I was honored to be invited to speak on the technology panel at the recent Forex Magnates Summit event in London. Hosted by forex industry news channel Forex Magnates, the conference brought together forex brokers, analysts, technology providers, and platform specialists. Many of the attendees were vendors and technology providers, and it was a great opportunity to network with our partners, competitors, and influencers within the industry.
OANDA is somewhat atypical in that we develop our software products in-house. We write the code ourselves for our pricing engine, our hedging engine, our GUI, our mobile apps, etc. In contrast, most of our competitors outsource or purchase technologies from third parties to build the components of their trading systems. As an early innovator of forex technology it seemed fitting for OANDA to be part of the event’s technology panel.
One of the themes that came out of that discussion is the emerging trends around so-called “social trading”. At OANDA we see that as a growing area for forex over the next few years. It’s really an extension of all of the aggregation we see elsewhere in the social media space.
So what exactly is “social trading”? From our perspective it stems from the fact that people want access to a single app where they can bring together Twitter, Facebook, LinkedIn, or other social tools; they can post an update and have it go out to a variety of places or see the input from their various social circles come together in one place. I think those aggregators in the forex market make a lot of sense.
There’s a complex decision-making process around forex trading and it involves understanding news, economic figures and sentiment, expert opinion, and other things people synthesize to make good trading decisions. Being able to integrate those various sources with technical data from the market in one place is where this trend is headed. This will gain traction as people continue to become more savvy consumers and do more self-directed trading.
There was a lot of talk on the panel about “mirror trading” whereby you essentially pick an expert trader and use your account to follow a scaled version of what they do. There are a few companies that are specializing in technologies that enable this type of “copy” trading.
Many people who are new to forex trading typically look for a tour guide to help them out but it’s tough in any social community to really validate whether the people holding themselves up as experts are actually worthy of that title. Mirror trading is an area that OANDA hasn’t delved into because we don’t offer trading advice to our customers.
The same thought applies to trading algorithms. A lot of the conference attendees had questions, theories, and ideas around how algorithms and high-frequency trading is shifting the market. There are a lot of shops that offer algorithms that provide trading signals to a customer. That’s similar to providing trading advice but it is delivered in the form of a system or formula rather than somebody typing prose.
A few people asked, “Why doesn’t OANDA offer trading signals?” Part of my response to that is it’s such a core element of our DNA to treat the customer fairly that we regard our relationships with customers as partnerships. As soon as you start to offer algorithms or trading advice or influence your customers’ trading patterns in any way, as a forex broker, there’s a line you need to be very careful not to cross in terms of explicitly or accidentally offering advice that isn’t beneficial to your customers.
This is an area of the market that’s changing so rapidly that it’s hard for anyone to think that they have the full picture in terms of what’s going on everywhere at present.
Looking ahead, we see a growing shift away from the desktop and professional trading terminals, where forex has traditionally been rooted. One of the major drivers in the forex space over the coming years will be keeping pace with consumers' increasingly sophisticated use of technology, and finding solutions that enable clients to trade when they want, where they want, and how they want.
Without a doubt, one of the highlights of the event for me was accepting the “Best Forex Broker” award on behalf of OANDA. It was an absolute thrill to be recognized by our industry partners for our forex technology leadership and our reputation for excellence in client service. OANDA was shortlisted alongside other top brokers such as FXCM, Saxo Bank, Alpari, CitiFX, and IG Group.
I was also pleased to hear from many people at the Summit that they have had good experiences with OANDA. Receiving the “Best Forex Broker” award was especially gratifying as that same week we were also named by Wired magazine as one of the top “non-Californinan” technology companies to work for.
We look forward to seeing the Forex Magnates Summit continue to grow and to our future involvement participating on the technology panels they hold.
What is your view of the major drivers in the forex space over the coming years? As a forex trader, what technologies do you want to see the industry implement?