Demo accounts binary options41 comments
Wallstreet forex robot erfahrung
I graduated from the University of Birmingham with a degree in Economics in This gave me an interest in the financial markets, which combined well with my love of numbers and statistics, which I have had since an early age. This taught me a lot about customer service and time management. While I did work for a financial company it did not satisfy my desire to engage with the markets more closely.
By chance I was made aware of a local company in Windsor which could provide this opportunity and hence I found myself with a job at Record Currency Management in I had an excellent grounding at Record; when I joined, the company had 25 employees and each member of my team covered all back to front office functions, including trading, reporting and reconciliations. As the company grew its client base it was necessary to expand the department and create specialist teams.
I had already developed a natural affinity to managing the bank relationships both on a personal level and reviewing their performance, these naturally led to me heading the newly created Trading department. The attraction of the FX market itself is the fact that it is affected by everything in the financial world. This means that being an FX specialist requires knowledge in a plethora of areas. Our key objective, and indeed obligation to clients, is to ensure best execution on every trade, subject only to any client-specific counterparty constraints.
Our clients are predominantly institutional investors, including pension funds, charities, foundations, endowments, family offices, other fund managers, and corporate and insurance clients. Our services cover both currency risk management, or hedging programs, and outright return-seeking programs.
In return-seeking programs, we take advantage of a range of risk premia and patterns of behaviour, which clients can implement in either segregated separate accounts, or pooled funds. We believe there are distinct sources of risk in currency markets to which investors can choose to allocate capital in the rational expectation of a long-term return.
The two currency risk premia that we have the longest track record of exploiting are the Forward Rate Bias FRB , also widely known as the carry trade, and the expected appreciation of Emerging Market currencies as their markets converge with developed markets. In both cases we can explain the risk premium as a rational payment to investors who are willing to bear the risk of undertaking the economic function involved.
As well as these risk premia, currency markets show repeated patterns of behaviour which can also be systematically exploited. Both of these patterns are familiar to Record, and both can be exploited in the expectation of return. Record offers segregated mandates exploiting each of these, as well as combining certain of them in multi-strategy products.
We also offer pooled funds principally exploiting the FRB in both passive index-tracking and active forms and Emerging Market currency appreciation, as well as more tactical opportunities. Record has a unique currency rate database going back to , which Neil Record gathered when founding the firm in — this historic data, plus of course the plethora of data available today, forms the raw material for modelling and back-testing new strategies. There are a number of different sources of risk in the mandates we run, which require different risk management strategies.
Investment risk — for which the client expects to be compensated — is typically managed within the design of the product. This is both through systematic implementation — built-in stop loss mechanisms, position diversification by currency pair, rate, maturity etc.
We do not rely on stop loss mechanisms implemented by counterparties. Finally, as across the industry, CLS is our preferred approach to managing settlement risk.
At present the division between electronically traded volume and telephone volume is fairly equal. While the percentage traded electronically has increased over the years we can still see the benefit of using both methods to ensure best execution. Typically we will use the electronic channel for liquid currencies and smaller ticket sizes.
In addition there is a tendency for electronic prices to widen in times of market stress to a larger degree than on the phone. The narrowing of interest rate differentials amongst the G5 currencies has impacted returns for carry strategies overweight those pairs, although attractive returns can still be found with a wider pair universe, as shown by the FTSE Currency FRB10 index, and the prospect of divergent monetary policies across central banks is certainly re-awakening client interest in carry strategies.
Momentum or trend-following strategies have also encountered some resistance in less volatile range-trading markets, but the merits of these strategies was demonstrated clearly in — paying off precisely during the sharply risk-averse fourth quarter, when other strategies underperformed — and again in the last quarter of and first quarter of this year, largely driven by the Yen.
Overall, it is exactly this diversified behaviour between currency strategies that makes us so enthusiastic about the multi-strategy approach to return-seeking currency. In selecting execution venues we take into account the instruments which our programs use and the structure in which our individual clients are setup to trade.
The majority of our programs require us to execute forward and swap trades, often to broken dates. The other key point to note is that we trade as agent in the name of our clients for some clients and for others we trade in the name of their prime broker — and never as principal. Over the past couple of years we have performed a thorough search across over fifty platforms. The result of this search is that we are still happy with our current provider FXall.
We like the fact that our counterparties are aware that it is Record asking for a quote. Since they like our flow and know that it is not predatory they are able to create a pricing tier unique to us. In addition we have a high level of control with regards to individual counterparty panels and administration rights.
The key things about accessing the best liquidity are experience and respect in the market. Without a combination of these two factors it is not possible to achieve best execution. We have access to a wide panel of almost 30 counterparties.
This includes all of the large multinational banks and also a number of local banks who provide good liquidity in specialist areas. On a quarterly basis we formally review the performance of each counterparty and create reports to pin-point the strengths and weaknesses. This allows us to provide powerful and accurate feedback to our counterparties which they can use to tweak their pricing.
Using this knowledge we can target the strongest counterparties for each trade while giving other counterparties a chance to show any improvements they have make since the most recent feedback. We do not currently use ECN platforms as they do not currently provide streamed broken dated forwards. The majority of our trades are swaps or outright forwards and thus we prefer having a platform where we can ask for the outright price. We have not ruled out using an ECN in the future and we keep in contact with all electronic platform developments.
The programs, which we run for our clients, are predominantly systematic in nature. The in house order management system known as ROMP Record Overlay Management Program prompts the trades, which are due to be executed, however the execution itself is not processed by an algorithm.
As mentioned above on a quarterly basis we produce a multitude of reports which can break down where our counterparties have won and lost trades. The breakdowns are mainly based on currency pairs, size of trade and the spot and forward elements of the price. We are also able to monitor whether counterparties have won or lost trades due to their spread or the skew of their price.
We are currently in discussion with a number of independent Transaction Cost Analysis TCA providers in order to verify the quality of our execution. The most important element in choosing a provider is ensuring that the underlying data is of a high quality.
All of the providers are able to show that the quality of their spot pricing database is suitable for our needs and so the key differentiator will be the quality of their forward databases and to a lesser extent the method of their interpolation between fixed tenors. These trades will be a mixture of rolling positions and adjusting position sizes. All of the economic details, apart from the price, of the trade are locked down and the trader simply needs to select a counterparty and enter the price.
The trading application is able to create a file which is imported into FXall, in a similar way the economic details of the trade are locked down and the trader simply selects the counterparties to receive a quote from. Once the trade is executed another file is created and exported back to ROMP, which completes the necessary fields. This straight through process STP reduces the risk of errors and speeds up the process. Once the trades have been executed the trades are exported to Calypso.
Calypso is a third party software system, which we use primarily for middle and back office functionality. Calypso then sends out any necessary trade notifications such as emails, faxes and Swift messages.
Our Operations department are able to monitor whether the trade details match with the counterparty using Calypso. I am personally involved in the assessment of how the new regulations are going to affect Record and our clients.
The regulations can be split into two distinct sections; Dodd Frank and EMIR affect which instruments and entities are mandatory to centrally clear with a clearing house, and Basle III and CRD IV affect the amount of capital the bank needs to hold, more specifically for non-centrally cleared trades. At present and these regulations are a moving target!
NDFs and options are the only FX instruments which will be mandatory to clear. The main difference for existing clients is the need to place initial margin with the selected clearing member and to have variation margin available for when positions are out of the money.
For clients which currently use prime brokerage arrangements the transition will be relatively small as this will generally only require some additional legal documents as opposed to a different operational setup. It is still unclear whether all instruments which are mandatory to clear will be obliged to execute via a Swap Execution Facility, if this is indeed the case the main concern is that banks will pull liquidity from the less liquid currencies and thus increase the trading costs.
The big question is how will spreads be affected for non-margined or even non-cleared trades? The likely hypothesis is that it will eventually become overall cheaper to clear or at least margin all trades, although there is no certainty how the market will develop and react to the new regulations.
Record is an independent currency manager and this removes any conflict of interests. Record as a firm is remunerated solely via management and in some cases performance fees and so our interests are fully aligned with our clients.
We pride ourselves in the thoroughness of our counterparty performance analysis and the feedback which we provide. The feedback allows our sales contacts to have specific conversations with the traders with regards to where improvements can be made without qualitative judgements distorting the reality.
At the end of the day we understand that the relationships we have with our counterparties are symbiotic. We seek to be active in the FX market for the long term and this is the key to the way we work. All of the above allows us to keep a wide panel of counterparties hungry for our non predatory business and this is reflected in the prices which we execute on.
I think as ever challenges will continue to come from a variety of sources. First and foremost, as a specialist independent currency manager, we have a constant obligation always to seek the best liquidity and pricing, wherever it may be found. In future this may mean different trading venues, different locations — not that London seems to be losing its pre-eminence — or different instruments, particularly if regulatory changes imposed on counterparties force liquidity to change.
We also exist in a competitive environment of course, and can never rest on our laurels — we have to constantly be on the look-out for product innovations and enhancements, while never complicating matters for its own sake. This material may not be published, broadcast, rewritten or redistributed in any form without prior authorisation by ASP Media Ltd. Login Free Trial Subscribe. James what is your background and what attracted you to the world of currency trading?
Who are the key people involved on your side of the business at Record and what are their main day to day responsibilities? What sort of firms are clients of Record and what range of services does the company provide for them? What currency risk premia and patterns of behaviour within the currency markets are you systematically trying to exploit for some clients to provide returns?
What instruments are you mainly using and what factors influence how frequently you trade them? Once your in-house research team have developed ideas for new hedging or currency return strategies how do you go about modelling these and testing them?
What external and internal risk management systems and methodologies does your team employ? Is all your trading carried out electronically or do you still use the telephone from time to time?