Marcin Wenus: How did you get into this business?
Ingmar Mattus: I have been trading since 1997 when I finished high school. First years were extremely difficult because I lost all the money. So it was like a school money. So trading is not as easy as it looks like. As the time passed then I moved from trading stocks to trading options and then to futures and forex.
At some stage I realized that if one strategy does not work and you always lose money then it makes sense to completely reverse the strategy. For a very long time I bought options on stocks, futures and indexes. One moment we had an idea that if buying options does not work then we have to start selling options. Most banks and hedge funds sell options as most of the options expire worthless and you get to keep the premium. It is like running an insurance business. We also reversed our strategies to futures spreads trading. Even today on my free time I trade soybean, crude oil, corn, sugar and other commodity futures spreads.
As to my professional life then I started at the Estonian Banking Association where I worked for 5 years as a payment systems and standardization advisor. I was also involved with international relations. Then I started to work as a Head of Dealing at one Forex broker. This was very interesting time as the company was growing very fast.
After that I ran some of my own businesses and also was involved in some real estate projects. But trading is something that has always accompanied my other activities.
Marcin Wenus: How was the idea of Armada Markets born?
Ingmar Mattus: A few years ago I was sitting in the office of one Forex broker and one of the owners asked me why do I trade when I have all the expertise and I could start my own brokerage firm? Also over the years we have constantly talked with other traders about why don’t we build our own broker so that we could have the best possible conditions and nobody would stop us earning profits. So we kind of built Armada for ourselves but as the business is growing then we don’t have any more time to trade ourselves, we just provide the brokerage services to our clients. All people working at Armada have a trading background, so we can talk about trading, strategies, risk management and other things with our clients. We sometimes even ask clients to trade less if we see that their strategy is not working anymore.
Marcin Wenus: What was the beginning of Armada Markets?
Ingmar Mattus: The beginning was very creative and fun. We talked with a lot of traders, asked what kind of conditions they need. We also talked with many bridge and platform providers, liquidity providers and with people involved in the financial industry. I think we have talked with most of the companies around the world who have expertise in the Forex business. So we always want to co-operate with other companies.
At some stage we started to form our strategy and business model. We wanted to do something totally different and soon we found out that our interests are aligned with FSA licensed LMAX Exchange in London. So we have always co-operated with them as we have the same values and mission.
We are an extremely dynamic company and our clients decide how we operate. This is unique.
Marcin Wenus: What are main markets You are focusing on?
Ingmar Mattus: We are focusing on the professional side of the retail market globally. Professional traders talk with each other and therefore if our service is good then people talk good things about us and clients come. We don’t have to spend a lot of money on advertising as happy clients promote us among other traders. We are of course very happy that Polish traders understand that trading success can only come if trading conditions are good.
Marcin Wenus: On which type of clients are You focusing on?
Ingmar Mattus: We are focusing on the 5% of the market which consists of traders who know exactly what they want to become and remain successful.
Marcin Wenus: What is main goal of Armada Markets?
Ingmar Mattus: Large banks and corporations trade with extremely low spreads and nobody interferes with them in their trading. Our goal is to provide these trading conditions to every retail client as we believe that every person deserves to have equally good opportunities to succeed in trading. Trading is extremely complicated and technical profession. So in order to succeed then you have to have really good trading conditions. Large banks have extremely good trading conditions and that is why they are profitable. We bring the same conditions to retail clients.
Marcin Wenus: Lots of time I have heard Your spreads are not real. They are too tight. Your comission is too low. What is Your answer on this?
Ingmar Mattus: Average daily EURUSD spread on the interbank market is 0.2-0.4 pips depending on market conditions. We get our spreads from banks, LMAX and other counterparties. Any broker can provide their clients the same spreads and I even think that clients should demand this kind of spread from their broker as this is normal. I don’t know why many brokers have decided not to provide these real market spreads to clients.
Over the years I have done a lot of analysis on the impact of spreads on the profitability of trading. It is a statistical fact that if the EURUSD average spread is higher than 1 pip then it is impossible to become profitable. Better buy a lottery ticket.
We have an extremely cost-effective business model. We spend money only on the things that help to maintain our trading conditions and make them better. We don’t have 20 offices around the world and we don’t have large advertizing budgets or large marketing and sales department. We believe that if the service is good then the client will come anyway. Our clients are smart.
Marcin Wenus: How has the Forex market changed in last few years?
Ingmar Mattus: Traders have been moving more towards ECN and raw-spread brokers. Also the proportion of traders using algorithms to trade for them has increased substantially.
I believe many large brokers have reached their peak growth. Trading volumes of large brokers have been declining in recent years. One of the reasons is that they have not been able to adapt to changing market conditions and client demands.
So the market is aggressively consolidating as revenues are declining. I think some large brokers will be gone in a few years as their cost basis is too high and therefore they cannot improve their trading conditions. They would need to cut their costs extensively and accept lower and probably declining revenues. This will be difficult for them.
We believe that spreads will continue to tighten and so will commissions and clients become more and more knowledgeable.
Marcin Wenus: What is future of Forex?
Ingmar Mattus: The future is automated and computer-assisted trading. Computers will not just place trades based on pre-determined criteria but they will also start evolving the strategies. Today the problem with many commercial algorithms is that they are widely used and they have started to impact the market. So in the strategy may be good but as too many people use it then it nullifies everything.
But an evolving algorithm is something totally different. It can be constructed from thousands of indicators, correlation systems etc. So the strategy would be unique and it can be used without having any impact on the market and therefore profits would be larger.
What I like about algorithmic trading is that it is emotion-free. Emotions are the major factor why so many traders cannot become successful. Algorithms do not have any emotions, they can place trades when a normal human being would never open a position. Banks have sophisticated trading algos and they are successful. Ordinary people can do the same.
Marcin Wenus: In one sentence “we are best Forex broker because?”
Ingmar Mattus: Our clients are the best.
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Marcin Wenus: How did you get into this business?