Technology firm CPattern, has announced new studies for its Guardian Angel product. Guardian Angel is a client engagement product that provides users feedback and comments on their trading. In our Q4 Forex Industry Report, we reviewed the product. This is an excerpt from that article:
With a background in Behavioral Science, CPattern Founder Oded Shefer set out to track the behaviors of traders, rather than rather than looking at moves in the markets. What he wanted to know was whether there were specific actions that traders did that made them more successful or caused losses. The result was the creation of Guardian Angel, the retail forex market’s first product that analyzes client behavior in real time. Guardian Angel works as an embedded system on a client’s trading platform and analyzes trader actions relative to the market. The system sends messages to the trader based on the types of trades taken. According to Shefer “Guardian Angel’sgoal is to be an automated retention system that works in any language and provides objective information, but not advice to clients.”
The product does this by providing historical and real time analysis of trades. Examples include sending a message to traders that they are using too much leverage and their trade size is risky, congratulating traders on a winning trade but also providing a cautious note that “traders with large wins can make riskier decisions, so be careful”, encouragement to clients who have lost money, and recommended stop loss sizes based on current volatility. In the statistics section, Guardian Angel provides analysis on the types of trades being made such as average P&L for EURUSD trades is positive, but negative for the USDJPY, or trades conducted during a specific period of time are better than others. Traders can then use this information to gain a better understanding of their own behavior and become more sensitive to the market, and help them fine tune their trading.
During November 2012, Shefer presented at Forex Magnates Elevator Pitch Session at the London Summit and provided initial statistics of Guardian Angel’s performance. At the time, CPattern’s research showed that In a sample of 1477 Guardian Angel users Vs. 1376 controls (traders who made at least 5 trades, across several brokers and several months of trading) Guardian Angel users showed a 13.86% and 43.3%, increase in volume and number of trades respectively. Following up that study, CPattern has published new results from a single broker that show Guardian Angel users posting 48.5% more trader and a 20.4% increase in volume (full press release below).
Overall CPattern is part of a new wave of products aimed at increasing conversion rates and lifetime revenues of clients by providing automatic online engagement tools. While these products do lead to increase trading, the jury is still out on whether they lead to higher client profitability. Nonetheless, for brokers with a large percentage of Introducing Broker led clients, the increase in trading volumes provides additional incentives for partners. Also, higher volumes would benefit brokers operating an STP model.
Guardian Angel™ Generates 20% More Volume
CPattern’s Guardian Angel™ sets a record in impact on traders’ activity and volume. The Guardian Angel™ provides traders instant feedback on how they trade with respect to dynamic market conditions through the trading platform. Traders’ activity is compared to various best practices to provide traders a personalized decision support tool. The tool provides an objective reflection of traders’ behavior to assist each trader in understanding his own strengths and weaknesses in trading.
The Guardian Angel™ provides additional features such as real time volatility alerts and a chat option to engage with the broker in real time. This makes the Guardian Angel™ an ideal automated retention system.
In order to establish the impact of the Guardian Angel™, 590 traders from a known broker who were using the tool on a regular basis were observed. Their trading data was analyzed over a period of 2.5 months and compared to a group of 955 traders who never signed up for the Guardian Angel™ from the same broker. The data shows dramatic increase in favor of Guardian Angel™ users:
1. Guardian Angel™ traders made 48.5% more trades
2. Guardian Angel™ traders made 20.4% more volume (in lots, values were normalized for group size)
3. The broker reported a sharp increase in chat requests
Traders’ reactions from various brokers were collected in the past 3 years and show high satisfaction rate. The following items were presented in a survey on a scale of 1 (low) to 4 (a lot):
It helps my trading – 77.5% rated it 3 or higher
Increases my confidence – 76% rated it 3 or higher
Improves my judgment – 72.3% rated it 3 or higher
Easy to Use – 85% rated it 3 or higher
I will recommend a friend – 75% rated it 3 or higher
Oded Shefer, CPattern’s founder and CEO: “We are very happy with these findings as they show value for brokers and traders. Until now we only had indications and estimations but this case study clearly shows that the Guardian Angel™ makes a huge difference: traders who use the Guardian Angel™ become more responsible and therefore trade more, in higher volume, and enjoy their trading much more. We are now working to make these numbers go even higher with our unique behavior analytics”.
The concept of providing traders personalized feedback in real time sparked in CPattern, and was first introduced in etoro, who served as CPattern’s beta site. Since then, it was used by over dozen of well-known brokers until CPattern reached the right formula that shows direct increase in Customer Life Time Value.
CPattern’s Real Time Analytics Services also include back-office signal feeds on customer behavior that is associated with abandonment and on demo activity that is associated with conversion. This way brokers can act upon their trading data in real time and engage with high potential traders in a much more targeted and efficient way. The end result is more conversions and much higher customer satisfaction and Life Time Value.
CPattern was established in 2009 and bases its analytics on unique methodologies from behavioral science. CPattern collaborates with Leverate and Boston Technologies to deliver its services and is a certified partner of LivePerson.