I spent all of Wednesday at the Forex Magnates conference in London. Although it’s been around for several years, Forex Magnates is the go-to site for everyone in the forex industry. I ran into a surprising number of colleagues, which came as quite a pleasant surprise.
The presentations on the 10 most unique ideas in the forex industry really caught my attention. One of my favorites was tradable. They must have some massive venture funding. Their site looked spectacularly well done and they employ 37 people despite launching this year. The company has built an open source API usable by both brokers and traders with a social network stacked on top of it.
One of the speakers on an earlier panel mentioned how nearly every industry has some type of open source code that unites how business is done. Banking, for example, uses the SIWFT system for international settlements. The institutional forex side has the FIX protocol for electronic trading. Retail forex, despite roughly 15 years of existence, is still a highly fragmented industry. MetaTrader is the only platform uniting disparate brokers. The sentiment across the room was that everyone except Alpari was grudgingly pushed into using MT4. The other brokers made it clear that they wouldn’t be upset if something else came along. An open source system, which means that you can 100% customize the platform, could be the rival that unseats MetaQuotes. Kudos to tradable for taking the initiative and placing it into a social network.
I also enjoyed the presentation from Rosario Ingargiola, the founder of FxOne. Rosario’s big idea is to help reduce the need for programming by moving into a platform that every major institution uses: Excel. It may surprise most readers to learn that multibillion dollar hedge funds trade using Excel, but it’s true. Excel is such an easy platform that the quants can easily navigate and do their data analysis without any major effort. It’s the lack of programming that attracts them. When they’re ready to launch, they hand the spreadsheets to a programming team to do all the backend wiring for making the trades happen.
FXOne has skipped that step; the backend wiring is already done for you. Rosario’s big idea is to reduce the programming requirements sot hat anyone who can work a basic spreadsheet with formulas can automate a trading system. You might find it unusual for a programming company to promote a system that claims to eliminate programming. In reality, I don’t expect programming would be entirely eliminated. Most people are uncomfortable with logical processes of if-then statements. Most of our customers use us to help organize their ideas. Although most people don’t realize it, I feel that our programming service is most valuable as a “thought organization” process rather than directly as a programming service. I already looked into the FxOne platform about a month ago and have spoken with Rosario on multiple occasions. I expect that we’ll have a role to play with most people who’d like to trade on spreadsheets.
The CEOs from FXCM, Saxo Bank, Alpari and GAIN were all in attendance. As nearly everyone commented, I don’t think we’ve ever seen the heads of our industry all garthered in one spot before. The topic of the CEO panel discussion was mergers and acquisitions, which started gaining attention recently. FXCM launched FXCM Ventures earlier this year with the intention of spotting buyout opportunities. Saxo Bank keeps making headlines through its purchases of white label partners in developing markets.
The CEO group unanimously bemoaned the lack of volatility in the market. Broker profitability directly correlates with market action. Traders don’t trade when the markets are quiet and boring. I had been wondering why the stock of FXCM and GAIN has gotten hammered so badly this past year. Both chalked it up to the decline in trading volume. As Drew Niv noted, his company has increased its number of accounts fivefold in five years, yet profitability is still flat.