It’s no secret that the vast majority of online retail  Forex  Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Read this Term traders lose money. Within our quarterly profitability report of US brokers, on average, about 35% of retail traders in the US make money each quarter, with lifetime success estimated to be below 30%. While brokers in other jurisdictions don’t post profitability statistics, based on interviews with various brokers, worldwide profitability for regulated retail brokers is believed to be around 25%. However, multiple brokers have cited that larger accounts (over $10,000) significantly perform better than smaller sized accounts.

With this reality, a number of firms have been creating solutions to help traders have a higher chance for success. Products include solutions that conduct behavioral analysis to review when and how a trader does their best and worst and send notifications when they are placing trades that have historically performed poorly. In addition is an array of education and  Risk Management  Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firm’s exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent. One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firm’s exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent. Read this Term tools to help traders better understand the market and applicable risks.

Soon launching to provide a new solution for the retail lack of profitability problem is PsyQuation. Based in Australia, the firm was founded by company CEO Michael Berman and CTO Vladamir Krouglov Ph.D who prior to creating PsyQuation had worked together on a product to help incubate traders for money management funds.

Profitability = higher retention

Speaking to Finance Magnates, Berman explained that the roots of PsyQuation was based on the theory that brokers can increase customer lifetime values and retention rates through having more profitable traders. In their previous work, Berman and Krouglov had built an algorithm to score traders and allow them to discover which are the most skilled and most likely to succeed in the future.

However, Berman explained that the problem with any trader rankings is that less skilled traders fall to the bottom, and their “score is less useful” when calculating expected results for the future. As a solution, Berman cited that when building PsyQuation the goal was a product that could both monitor new traders, but also discover ways to improve their success.

To do this, Berman stated that the PsyQuation’s angle is “less is more”. He explained that to do this, they removed many of the statistical calculations that are used to calculate risk such as sharp ratios, and focus on whether a customer is trading in a way to achieve their goals.

Setting goals

To simplify the process, upon registering to PsyQuation, users enter their annualized profit target and maximum acceptable loss. Based on these goals, the PsyQuation platform reviews whether a trader’s habits are within their risk goals. Among items then reviewed is customer leverage, whether trades are taking place during news periods, position sizes and behavioral factors such as overconfidence and loss aversion.

PsyQuation also creates a real time VaR (value at risk) score that displays how much a trader is currently risking if all trades go against them. In addition to the dashboard which shows current risk and performance as related to a customer’s goals, the system also sends notification popups when fundamental and behavioral alerts are triggered.

Beyond the real time view, the platform includes the “PsyQuation Journey”. Providing longer term performance analysis, this page allows customers to view how their trading is matching to their desired goals. Berman explained that PsyQuation uses an algorithm to track how a customer is adhering to the trading alerts which were created to help them meet their profit goals. Overall, According to Berman, the end goal for traders that emerge from PsyQuation isn’t a system that leads to finite profit amount, but one that will make them better traders for longer lasting success.