There’s a Revolution Coming For Retail Brokerage

November 26, 2018

…and it’s not about the cheapest commissions, the slickest mobile experience, or the coolest ads during the Super Bowl.

Nope. It’s about giving the customer what the customer wants.

And what do customers want? Well, before I answer that question, let us do a very brief review of recent history first.

[If you’re in a hurry, you can skip to a video of my short live stage presentation of this topic at the Benzinga Fintech Summit in San Francisco in mid November that I include at the end of this blog post.]

In the immediate aftermath of the Financial Crisis of 2007-09, people with risk-seeking assets (whatever was left of them) began looking for safer places to hide out. And the people making the decisions on where to place these funds began gravitating towards these new things called “Robo-advisors” — essentially low cost custodians of assets that basically look to track the performance of the popular benchmarks, while providing next to zero custom advice and collecting smaller than normal fees for essentially nothing. For recently burned investors, “cheaper fees” and “market returns” seemed like a happy marriage.

And for the next 9 years or so, this plan has more or less made more and more sense (…and dollars!). As the bull market roared on, more investors willing to dip their toes back into the waters decided to invest the largest portion of their investable dollars with these “robo-advisors.”

And that’s essentially where we find ourselves now. An entire investor class largely populated with individuals who have either never had their assets live through a bear market, or have caught amnesia and forgot the pain of the last one.

What happens when the next real bear market hits?

Well, I’m willing to bet that a large portion of these “passive investors” will suddenly find themselves “not-so-passive” any more and many will make terrible, emotional decisions at the worst possible times. The best case scenario is that the smarter ones will see the writing on the wall and will be proactive in protecting themselves and will seek to take more active roles with their passive investments.

This is where Trade Ideas, LLC will be changing the game for investors.

Quietly, two years ago Trade Ideas rolled out a beta version of our game changing platform Brokerage+. This tool allows traders the ability to send orders into the marketplace direct from their Trade Ideas platform to be executed within their brokerage account (Trade Ideas itself is not a brokerage*). But there’s more to it than that… With just one or two clicks, trades can be sent at the proper share size according to the risk level the trader is comfortable with and the distance to the stop level. Additionally, the appropriate stop loss order and profit target limit order will be simultaneously entered so that the trader knows that every trade entered will risk the same amount of capital and exits will be managed according to plan — hands off.

But it gets better! Trade Ideas also allows our customers to build their own trading algorithms, backtest the results, and optimize each strategy until it is achieving the goals of the trader (on paper). With this confidence, traders can then have their strategies auto-traded using Brokerage+. Can you imagine how powerful this feature can be in the hands of people willing to put in the work to build strategies with statistical edge?

Here’s a hint: With zero promotion from our partner brokers, very little marketing, and only word-of-mouth and user adaptation, here’s a snapshot of trading volumes (both live executions and paper trades) since the beginning of the beta launch of Brokerage+:

This is undeniable data showing early adopters positioning themselves to be the leader of the pack, delivering alpha to themselves.

But wait….there’s more! 

Sometime in 2019, Trade Ideas will once again change the game for investors thanks to broader application of our groundbreaking Artificial Intelligence engine we named HOLLY. We’ll be rolling out more versions of our AI, tackling more specific corners of the marketplace, with a wider range of statistically significant strategies, and greater customization for each individual investor. Once that is available, we’ll begin allowing customers the ability to auto-trade AI. When this happens, the whole game changes overnight.

Who wouldn’t want to put this kind of performance on auto-pilot?:

(psst…. did you notice the acceleration of alpha for the AI since early October versus the S&P 500?)

If you are an active investor seeking to take a little bit more control back for your investments and would like to learn more about Trade Ideas’ Brokerage+ tool and the wide variety of features available to amp your game and elevate your alpha, start here.

If you work at or represent a large brokerage house that is wondering how they will be able to retain current customers, drive new account openings, and increase trading volumes, we’d like to partner with you. Your current and potential customers are coming to Trade Ideas, learning about our AI and algorithmic trading and getting excited to participate in the future of investing. The first question they ask us is: “where do I need to open a brokerage account in order to trade through Brokerage+?”

We’d like to be able to send this business your way.

Reach out to me and let’s get the ball rolling for you.

For more on this topic, see a recording of my short live presentation at the Benzinga Fintech Summit in San Francisco on November 14, 2018. I come onstage after a brief promo video:

~ @chicagosean

*yet.