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Fintech Future for Retail Traders

As a newbie retail trader I can empathise with my fellow Gordon Gekko wannabes who dream of using their personal trading track record as leverage for securing their dream job managing large amounts of money. Unlike Gordon Gekko, however, for most people this will probably have to be someone else’s money!
The creation of broadband infrastructure and online brokers over the last decade has led to the democratisation of trading.This itself has led to millions of people trying their hand at ‘getting rich quick’ in the world of online trading.

What most new traders realise, however, is that you need money to make money. Even if you take advantage of the massive financial leverage on offer with retail brokers you stand more chance of accelerating your bankruptcy than your financial freedom!

Even if you are an amazingly successful trader who can produce 1% or 2% a month, if you only start with a $10,000 account you are hardly going to be trading from your private yacht in the Med anytime soon.

As a result, profitable retail traders are forced to look at other ways to make money and build their trading account. This has traditionally led them to securing client accounts to trade on behalf of other, wealthier people and taking management / performance fees.

The alternative was to use your personal trading track record to get yourself a job at a proprietary trading firm or hedge fund and get paid a fat salary to manage their client’s money.

Neither of these is easy, however, and requires a good trader to be a great salesperson – not necessarily skill sets that always go together.

We recently had the pleasure of interviewing a guest on the Two Blokes Trading podcast who (in his own words) has created a way of finding that success with “much less ass kissing”!

Yoni Assia is the founder and CEO of fintech company eToro, the original and largest social trading network. He has just launched a CopyFunds programme that basically enables retail traders to access thematic funds run by eToro’s best private traders. This access comes at a fraction of the cost and a much lower cash barrier-to-entry that a hedge fund or similar would have.

If you are a profitable retail trader but maybe aren’t the best salesperson, then you can simply trade on a site like eToro or one of their competitors and let your track record speak for itself – if you make money people will auto-copy your trades and you will be financially rewarded by the company itself.

If you are one of the best 50 traders on the site you will be put in the CopyFund that tracks their absolute top performers – earning you good management fees as well as any of your personal profits. All without having to sell anything to anyone.

Fintech is changing not just the way people can trade but also the way they can be paid to manage money, if and when they become successful traders.

eToro is just one of a wave of social trading and fintech companies that are changing the landscape of retail trading.

As for Tom and me, the eponymous ‘Two Blokes’, we are excited to see what the future holds for our copy trading, but we are still some way off the goal of being consistently profitable. We are progressing, but it takes time!

Two Blokes Trading is a podcast and website that we are using to detail our progress towards becoming successful, profitable traders. But if our appalling performance trading the Trump victory shows anything, it is that we have a lot to learn!

If you want to hear what we did wrong (and then what our expert guest trader did right!) then you will have to get on iTunes or a podcast app and download episode 25 of the Two Blokes Trading podcast! Alternatively checkout the episode here


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