Do retail Forex traders need to be forced to apply risk management rules to become more successful? Japanese Invast Securities thinks so. In unveiling a new forex trading account type and platform called TriAuto, at the core of the product’s features are automatic risk management rules that customers apply for each new trade.
According to Invast Securities in their public statement about TriAuto, several years ago they initiated research to determine what conditions could lead to improved customer trading results. As a provider of both exchange traded FX via Click 365 trading, as well as OTC FX through their FX22 brand, Invast studied differences between performance of accounts using the two products. Due to Click 365 having a minimum spread of 0.01 yen, plus commissions, versus 0.008 and no commissions with their OTC FX offering, the expectation was that it they lowered spreads in OTC FX even further, clients would see improved trading performance.
The data though, showed that there was very little change in trading results between Click 365 and FX24 account holders. According to Invast, rather than benefit from the reduced costs of trading, FX24 customers began to trade at a higher rate, leading them to place three times as many trades as Click 365 account holders. The increase in volumes caused an overall benefit of lower costs to be mitigated as customers changed their behaviors to become high frequency traders, instead of taking advantage of the improved trading conditions. As a result of the study, Invast stated that this led them to launch its ST24 mirror trading product using technology from Tradency in November 2011. Upon launching the product, Invast theorized that customers would benefit from only needing to choose strategies without being affected by changes in trading conditions.
Since launching the product over two years ago and reaching a current client base of 60,000 accounts, Invast stated that it was able to make comparisons between ST24 to FX24 customers. According to their data, ST24 accounts showed a lower ratio of losses and longer trading life than those of either FX24 and Click 365 customers.
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Using the data that showed improved performance for ST24 customers, according to Invast, they wanted to create a product that used elements of automatic trading and apply them for discretionary traders. This led them to create TriAuto.
In essence, TriAuto is a simplified click trading platform interface. When loading a currency pair, users pick either up, down, or range bound; this is the Tri in the name. Customers then enter four different order entry types and profit and loss criteria before activating the order to take place. By creating an interface that asks users to answer what they aim to achieve in the trade, it boxes customers into a position to use risk management.
About this, Invast stated that “Placing multiple auto-pilot automatic trade orders enables the trader customer to create a simple trading strategy as well as a complex trading strategy in a completely free manner. The TriAuto trading service is the type of service designed to be used by trader customers ranging from well-experienced and sophisticated forex margin traders to beginner forex margin traders, according to their skill levels.”
In terms of comparable product, there are several other trading platforms that also utilize a simplified interface like TriAuto where users apply predetermined profit/loss prices before entering a trade. Among them include hybrid binary/forex platform Gwazy as well as nowfx. In addition, there are third party apps that provide interfaces to allow for simultaneous risk management application when entering trades, such as from Trader’s Toolset, whose founder David Anderson presented his product during the Elevator Pitch Session at last year’s Forex Magnates London Summit. Overall, risk management tools are an item that has been slowly becoming more developed in the retail forex sector, as in addition to order execution, behavioral trading products from cPattern and Corrsight have also been appearing on a wider scope of broker platforms.