If You Can’t Join Them, Beat Them! Looking for the Next Big Thing
A bit belated, my review of thoughts from last week’s exhibition in Cyprus. What is the next big thing? Is
A bit belated, but below is my rambling of thoughts from last week’s exhibition in Cyprus
Roaming the halls and around the pool of the IFX Expo last week in Cyprus, one of the overriding feelings of the event was that it lacked that killer product. There were some interesting items being presented along virtually every line of the industry including payment processors, trading platforms, retention tools, marketing solutions and affiliate management. But unlike last year, no one stopped to ask me what I thought about such and such a product, because it was creating a buzz. This isn’t a bad thing, and honestly many of what were last year’s hits in my mind, were only gaining any real traction this year. In addition, one of the sleeper products, Panda TS strategy index CFD, that was presented last year rather quietly, but which I had heard a lot of interest about in the months following the event, never made it to light for some reason. Therefore, just creating buzz doesn’t mean instant success.
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A year ago today, MetaQuotes famously issued its warning to Forex brokers to suspend offering products from Zulutrade and Tradency. Since then, the two firms have shed direct dependence on MT4, and have gone ahead and launched standalone platforms of their copy trading products. Talking to representatives of MetaQuotes during the pre-show evening party, I couldn’t resist mentioning that a year ago they had banned ZuluTrade, and today we were attending a party that was being sponsored by them as they showcased their new platform. Earlier that same day, Tradency launched Mirror 360, its standalone product. The evening proved that MetaQuotes’ creating hardball isn’t snuffing out third parties, but creating more competition for them.
MetaTrader 4 Killer?
Over the past year, among the top most asked questions I received from my perch at Forex Magnates is who will unseat MetaTrader 4. It really isn’t a simple answer, as MT4 is entrenched at virtually every broker, with nearly 45% of Non-Japanese online Forex broker accounts on the platform. There are arguably better platforms on the market that integrate easierly with such key broker items as CRMs, liquidity providers, marketing tools, and third party trading services. Many will even argue that the interface of MT4 is antiquated.
Due to the platform’s limitations, a long line of wannabe MT4 killers have been launched, such a cTrader, tradable, Protrader and the above mentioned products from ZuluTrade and Tradency. But what they lack, and why as of today there is little stopping the MT4 status quo is customer demand for those products. Among them, cTrader has done the best to brand itself as an ECN platform and create some momentum of trader interest. However, their creator, Spotware Systems, has been quiet of late, possibly showing that they are running out of steam in their battle against MetaQuotes.
What emerged though from speaking to brokers in Cyprus, was that there was little demand for a MT4 as much as for complementary products. Some even argued that their involvement with other platforms was a waste of time, as it was an opportunity cost lost to just focusing on sales and marketing. My overall impression is that there are a few platforms that are carving out niches for themselves, such as Tradency’s MirrorTrader from Tradency for copy trading, and cTrader’s ECN brand, but there isn’t a product on the market that is generating a “we need to have that” buzz.
The event itself was packed with payment companies, and frankly, brokers I spoke to seemed more interested in those solutions as they offered immediate answers to improving their bottom lines. If I had to provide my own opinion on products, the most compelling offering I saw was NetDania’s NetStation trading platform being offered as a white label solution from CFH. NetStation was one of the buzz products last year, but has taken a year to go from display to availability to brokers. The reason I found the CFH solution compelling, is that it provides new brokers a full front to end solution, where they can market their traders what is now still a unique platform, with similar white label conditions to CFH’s MT4 broker offering.
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In terms of a runner up, one product that has made visible steady improvements since last year is X Open Hub’s xStation front to end platform. The platform operates well across all platform types (except for the silly Sony Watch they had on display, but even X Open Hub Managing Director, Jakub Zablocki, will be the first to let you know it was more for proving you can trade on a watch than for design and usability value). But, that’s not what interested me. The part of their offering that was unique was the WL Creator, which fits a need I often hear mentioned from brokers. We posted about the WL Creator in the past, so it’s not a new product per se, but helps round out what is quickly becoming a very compelling overall offering from X Open Hub. In the way that I viewed Leverate’s new Sirix Webtrader addressing some core demands from broker customers last year for a more fine-tuned mobile and web-based platform, X Open Hub has checked a lot of boxes of broker needs this past year.
The Big Announcement That Wasn’t
If you ask MetaQuotes what the MT4 killer is, they will answer you that it is 100% going to be MT5. Their representatives remained bullish on the product, and for good reason. Despite bumps in the road that caused both traders and brokers grief when Build 600 was released, there is currently very little separating MT4 and MT5 from the end user perspective. The divisions between the MQL4 and MQL5 programming languages have been thinned, allowing for easier cross-platform development and marketing of MT4 and MT5 EAs.
As such, going into the event, I was under the impression that MetaQuotes was gearing for a big MT5 push during the expo. They even announced that they would be presenting new features in Cyprus. Despite anticipation for something new, and representatives giving me their bullish MT5 view at the pre-event party, all we got was basically a VPN service offered in conjunction with Webzilla. Truthfully, it’s not a bad product, and is being well priced starting at $10. They couldn’t give me any technical specs, so I assume that co-located VPN will be faster and provide more memory resources, but at $10 it is a fit for your average EA buyer who wants a low cost alternative to host their strategy 24 hours a day. One technical item that was in its favor is that the product leverages Webzilla’s footprint of servers scattered across the planet, providing users VPN hosting in numerous locations around the world.
Regulation
So what is the next big thing? That’s another question we quite often get. If I had to come up with one answer from the expo, it’s regulation. Sure, you are wondering what that means, and if the NFA is going to launch their own broker offering to finally put the final nail in the coffin of US brokers (Hmm, maybe).
One of the major trends we are seeing, and one that our CEO, Michael Greenberg, highlighted in the 2014 Industry Predictions, is the split between tightly regulated and banana republic regulation taking place. On one side we have the US and Japans of the world raising capital rates and decreasing margin usage, with the UK and Australia similarly appearing on their way to apply stricter rules. On the other hand, flexible jurisdictions like Belize and Mauritius are seeing a spike in firms registering in those countries. Among brokers, we are seeing firms seeking more globally recognizable regulation, such as several CySEC firms recently getting licensed in the UK. In addition, demand for CySEC licenses themselves remains strong, with many non-regulated brokers who can’t afford their own regulation partnering with regulated Cyprus shops.
Simultaneously, we are seeing a return of the non-regulated broker (or lightly regulated) broker appear on the scene. Specifically among binary options brokers, brands are less concerned about the need for regulation since customers don’t demand it. Probably worst of all, has been the rise of clone companies. These are Forex firms that just fake their regulation and write the details of another firm’s licence numbers. The effect is that not only are they blatantly lying to customers, which is a sign they are probably out to pocket all user deposits, but also causing a bad name for the regulated body.
What this all means is that the industry is setting itself up where regulation is going to play a big part of the future. Therefore, the trend is that new brokers will need to answer whether they are here to play the long or short game. To play the long game, means establishing meaningful regulation early in the firm’s life, allowing it to market across most regions. Playing the short game, entitles not caring much about regulation and marketing across the globe. However, as regulatory or customer warnings build, it means higher costs of processing payments as well as more difficulties in onboarding new clients due to negative online reviews posted across the net.
Okay, enough ramblings. These are one man’s observations. Were you at the IFX Expo? If so, what did you think?
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agree Ron regulation I believe has to be at the forefront of brokers minds. Not enough is being done by mid tier regulated brokers to control and influence their market to ensure their survival, create trust and avoid the monopoly that is now created in the US. working with the regulators is the most important item they need to grasp.
working together as a group, clearing out the corrupt and showing transparency will ensure longevity…
Platform wise nothing stood out but in conjunction with regulation they should be looking at pre and post trade risk and reporting tools.
agree Ron regulation I believe has to be at the forefront of brokers minds. Not enough is being done by mid tier regulated brokers to control and influence their market to ensure their survival, create trust and avoid the monopoly that is now created in the US. working with the regulators is the most important item they need to grasp.
working together as a group, clearing out the corrupt and showing transparency will ensure longevity…
Platform wise nothing stood out but in conjunction with regulation they should be looking at pre and post trade risk and reporting tools.
I did a study of brokers at the end of last year (random selection of fx) most had two platforms but one was for Fx (mt4 not 5) the other would be specific asset class for cds/ equities. copy trading or social if you will tended to be hidden on another page and referred to the usual suspects as a link (not integrated) … very few binary offerings. I found brokers were looking at another platform as backup to Mt4 in the event they forced Mt5 through..EAs are the driving force though and finding a way to bring this to… Read more »
I did a study of brokers at the end of last year (random selection of fx) most had two platforms but one was for Fx (mt4 not 5) the other would be specific asset class for cds/ equities. copy trading or social if you will tended to be hidden on another page and referred to the usual suspects as a link (not integrated) … very few binary offerings. I found brokers were looking at another platform as backup to Mt4 in the event they forced Mt5 through..EAs are the driving force though and finding a way to bring this to… Read more »
Well thought out and written Ron. (albeit no mention of bitcoin……:)
Well thought out and written Ron. (albeit no mention of bitcoin……:)
@Andrew- Here is Ron’s recap of all things Bitcoin related at the expo:
http://dcmagnates.com/bitcoin-google-search-rises-above-currencies-and-other-tidbits-from-the-ifx-expo-in-cyprus/
@Andrew- Here is Ron’s recap of all things Bitcoin related at the expo:
http://dcmagnates.com/bitcoin-google-search-rises-above-currencies-and-other-tidbits-from-the-ifx-expo-in-cyprus/
When talking MT4, I think it is important to separate the MT4 server, and the MT4 frontend. 90% of the brokers are using the MT4 server, and there is no sign of brokers in larger scale will replace the MT4 server in the near future. So the MT4 server talk is not the focus. In terms of the MT4/5 frontends, the art of TA and strategy development is not static, and the two frontends are old art, and outdated. A MT4 killer, would not be a MT4 clone focused at programmers, but rather a MT4 killer in terms of the… Read more »
When talking MT4, I think it is important to separate the MT4 server, and the MT4 frontend. 90% of the brokers are using the MT4 server, and there is no sign of brokers in larger scale will replace the MT4 server in the near future. So the MT4 server talk is not the focus. In terms of the MT4/5 frontends, the art of TA and strategy development is not static, and the two frontends are old art, and outdated. A MT4 killer, would not be a MT4 clone focused at programmers, but rather a MT4 killer in terms of the… Read more »
Further to my comment, when talking about a MT4 frontend killer, apples should be compared with apples.
The MT4 is a charting platform, for discretionary trading, including technical indicators, custom development of technical indicators – with a section for strategy development by programming, and recently apps.
So in order to compare apples with apples, a MT4 killer has to be a trading and development platform including charting, technical analysis, strategy development etc etc etc.
The MT4 frontend is for the experienced discretionary traders, and for the developers. Zulutrade, and similar, are in a completely other segment of frontends.
Further to my comment, when talking about a MT4 frontend killer, apples should be compared with apples.
The MT4 is a charting platform, for discretionary trading, including technical indicators, custom development of technical indicators – with a section for strategy development by programming, and recently apps.
So in order to compare apples with apples, a MT4 killer has to be a trading and development platform including charting, technical analysis, strategy development etc etc etc.
The MT4 frontend is for the experienced discretionary traders, and for the developers. Zulutrade, and similar, are in a completely other segment of frontends.
If Microsoft charged for every email you sent and received through outlook how much market share would they have? Brokers hate MetaQuotes. The platform is rigid and fragile, it has limited functionality and a rudimentary design, the service/support is non existent but they charge the brokers a monthly support fee for each license and WL regardless. But at least they don’t charge the broker a volume fee like all of the other platforms… Infact the ECN style platforms charge both sides of the STP or DMA deal. These platform providers are simply software vendors but they demand a compensation model… Read more »
If Microsoft charged for every email you sent and received through outlook how much market share would they have? Brokers hate MetaQuotes. The platform is rigid and fragile, it has limited functionality and a rudimentary design, the service/support is non existent but they charge the brokers a monthly support fee for each license and WL regardless. But at least they don’t charge the broker a volume fee like all of the other platforms… Infact the ECN style platforms charge both sides of the STP or DMA deal. These platform providers are simply software vendors but they demand a compensation model… Read more »
Excellent article. True point about Metaquotes managing to close the gap between MT4 and MT5. The new builds of MT4 (post 600) could be considered as a MT4.5 really.
Excellent article. True point about Metaquotes managing to close the gap between MT4 and MT5. The new builds of MT4 (post 600) could be considered as a MT4.5 really.
@Soren “When talking MT4, I think it is important to separate the MT4 server, and the MT4 frontend” You make a good point – but, as you agree that the backend isn’t getting replaced, it creates an environment for a MT4 frontend killer to arrive since so many of the products on the market are operating on top of MT4, with MetaQuotes periodically stating that they are doing such illegally. In terms of the frontend – despite the focus on programmers, the fact is that there is pretty much an available youtube video explaining every possible facet of the frontend… Read more »
@Soren “When talking MT4, I think it is important to separate the MT4 server, and the MT4 frontend” You make a good point – but, as you agree that the backend isn’t getting replaced, it creates an environment for a MT4 frontend killer to arrive since so many of the products on the market are operating on top of MT4, with MetaQuotes periodically stating that they are doing such illegally. In terms of the frontend – despite the focus on programmers, the fact is that there is pretty much an available youtube video explaining every possible facet of the frontend… Read more »
@Ron – Excellent article, but I’m not sure that I understand your subsequent comment about “MT4 frontend killers”. Leaving aside competing platforms such as cTrader, it seems to me that there are two things. Firstly, there are tools which continue to talk to the MT4 backend while completely replacing the frontend, for example MT4 web trading solutions. These shouldn’t harm core MQ revenue from sales of MT4 Server – in fact, if successful, these tools should create a need for more Server licences – but they do mean that there’s reduced distribution of the MT4 frontend, and fewer people getting… Read more »
@Ron – Excellent article, but I’m not sure that I understand your subsequent comment about “MT4 frontend killers”. Leaving aside competing platforms such as cTrader, it seems to me that there are two things. Firstly, there are tools which continue to talk to the MT4 backend while completely replacing the frontend, for example MT4 web trading solutions. These shouldn’t harm core MQ revenue from sales of MT4 Server – in fact, if successful, these tools should create a need for more Server licences – but they do mean that there’s reduced distribution of the MT4 frontend, and fewer people getting… Read more »
@James – sorry – meant, “doesn’t create an environment” since everyone is using the backend server.
@James – sorry – meant, “doesn’t create an environment” since everyone is using the backend server.
@James, good comments, for discretionary trading its all about technical indicators and TA. Most strategies are using technical indicators as main source, so they are key.
But you forget the world is not static, who would predict the jet plane in 1720 ?
A candidate as a M4 killer would be something entirely different than the MT4/5, but still a traditional platform for discretionary trading, and for strategy development.
@James, good comments, for discretionary trading its all about technical indicators and TA. Most strategies are using technical indicators as main source, so they are key.
But you forget the world is not static, who would predict the jet plane in 1720 ?
A candidate as a M4 killer would be something entirely different than the MT4/5, but still a traditional platform for discretionary trading, and for strategy development.
@Soren – Has there *ever* been a point in time when MT4 was the best available platform in terms of built-in features for discretionary trading? Quite possibly not. “Best platform overall”, or “MT4 frontend killer”, need to encompass a huge range of external factors such as the variety of brokers who you can choose to trade through, the availability of third-party add-ons, quality of support, plus all the “network effects” which arise from lots of brokers and traders using a platform. The jet engine must come along eventually, but it’s hard to see when and how given that MQ’s actions… Read more »
@Soren – Has there *ever* been a point in time when MT4 was the best available platform in terms of built-in features for discretionary trading? Quite possibly not. “Best platform overall”, or “MT4 frontend killer”, need to encompass a huge range of external factors such as the variety of brokers who you can choose to trade through, the availability of third-party add-ons, quality of support, plus all the “network effects” which arise from lots of brokers and traders using a platform. The jet engine must come along eventually, but it’s hard to see when and how given that MQ’s actions… Read more »
@Soren –
…we obviously can’t take the jet-engine analogy too seriously, but it’s worth remembering that, for decades until really quite recently, international air travel was only routinely affordable by a small number of very rich people. If you want to find what’s going to be the “jet engine”, then the place to look is perhaps at what’s currently being used by a small and wealthy elite.
@Soren –
…we obviously can’t take the jet-engine analogy too seriously, but it’s worth remembering that, for decades until really quite recently, international air travel was only routinely affordable by a small number of very rich people. If you want to find what’s going to be the “jet engine”, then the place to look is perhaps at what’s currently being used by a small and wealthy elite.
@James, “If you want to find what’s going to be the “jet engine”, then the place to look is perhaps at what’s currently being used by a small and wealthy elite”.
Exactly, which is in the institutional segment.
@James, “If you want to find what’s going to be the “jet engine”, then the place to look is perhaps at what’s currently being used by a small and wealthy elite”.
Exactly, which is in the institutional segment.
… and not public available.
… and not public available.
I think MT4 is where it is, simply because they were first and allowed a lot of new brokers – at the start of the industry – to quickly and relatively cheaply get in business. The fact that they were not smart and knowledgeable enough to charge per volume but a fixed fee added to the snowball effect – sometimes not being too smart and shrewd can lead to success. The fact that they could not replicate the success of MT4 with MT5 clearly shows MQ did not know what made them successful in the first place which means, they… Read more »
I think MT4 is where it is, simply because they were first and allowed a lot of new brokers – at the start of the industry – to quickly and relatively cheaply get in business. The fact that they were not smart and knowledgeable enough to charge per volume but a fixed fee added to the snowball effect – sometimes not being too smart and shrewd can lead to success. The fact that they could not replicate the success of MT4 with MT5 clearly shows MQ did not know what made them successful in the first place which means, they… Read more »
“justme – “There are only 2 things that happened to Forex – Internet and Social Platforms”.
The most important thing, perhaps apart from the internet, is the technology for aggregation of liquidity, providing “from 0.0 in spread”.
This will and is changing the FX industry forever, and will imply some will die and some will live. This is splitting the FX industry in two sides, one side with growth, and the other will steady decline in revenue for finally stop existing, if they do not change their structure. Frontends are in this perspective secondary.
“justme – “There are only 2 things that happened to Forex – Internet and Social Platforms”.
The most important thing, perhaps apart from the internet, is the technology for aggregation of liquidity, providing “from 0.0 in spread”.
This will and is changing the FX industry forever, and will imply some will die and some will live. This is splitting the FX industry in two sides, one side with growth, and the other will steady decline in revenue for finally stop existing, if they do not change their structure. Frontends are in this perspective secondary.
There can exist multiple titans, just like there can exist Microsoft and Oracle (and CA, and…). When trading products become the driving force, the market finds the right platform for the product. When traders believe that OTC options help them trade, and they see no options on MT4, then another platform will emerge to fill the gap. In options, there’s FX Bridge. Today it’s a niche – and it’s growing all the time.
There can exist multiple titans, just like there can exist Microsoft and Oracle (and CA, and…). When trading products become the driving force, the market finds the right platform for the product. When traders believe that OTC options help them trade, and they see no options on MT4, then another platform will emerge to fill the gap. In options, there’s FX Bridge. Today it’s a niche – and it’s growing all the time.
The mt4 killer is simply metaquotes management, they are so incompetent that they will kill themselves with their own hands. Small brokers using mt4, who cannot afford to create a own proprietary platform will die soon as market is getting more and more competitive and there will not be space anymore for small unregulated mt4 brokers. Big brokers like Saxo did will soon stop offering mt4. The only reason why big brokers bought the mt4 server is just to get as many clients as possible from the mql4/5 community. Once they reach this target they will remove mt4 and focus… Read more »
The mt4 killer is simply metaquotes management, they are so incompetent that they will kill themselves with their own hands. Small brokers using mt4, who cannot afford to create a own proprietary platform will die soon as market is getting more and more competitive and there will not be space anymore for small unregulated mt4 brokers. Big brokers like Saxo did will soon stop offering mt4. The only reason why big brokers bought the mt4 server is just to get as many clients as possible from the mql4/5 community. Once they reach this target they will remove mt4 and focus… Read more »