Ransquawk

But then I would say that!

I am getting a feeling that the retail FX market is slowly turning towards my vision of using every advantage to make money in what are becoming tougher and tougher markets.

Brokers are starting to see the need for differentiation in a market that is becoming more and more saturated and just continually chasing leads from SEO and tried and tested methods leads nowhere.

It is interesting that while the market is becoming saturated by the sheer number of brokers, each promising that they are the ones with the edge, promising the world but delivering nothing new, that the market for new clients is buoyant if it can only be tapped into.

The “big boys” have a template they work to which requires a huge advertising budget and a large footprint. More than half the teams in the English Premier League are sponsored by either brokers or sports betting firms so that shows the outlay necessary.

The “smaller fish” rely on a similar, although scaled down, model using more digital marketing to home in on the market.

But there is an issue. Once a “smaller fish” attracts a client how can he be retained when all he has to offer are a few charts and an occasional bonus that is becoming more transparent almost by the day?

Differentiate or die

It is very easy and almost glib to say that a new or novice brokerage firm has to offer something different to even survive let alone grow. In a similar manner to the deliverable space, it is becoming more and more difficult to gain that edge.

There are many many introducing brokers who have hit on the idea of creating a website, piggy backing off their LP’s pricing and seeing their advantage of representing a “big fish” fade as they try to “go it alone”. The point? There isn’t one, but there is a moral. If you are small stay small provided your model works. Stay inside your own border, that is where your advantage lies. Language is a major factor when it comes to attracting clients.

Retention is the second major issue for a small fish. A small firm must not only attract clients but also retain them. It is natural, particularly for a new to market client to have a look at what is on offer. Try to be different. The new guy will start to learn and understand technical analysis and since he is committed since it is his capital that is on the line, if he is going to be successful and be the kind of client you will wish to retain he is going to need to be stimulated.

The new word is “actionable”. Traders are not interested in what happened yesterday, unless it is related to their charts and tech studies, but they will have already disseminated all they need to know form that. A review email simply recounting yesterday and giving a few spurious ideas on today’s data could even lead to his departure as you can be sure if he is trading, he is being feted by other firms.

Crypto Warriors do themselves a disservice

Last week’s rather odd attack on the view of investment legend Warren Buffett where he likened Bitcoin to rat poison has backfired rather spectacularly on the “crypto community. As I sit and write this article, bitcoin is trading at close to $8k, substantially lower than where it was when Buffett made his remarks.

It is well-known that any new product, technology or money-making opportunity will always attract a “highly-motivated” following but this is a little more sinister. In amongst those with a genuine interest in blockchain, cryptocurrency and the whole move away from fiat are “vultures”with no interest other than making money in the easiest way and shortest time possible.

The good thing is that they are easy to spot. They are the most vociferous in their defence of the product to the absolute limit and occasionally beyond.

It seems to me to be a simple premise that to meld together the traditional investment community with the new, it would be better to educate rather than insult.

Using that simile and going back to what I said earlier. If, as a broker, you are speaking to a potential client and he is wavering, the last thing you need to do is launch a tirade in his direction.

Cryptocurrency will make it, of that I have no doubt, but the tactics being used by those wanting to make money quickly will without doubt slow its progress.

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Ransquawk