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FX training has been until now a peripheral segment within the industry, with a series of physical training centers operated by individuals in various major financial centers such as London, New York and Toronto.
In today’s rapidly evolving and global FX industry, training has moved on, with traders requiring highly credible learning resources, and similarly with companies needing to increase their client engagement via intelligent educational resources.
LeapRate discussed the modern and effective methods of providing training to retail FX traders with Sebastian Kuhnert, Co-Founder and Managing Director of Tradimo
The establishment of an online training school for FX industry participants is very interesting. Let’s discuss the advantages in terms of cost model and ergonomics of an online facility which can be distributed via brokerages compared to the plethora of physical FX training facilities that operate.
Physical presence is always great in order to establish personal relationships. At the same time, it lacks the scalability of the online world where you can create long-lasting, valuable assets that add value for every single interested client. This is more challenging than it sounds, however.
To produce the highest quality online training modules an immense amount of focus and expertise is required, involving writers, instructional designers, trading experts, video animators, voice artists, community managers and online marketeers.
Therefore, in a competitive environment, it’s much more time and cost effective for a broker to focus on risk management, service and operations, and to team up with a high quality online trading school such as tradimo. Eventually, the online trading school can fuel the broker’s physical presence with additional people to build relationships with, so the two do also work well in conjunction.
How was Tradimo established, and what expertise did the management team bring to it?
Tradimo was originally established as an intra-group venture of etruvian, which at the time operated the largest online poker school, PokerStrategy.com with 6.5 million members. Both of the Co-Founders of tradimo had done a Masters in Business, Finance or Economics.
I was managing the regulated markets of PokerStrategy.com at the time and entrusted with the development of tradimo, supported by the expertise of many experienced managers within the group. Dean Peters-Wright added a comprehensive business and operational management, trading and editorial background to the team. Together, we combined the experience of online education, community management, trading and a passion for the financial markets.
Today, Etruvian runs the fastest growing chess school, chess24.com and while we’re more independent, this continues to have a positive impact on us as well.
A very efficient means of distribution is to partner with a prime brokerage or liquidity provider. Talk us through the 50% acquisition of Tradimo by CFH, and what value was seen in the company for an established firm to invest.
We knew that we had a great product because our users have given us a lot of positive feedback over the years and whenever we showed our work to a broker they were always very complimentary and enthusiastic about it.
At the same time, we felt that not enough people, even in the industry, were aware of us or the value we could create for a bank or broker in a more strategic relationship.
We decided that the best way to accelerate our growth would be to team up with a reputable organisation which already has great relationships in the industry but would also allow us to remain independent.
The structure and philosophy of the CFH Group seemed a great fit: CFH Clearing and CFH Systems offer great value to brokers when it comes to pricing, execution, risk management and integration of multiple trading platforms, while Tradable allows brokers to respond to clients’ trading software needs in a very flexible, fresh way. The only thing missing in that ecosystem was a vehicle to really help brokers educate and acquire clients. Education and community building is a great way to achieve this.
What is your view on physical FX training facilities in London and various financial districts in North America which charge up to $5000 for a course and software, then use a demo account to show the trades, and sign up delegates of conferences, who are often novices hence their need for training, to b-book brokerages in order to split the losses?
Physical FX training facilities meet a customer need that obviously exists. Some of their educators are said to be top-notch and we’ve met excellent traders who learned at such facilities. We have a lot of respect for how well these companies operate as businesses.
At the same time, the price point and the burn-rate of beginner traders and associated negative word-of-mouth and press limit the amount of people who experience high quality trading education. Ultimately, this affects the industry. It would be great to reach a stage where people learn first online and then attend offline presences, primarily to effect behavioural change since many failed trading careers are rooted in psychology.
Learning to trade requires a longevity and experience in the markets and this requires ongoing support. The scalability of tradimo along with the low cost of learning there means that new beginners are able to sustain their learning over a much longer period of time than a single week of learning, as much as a single instructor can pack into that very expensive week.
That is not to say that off line presence does not hold any value, but rather the longevity of tradimo allows for an easy entry point and the ongoing support throughout their trading career that is needed is more feasible in the long run.
The APAC region is clearly an important market for Tradimo, with Japanese brokerage DMM’s Australian division having adopted Tradimo Play’s client acquisition methodology in November last year. How has this given DMM an edge in an industry where client acquisition is expensive and churning is a major concern?
We are currently seeing a lot of interest in Japan for both a new tradimo.com language site as well as for tradimo play. Client acquisition is expensive for multiple reasons: cryptic financial news, scandals in the financial industry, the complexities of the market, lack of financial education in schools and tough regulation, which makes account openings cumbersome.
It’s also interesting that in our societies we sometimes love to warn of risks but call opportunity-seekers crazy risk takers. With the tradimo play game we are seeking to familiarise people with the financial world, making it more approachable.
That ultimately opens up the market to more people who can then learn more about trading or open accounts. The banks and brokers who are working together with us on this topic will be able to extend their reach to people who were previously not reachable with an acquisition budget within the commonly accepted Customer Lifetime Value limits.
Do you think there will come a time when FX training facilities will be subject to regulation as financial advisers?
This probably depends on whether training facilities actually give financial advice instead of teaching general principles and showing trades for teaching purposes. Ultimately, regulators need to act for the benefit of the clients. It’s usually the black sheep within an industry that make regulation necessary. So if a training facility gave “Wolf of Wall Street-like advice” in its training and clients lament, then this might be the case one day.
Regulation is acceptable if it really protects clients but if it would also mean that a company like Bloomberg couldn’t ask in its video stream where a certain price is heading, then that would not be welcome. Basic financial education, not blindly following someone else’s advice and selecting trustworthy media should be part of general media education in schools. That, rather than additional bureaucracy, would be preferable.
Lets talk animation. How does the use of CGI images engage clients and ensure a longer life time value, as well as impart useful trading information?
Information needs to be as easily digestible as possible for the respective purpose. If you want to convey a feeling and motivate for further engagement, an animated story is best. When the user needs to learn individual facts, a less animated style is preferable.
When something can be shown as an image or graphic, it’s usually best to do so instead of text as we remember images better than text. That’s why we have both text and video content as well as illustrations as part of the text. We also start off a topic with an animated video while teaching facts in less animated videos and showing actual strategies in a screen recording.
People think and learn in different ways. Some people’s brains are hardwired to respond, and hence remember in pictures, whereas others may respond to sound.
Each individual has a capacity to remember and learn with each technique, but depending on how our brains are wired show a preference for one or the other. The use of images, text and video allow an individual to absorb and retain information in a more holistic way.
We have found that it is rarely the case that someone learns with just reading, watching etc, but rather a combination of things. But the most powerful aspect of learning is doing, which is why the entire website works together with a combination of the learning materials and the community support and interaction.
What is Tradimo’s plan for the year ahead?
We are focusing on finding strategic partners who are interested in launching new languages with us on an exclusive basis. We hope that these partners will also follow up with the joint launch of the tradimo play game in the same region. This is both to learn from the partner’s regional expertise as well as to add unique value to the partner through our services.