FXCM is a company that needs no introduction. Under the savvy leadership of Brendan Callan, it has kept itself at the forefront of the FX and CFD industry throughout countless challenges, all while managing to maintain impressive organizational agility and foresight.
Brendan generously agreed to share with us some valuable insights with regards to current key market trends, the value of automated trading, and even some of his own hard-earned trading wisdom.
Hey Brendan! Thank you so much for taking the time for this interview. Kicking off with our juiciest question: What’s the worst mistake you’ve ever made trading?
Ooof, good question. It pains me to stir this memory back up again, but way back in early 2002 I made a series of bad trades that I consider to collectively be my worst mistake in trading.
During those months, USD/JPY was in a free fall and the daily ranges and price gaps were massive. The Bank of Japan kept coming in to shake out the sellers. They would intervene unannounced and were not stating any target levels, they would just randomly sell big chunks of Yen. USD/JPY would spike 80 or 100 pips then crash through any support levels that I thought might have existed. Foolishly, I kept trying to pick bottoms.
My mistake was in thinking that an expressly committed central bank would eventually stop the rapidly increasing value of its currency. The BOJ was not trying to stop the appreciation of the Yen. They were just trying to slow it down to give businesses slightly more time to adjust. It was a costly lesson for sure.
Ouch. Sounds rough! To quickly change the subject: The barrier of entry to trading and interacting with stocks, forex, and crypto is constantly getting lower for retailers. With more and more newbies pouring into the market every day: how do you think this will affect market dynamics in the near future?
As with any industry, more consumer demand means more revenue opportunity, which attracts more market entrants and drives all other competitive forces. This increased competition will push trading costs down even further and it will really push service providers to up their game. All of which is great for traders.
As far as how the markets react to more flow coming from retail traders – and therefore proportionately less from institutional traders – that is tough to know. Institutional flow is often market neutral (meaning they are just trying to capture spread), retail flow is directional.
That shifting dynamic may mean that in general, positions have a little more conviction behind them and maybe trends sustain for longer.
Considering the above, how do you think the democratization of trading automation would affect the financial sector?
An increase in the number of traders using automation tools will certainly increase trading volumes. Services that allow for easy automation of strategies help part-time traders become full-time traders. Capitalise helps clients take advantage of trading opportunities they would have otherwise missed.
Automated traders are more sensitive to the quality of execution statistics, particularly the speed of execution and slippage rates. I think more automation will drive firms in the financial sector to focus on the client experience in these specific areas.
FXCM is particularly suited to automated traders as we are an industry leader on both fronts. Our average execution speed is just 18 milliseconds and over 87% of market orders receive the price requested or better. FXCM publishes our execution statistics monthly on our website, which is a level of transparency I haven’t seen from other competitors.
We see a clear trend of FX & CFD brokers adding crypto assets to their offerings. When did you first realize that FXCM had to make crypto available to its clients? What led up to that decision?
We first added crypto in 2018. The instruments and platform functionality we add are almost always determined by the client requests we get day in and day out. At the time and still now, cryptocurrencies are an often-requested product category.
The more recent requests are for us to offer more alt coins as well as for us to offer crypto against currencies other than the USD. We plan to significantly increase the number of crypto pairs we offer before the year is out, which is something I am very excited about.
What do you think are the main challenges to bringing Crypto investing into the mainstream?
I think the main challenge is an under developed regulatory environment.
Mainstream clients need to know their money is safe when trading and investing in crypto. As antithetical as government oversight might be to the reasons crypto assets exist, increasing safety of funds is a necessary and positive evolution. This boat has already left the dock here, and as the exchanges and wallet providers face more stringent corporate governance and client money requirements, more people will take up crypto use and trading.
The benefit to trading crypto as a CFD, is that a stringent regulatory framework is already in place for CFD brokers. I’d argue that crypto is safer to trade as a CFD with a regulator CFD broker than it is to trade on an exchange.
What excites you the most about Capitalise? Why did you choose us as a partner? Thanks for that by the way!
To my previous point about service providers needing to up their game, FXCM partnered with Capitalise as part of our effort to make sure clients have access to the best trading tools available. Capitalise is the best tool I have seen for making automation extremely simple. No coding expertise is required.
Most of our clients have other jobs. They generally trade for a couple of hours in the evening and that is it. A lot of trading opportunities pass them by simply because they were not logged in and watching the markets. Capitalise will be a very useful tool for clients that do not want to miss those trades.
Automation is also a good tool for forcing discipline. We have all moved a stop-loss order that was about to get hit for no good reason. Automation removes all emotion from trading decisions. If it is time to close a trade out at a loss, the trading algorithm will not change that decision based on its emotions in that moment.
Last but not least: What advice would you give to newbie traders who are just now beginning to dip their toes into the field?
Start small. That advice might sound obvious and I hope that it does. Nobody starts off as a good trader. Get over those initial lessons on the cheap by placing small trades and focusing on the percent of your wins and losses not the dollar amount.
Thanks again for joining us for this interview!
Readers: if you’re interested in more of FXCM’s market insights, check out their Podcast “FXCM Market Talk” – it’s a big part of our information diet!
Capitalise.ai is available for free to all FXCM traders – so if you’re a client, go wild!