“FXDD and AvaTrade are spearheading the retail entry into algo FX hedge fund trading” – Oz Golan, VP Sales, Tradency

After breaking the news on television with me a few weeks ago that algorithmic hedge fund trading is now within the reach of retail FX traders via Tradency’s Mirror Trader system, FXDD and AvaTrade, two very established retail FX brokerages have taken the system to their client bases, standing the two companies out as pioneers in the evolution of copy trading in the institutional direction.

What, after developing an end to end brokerage solution last year, spurred Tradency into taking yet another new direction into hedge fund algo trading via automated systems, and why did two brokerages see the value in this?

Indeed, many identity crises and value proposition deficiencies plague the retail FX sector with so many ‘me too’ approaches to retention, customer engagement and the general range of products available, so is it likely to bring a new dimension to retail FX if traders using standard platforms, with less experience and a fraction of the resources of the prop shops of Chicago or the wealth managers of London can now set their system to follow the strategies of professional hedge fund managers and allow their platforms to execute trades automatically by mirroring them?

To take a close look into these conundrums, FinanceFeeds spoke at length to Oz Golan, VP of Sales at Tradency who began by explaining “The industry does not yet realize the full extent of this service yet, which is fine as time is required to understand that this is serious and not just a marketing strategy. Currently, our head of development for the Algo Hedge Fund system, Ido Golan, is on his way to London to meet 12 hedge funds.

Mr. Golan continued “Just to describe to you how important this project is to retail clients and to brokers, it is vital to consider that because of the internet revolution that we see many many high level services becoming available to retail users and being able to bring the information from good quality hedge funds.”

“Until now, hedge funds cannot distribute their value proposition and goals to a large, retail audience” – Oz Golan, VP Sales, Tradency.

“Until now, hedge funds cannot distribute their value proposition and goals to a large, retail audience. Their marketing efforts are limited as they have to focus the resources of the code on their algos and they do not have marketing power, therefore they can only really approach Tier 1 clients” said Mr. Golan.

In terms of synergy between global hedge funds and the electronic community represented by Tradency, Mr. Golan concurs that “Tradency represents an enormous client base and this is why we are attractive because by aggregating into one platform we are bringing huge buying power. If we did not have this client base then we could not offer them what we can offer right now.”

Why did some of the large retail brokers go for it?

“They understand the value of hedge fund reputation. Everyone in the market understands that the highest level of knowledge exists within those companies” explained Mr. Golan.

“Most of the hedge funds are located in London, New York and Chicago. There are over 10,000 hedge funds in the US, most of them are working under the radar as they do not have the tech to leverage their trading knowledge into new clients.”

Mr. Golan concluded by stating that “This is the main story, and we are getting very good feedback from most of the hedge funds as well as the brokers that have onboarded this service, and now moreover, a number of brokers are starting to approach us to take the product. We are now about to launch the service with another broker, the company having signed an agreement and of course we will announce this very soon. We are discussing doing business with several more.

When asked by FinanceFeeds whether novice traders in the retail market are more confident following the trades of professional traders, adding value as a retention tool, Mr. Golan said “Absolutely. This is a huge retention tool, and I think it is a stronger retention tool for novice traders, most of whom already use Mirror Trader. On the retention level you have clients which are done with the manual experience and this is a great alternative for them. It is absolutely helping with the most critical client journey with the broker which is the conversion and retention. We have therefore positioned this as a premium service and concurrently the lifetime value is considerably higher.”