We last visited algorithmic trading last month when discussing global regulators’ efforts to manage its integration into the trading landscape. The Security and Exchange Commission had this to say in August:
“Algorithmic trading platforms can create trading disruptions; systems failures have interrupted initial public offerings; opening auctions have been delayed as a result of high volumes and unusual volatility.”
But Abdul Abdi, Executive Director at 8topuz (pronounced “octopus” – the invertebrate whose dynamic, decentralised neural networks provide the ideal analogy for machine learning) tells #DisruptionBanking that there are “promising times ahead” for his algorithmic trading firm, established in 2010. Abdul explained to us how his company is trying to combine human and machine learning to reduce volatility for clients:
One of 8topuz’ USPs is the idea of “hands free” trading targeted at non-technical and non-financial clients. Can you explain what exactly your technology does?
“Our technology is based in the Python and MQL4 languages. We’ve also recently closed a partnership with Quantgate in the USA for additional technology that will make our product even more competitive.
“The Algo, that has been running for the last 4 years, uses a proprietary neural network that analyses a market’s depth and looks for patterns of pre-set mathematical models (such as fractals, chaos and waves) that allows it to understand and forecast market’s trends on a real-time basis (in fact it is a trending program).
“The neural network is supervised, multi-layered and composed by variable nodes. By feeding the network with pre-set data, the system creates its own real-time strategies to achieve the established objectives. In only milliseconds, our system can choose the most appropriate strategy among more than 30,000 options in every single market condition.
“The network’s main tasks are
- pattern recognition;
- process optimization;
- signal validation and
- information processing.
“If the system identifies a trend which is not followed by the market, our software applies a counter-strategy to solve the situation on a real-time basis, adapting to the new scenario.
“During this non-stop analysis, research and optimization process, all new movements and patterns are stored to be used in up-coming scenarios, helping solve future market situations.
“Hence, it learns from its own mistakes and successfully solves the problems posed.
Does unpredicted, non-historic market volatility, such as the onset of the pandemic, not undermine AI predictive trading?
“Our system operates even better during volatile times. Our best performance month this year was in March during the peak of COVID-19. The advantage of machine learning is the possibility of learning with different market behaviour and patterns.
“One of our main advantages is also the 24/5 monitoring from our Trading Desk, which is able to detect and prevent unexpected changes of market conditions, so investors are not purely depending on the brain of an Algorithm but also on a full human monitoring of everything that influences the different markets.
How many brokers do you work with, and how do you differentiate your product against AI-based wealth managers?
“We cooperate with more than 16 brokers currently, but the main ones are listed here.
“Each client is a client, and different risk profiles require a better understanding of their investment goals. Investment can never be a one fits all solution. That’s why our Fintech Specialists guide all clients on their first initiation to our trading solutions, so we can adjust it to the risk appetite and expected ROI of each client.
“We started our business by providing solutions mostly to institutional clients as Investment Funds and Family Offices. We have identified recently an interesting niche on the retail side. This is an area which is lacking serious and reliable automated trading solutions.
Is 8topuz concerned for its own market position given recent disruption to the fintech industry due to Covid, and technological innovations being adopted by established banks?
“Banks are experiencing very challenging times as interest rates are now very low. They have a need for innovation and new alternative investment products are becoming the necessary way to attract new investors and keep their clients on the hook.
“But there’s where investment solutions like 8topuz come in. We are currently in dialogue with a few banks in the UAE that are interested in adding our solution to their offering, so there are promising times ahead.
Who are you planning to partner with in the UAE?
“We have established this year a collaboration with SEED Group in the UAE, that been opening doors for us in the region, as part of the Family Office of Sheik Al Maktoum.
“We are in advanced conversations with a few banking institutions and family offices in the region, so soon we will have interesting updates to share, but not just now!”
While fintech investment in the Middle East and North Africa (MENA) is currently only a fraction of total venture capital investment in the region, it has ballooned since the expansion of state aid for the industry in 2017.
8topuz assures us they will have further news on their involvement in the region in the coming weeks.
#Python #MQL4 #Quantgate #8topuz #AlgoTrading #Algorithms