A Black Box Future? TickCOM Launches iSTRAT
Back in January, Forex Magnates reported that TickCOM, was planning on entering the retail market with the launch of automated

Back in January, Forex Magnates reported that Danish financial technology firm TickCOM, was planning on entering the retail market with the launch of automated trading products. Following on that report, the firm is currently launching its iSTRAT automated trading product to the market. Similar to products like Tradency and Currensee, iSTRAT provides an array of diverse strategies which users can elect to copy and have executed automatically in their accounts. Differing from those products, as well as social trading offerings, iSTRAT strategies are proprietary models created within TickCOM’s quant engine. Generating 1000’s of strategies, users are provided the current top 100 algorithms of each symbol for them to choose.
Soren Lanng, TickCOM CEO explained to Forex Magnates that, “There are many similarities between Copy Trading / Social Trading and the iSTRAT product type.” As he described that, “Traders select among promising historical performance, equity curves in both cases.” He added though that the “Main difference is, that the user with iSTRAT has influence of which kind of strategies he is subscribing to, he can for example use “Bear/Bull” to get bullish or bearish strategies, if the trader knows the market is directional in these days, or the trader wants to explore a market event – selecting a trade leader, the trader has no influence on how the trader leader is going to trade today or tomorrow.”
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Lanng added that the firm doesn’t view themselves as a signal provider or strategy creator, as the product gives users the ability to choose and remove strategies within their portfolio. According to Lanng, putting the power in the hands of the traders to manipulate the TickCOM quant engine as they please, the product doesn’t fall under the category of money management offerings that may require regulatory licenses in the future within the EU. TickCOM believes that this is one of the product’s more important features for brokers.
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The product is currently being offered to brokers as a standalone platform that can connect to their platforms. In addition, an iframe version is available to be integrated within a firm’s platform.
A Black Box Future?
One of the main questions about iSTRAT and similar types of product adoption are whether users are interested in black box strategies? With these black box products, users are provided performance data which they can use to determine which strategies fit best with different markets. However, the technical specifics of the algorithm remain hidden from users. On one hand, this is no different from the experience of buyers of distributed EAs or PAMM accounts. With those products though, there is generally some sort of description of company facing representative to provide more information. With black boxes, traders are at the mercy of the algorithms and performances. In addition, products such as iSTRAT require traders to become more active in managing their portfolios. While this isn’t necessarily a bad thing, it does differ from the majority of autotrading products which aim to be as simple and hands off as possible for traders.
Having demoed the product, my personal opinion is that the procedures to select strategies and manage a black box algorithmic portfolio will be found too cumbersome for the majority of retail users. This could change in time as the user interface to meet the needs of beginner traders evolves. However, where the product could find popularity is with the people it is supposed to replace. Money managers may find that having access to TickCOM’s algorithmic strategy library is a compelling offering. Specifically, TickCOM is marketing that iSTRAT’s portfolios are expected to be heavy volume generators, which is an appealing product for managers that have a rebate component in their compensation.
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Would like to add some comments: The strategies are developed and backtested live on the request from the user, using data to the last minute – a small correction is, that the quant engine is providing different strategies from request to request, and as market behaviour changes. The process our quant engine performs, is no different from institutional quant developing, we have added some new technologies to speed up the development time, and new manners to provide input to a quant engine. One could say to some extend what is delivered are “black box strategies”, but all signals are to… Read more »
Hi Jon, thanks for the comments and questions, please see my replies below: #1 A detailed article about that subject (agency vs principal business) is already scheduled in our upcoming QIR report which will be available for purchase in early January once Q4 2013 concludes. #2 With regards to algo’s, I think the comparisons which used EBS as an example – where meant as a basis to compare how overall algos have aided market efficiency by bridging liquidity gaps and increasing market speed for price discovery and execution (with regards to using algo’s to make-markets and order-routing as well as… Read more »
Hi Jon, thanks for the comments and questions, please see my replies below: #1 A detailed article about that subject (agency vs principal business) is already scheduled in our upcoming QIR report which will be available for purchase in early January once Q4 2013 concludes. #2 With regards to algo’s, I think the comparisons which used EBS as an example – where meant as a basis to compare how overall algos have aided market efficiency by bridging liquidity gaps and increasing market speed for price discovery and execution (with regards to using algo’s to make-markets and order-routing as well as… Read more »
Very nice sales pitch. Allow me to add: Profitable traders make a choice whether to make their algorithms or basic trading logic public; I have done so for a while. Unprofitable traders are the ones that have a large need to shroud their ‘logic’ in complete secrecy. After all, isn’t it easier to sell the IDEA that you can be profitable vs. having to justify how exactly you make the profits appear consistently in the account? This “religious” approach to trading system development and deployment is a big part of the reason why there are so many blind leading the… Read more »
I believe TickCOM has done a fantastic job of making black box strategies available to the retail market. This is something that was previously reserved only to hedge funds etc. Having traded the financial markets for almost 15 years I can tell that strictly mechanical strategies are the future. Good job, TickCOM.
I am not a big believer in social trading. Copy trading when there is somebody to select the signal providers is something else. So in the long-run I believe both TickCOM and the firms like Tradeslide and even Myfxbook will do well.
@Ingmar – perhaps, but brokers and technology firms shouldn’t under estimate the importance of simple designs and UIs.
nothing but it simply reduces the number of people who can access the website (not all even know what a VPN is)
@Ron Yes, institutional discretionary trading is typically done using quite simple utils and methods, such as S / R lines, pivots and perhaps a technical indicator or two. I think we on the other hand shouldnt underestimate the retail trader of today, who grew up with computer games, Facebook design, and as super users of computers. Combined with the increasing transparency due to fast and easy access to information on the net, todays traders are more demanding and request more advanced tools than just point-and-click. The gap between retail and institutional tools is narrowing, and will be narrowing, I think.… Read more »
@Jon – The sovereign currency is the Shekel (NIS). Dollar values are often used, and US Dollar is widely considered a B2B benchmark but since the Shekel has become such a strong currency, it is becoming more uniform nowadays. Your thoughts on BTC as a complimentary currency are very interesting indeed, because Israel’s bitcoin enthusiasts are very interested in the technological innovation behind bitcoin, therefore the country may become a technology center for Bitcoin as time goes on, and the government is usually in agreement with anything innovative. With regard to little state dependency, there are very few social programs,… Read more »
@Jon – The sovereign currency is the Shekel (NIS). Dollar values are often used, and US Dollar is widely considered a B2B benchmark but since the Shekel has become such a strong currency, it is becoming more uniform nowadays. Your thoughts on BTC as a complimentary currency are very interesting indeed, because Israel’s bitcoin enthusiasts are very interested in the technological innovation behind bitcoin, therefore the country may become a technology center for Bitcoin as time goes on, and the government is usually in agreement with anything innovative. With regard to little state dependency, there are very few social programs,… Read more »