With global retail trading volumes higher than last year, and with parts of the industry remaining opaque, what are the implications that lie ahead for retail trading platforms, traders, and the industry as a whole?
To open the discussion, Digital Journal spoke with Lev Mazur, founder of the multi-asset global brokerage Quantfury, a company that delivers unmatched trading conditions of real-time exchange spot prices.
Digital Journal: From your perspective, what is the most important issue that matters to retail traders right now?
Lev Mazur: For retail traders, it will always be about making profitable trades.
From our perspective, a more objective point of view, it’s about the conditions where traders conduct their trades, such as price accuracy and cost.
DJ: Are retail traders concerned about historically high market valuations?
Mazur: They’re not thinking about historical high valuations. They’re not thinking about all-time highs. Traders see the market go up, they think the market is healthy and are happy. When the market goes down, they are sad. If there is any price euphoria of any kind, it brings in more trading interest to the market.
DJ: How has the industry been able to make trading free and accessible to everyone?
Mazur: The industry didn’t really make trading free. Free trading comes from zero fees and zero commissions, but real-time accurate pricing is more important because other platforms offer zero fees and zero commissions but do so with elevated prices. However, few companies did succeed in doing just this and more. Let’s hope the rest of the global trading industry will follow. As for the accessible part, “blame” the internet.
DJ: What do you see are the challenges in keeping and retaining users on a trading platform?
Mazur: Honestly, I think the notion of keeping and retaining users on a trading platform lacks decency and dignity. Those trading platforms that can deliver value to their users by conditions users operate under will most likely retain those users over a longer period of time, since they will be losing less than elsewhere while trading.
DJ: Will retail traders be a force to be reckoned with in the future and should institutions be wary of their influence?
Mazur: Not really. Institutions and retail traders are both groups that are made up of individuals who make trading decisions. The actual difference comes in where institutions have more resources, and they also have mandates and rules in place to protect themselves, to a degree, by enforcing decision-making and risk management practices that differentiates them from retail trading habits. However, according to stats, 90 percent of hedge funds close within their first 3 years of launch showing that institutions as a whole on a macro scale don’t trade better or more efficiently than retail traders. These are the facts that should be emphasized that trading and the elements of greed that surround it cause serious damage to individuals rather than popular “us versus them” narrative that really just drive more speculation from people that really should not trade.
DJ: What does a totally transparent and free trading platform look like?
Mazur: There is one that I can point to, Quantfury. That being said, “free” is not the correct term to attribute to trading platforms. Rather, Quantfury, for example, delivers unmatched trading conditions. Zero fees is meaningless at best, or misleading at worst, unless the platform executes trades with accurate prices delivered in real-time directly from the exchange which the asset is traded, without any manipulation. So, what’s actually important for a trading platform is the degree that people can trust that platform not to manipulate prices.
While regulations in the United States enforce that brokerages and trading platforms must quote accurate prices, this is not the case globally. So, a truly transparent and honest trading platform must have some kind of self-regulating mechanism. For example, one where anyone can audit and verify the trading conditions of that platform, including the prices that trades are executed at. This is what Quantfury is built around. In addition, to be honest also means to be agnostic and not doing things that influence or encourage people to trade, such as announcing new assets that are listed to trade.
DJ: Do retail traders in the U.S. behave differently than traders internationally?
Mazur: Again, they don’t. As mentioned earlier, people in the U.S. have access to trading platforms that operate under regulations that safeguard the retail traders and investors, and directly alter their “trading behavior” for the better. For example, due to the lack of such regulations internationally, mainly outside the U.S and Canada, brokerages manipulate prices, even while claiming they “charge zero fees”, which can also directly influence the “trading behavior” of their users for the worst, by at the very least conditioning them to accept such practices as part of their “cost” of trading.
