Caplin are not ones to pass up on this type of information. So last Thursday I went down to the rather nice Grange Hotel in St Pauls in order to attend the seminar.
Of particular interest to us were the demographics of the people who attended. Caplin are big believers in using personas (specific user profiles of real people) to assess how to better serve our customers. Getting to know the end user is part of making sure that we design software that offers the best experience for that person. City AM is not just distributed in Central London or the Square Mile. Many outlying railway stations will have a distribution and the majority of the people with access to the paper will not be city workers. Yet they are choosing to read a very business-orientated paper in preference or perhaps in addition to the Metro, the wider news and entertainment-based offering. Just who are these other people who either trade or are interested in trading?
There were perhaps 60 people in the room, down on last year apparently. Perhaps the recent somewhat depressed market put some people off. I asked one attendee why he was there and was told that a unpleasant experience with spread betting had made him feel that he needed to learn some strategies before trying again. However the majority of people in the room were active traders, mostly in FX. The guy next to me had been able to leave a career in sales to make a living full time from Forex trading. About three quarters of the room wearing suits, only a few in jeans and jumpers and of the latter all traded privately.
I asked GFT what they felt was important to their customers, citing the Single Dealer Platform (SDP) as an example. SDPs have overtaken multi-dealer platforms in the FX market in recent years, accounting for about 25% of all FX trading. In contrast to Multi dealer platform which offer the user more than one price, they deliver integrated pricing and liquidity from multiple sources and then make them available via a single user interface By offering a SDP, a bank or other sell-side institution can concentrate on providing a better service for their clients.
GFT said that they felt that their customers were with them due to the customer service that they could offer. The help available, 24/7 live chat, the quality of the trading software and analysis tools available and perhaps most crucially the connectivity were much more important to the clients than the prices themselves. In fact in when any web search will uncover multiple brokers offering 0 to 0.5% spreads there have to be other things on the table in order to keep your users.
Onto the speakers. David Morrison, GFT’s market strategist, presented on “CFDs and Investment Themes for 2011”. He described the advantages of trading contracts for difference whilst the disclaimer, that one can lose a lot of money, was also never far away. The high degree of leverage can work against you as well as for you. An interesting talk on the political forces driving the markets followed, discussing the movements of the precious metals and oil and whether the former had already seen their peak or still had a way to go. The message that stuck out for me on the gold bubble? His observation about those awful TV commercials that urged viewers to send in their Elizabeth Arden necklaces in exchange for wonga. “CASH FOR GOLD”. When those same companies start selling then this really will have been a bubble. Oh and watch out for the Fed’s second dose of Quantitive easing and whether or not it is the last.
Boris Schlossberg spoke about “Actionable FX Strategies for the Individual Trader”. Boris is the Co-head of Global research. He had a super-confident presenting style, easy with his topic and betraying his Wall Street roots. Schlossberg had promised to share with his audience the one critical economic variable that matters more than any other in the currency market. That variable? Interest rates. Together with the state of economic growth, trades between any chosen countries and politically in/stability this can give the trader a good idea of what is driving the exchanges. Traders were encouraged not to oppose the markets, but to find the trends and go with them. “Trade what you see, not what you think”. Tight volatility points to indecision. A choppy market is best left alone. Schlossberg gave us a strong trade home message. Never move your stops, don’t let sentiment get in the way of economics. Get a separate account to experiment with. I think I might take his advice.