that brokers are sufficiently well-capitalised.
How has technology changed the wider trading landscape changed over time?
The same trends that have influenced everything from publishing to music and film have gone on to shape money itself and financial assets. Beneath it all, you have the democratisation of information as a result of widespread internet access.
Keep in mind that each new technology has its own network effects and these effects feed off of each other. YouTube started out as an online novelty, a decade later it’s a serious resource for traders of all levels.
Think how many obstacles a potential retail trader had to overcome in 1999 compared with today. The internet provided access to information that has educated an entire generation of traders at scale, as well as the infrastructure for brokers to reach all those new traders and offer them financial services. It’s this synergy that has made trading a mainstream activity.
This has led to some very interesting and unexpected occurrences. For example, crypto was an exclusively retail phenomenon, and over the course of the pandemic, we saw retail traders finding new and unexpected ways to influence the markets.
Speaking about crypto and this new generation of traders. What do they want and how do they differ from generations gone by?
There are certain broad strokes that we can use to characterise this new generation of traders. Reaching them on mobile, for instance, is of paramount importance. The bar has been set high as far as app experience is concerned since this generation has spent most of its online time on a mobile device rather than a personal computer.
There’s also a focus on sustainable investing, which is where we see a growing rift between this generation and the previous one. A survey we conducted last year on behalf of HYCM revealed the extent of this rift; sustainable investing was important to 60% of investors aged 18–34, as compared to only 30% of those aged 55 and over.
Crypto is also something of a dividing line between generations. Many of the younger generations of traders are crypto natives, meaning they are much more comfortable holding their own crypto and interacting with these blockchains on their own terms. As far as the older generation is concerned, those who have accepted crypto as a worthwhile asset class are perhaps most comfortable with holding bitcoin as a store of value rather than any of the more complicated smart contract blockchains.
At HYCM, we now accommodate crypto deposits and withdrawals, allowing crypto natives to easily fund their accounts with us and benefit from some of the advantages of CFD trading over spot trading, such as quicker withdrawals, flexible leverage, stricter regulation, added client protections, and advanced trading tools.
What role does technology play in differentiating one brokerage offering from another?
I think it’s how different brokers use the technologies available to them that makes the biggest difference. After all, more or less the same technologies are available to any brokerage business, budget permitting. At HYCM we choose to focus on what different types of traders require in order to make our offering most attractive to them.
To this end, HYCM traders benefit from a number of extremely useful third party services such as technical and AI sentiment analysis from Trading Central, news and commentary from Financial Source, as well as some interesting seasonal analysis possibilities via our suite of Seasonax tools.
We are also in the process of revamping our in-app experience in order to address some of the generational preferences described above. Our goal is to support traders by providing them with the right tools for the right job, and the right resources - like our popular webinars, workshops, and blog - tailored to the right kind of trader.
How do you see trading changing in the future?
I think that trading is going in a similar direction to so many other domains thanks to the information revolution. The learning curve for trading technology is becoming shorter and we continue to see user interfaces getting simpler and more intuitive for the sake of mass appeal in trading. Not only can this provide a gateway into the markets for new generations of traders, it will also educate the public, ensuring that trading evolves into a mainstream activity that’s more of a lifestyle than an occupation.
Asset-wise it’s becoming clear that all asset classes might eventually become fully digitised. The efficiencies to be gained are so great that this is highly likely to occur. The emergence of crypto could be responsible for hastening this transition, and the same goes for central bank digital currencies. It's doubtful that they would have been as firmly on the agenda of policymakers had a grassroots digital revolution not forced their hands with bitcoin and the plethora of other digital securities coming to the fore.
Something not many in our industry are talking about yet is the growth of communities with their own tokens and management structures. This is where you’ll see NFTs and the metaverse truly coming into their own, rather than as gimmicky novelties. We saw the power of communities sharing information and moving into assets en masse with the WallStreetBets story throughout the pandemic. Once these communities have the tools with which to organise and manage themselves, as well as their own community tokens, things are going to become very interesting.
Generally, the future is bright. More access, more involvement, more unique ideas and perspectives; this is what makes the markets so exciting.
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Note: Cryptocurrencies are not available for trading under HYCM (Europe) Ltd and HYCM Capital Markets (UK) Limited.
About: HYCM is the global brand name of HYCM Capital Markets (UK) Limited, HYCM (Europe) Ltd, HYCM Capital Markets (DIFC) Ltd and HYCM Limited, all individual entities under HYCM Capital Markets Group, a global corporation founded in 1977, operating in Asia, Europe, and the Middle East.
High-Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.
