02.24.2012
By Terry Flanagan

FX Trading Bridges Man/Machine Divide

Technology and human intuition is needed to track currency movements.

Foreign exchange brokerage involves a unique blend of high-end technology and human intuition, in order to ferret out movements among the world’s currencies.

FX Solutions, a leading FX broker, supports retail traders with robust technology platforms, such as computer/mobile apps along with back-office synchronization functions.

Its proprietary Global Trading System maximizes flexibility, facilitates efficient trade execution, and delivers a range of trading tools that includes more than 150 customizable charts to provide visual cues of trade opportunities.

But there is also a human element. Although FX Solutions doesn’t engage in proprietary trading, it’s required to hedge the positions it assumes in its role as market maker.

“Everything is automated to the extent that the information that we as humans need is processed by tools,” Tommy Molloy, chief dealer at FX Solutions, told Markets Media. “But decision making takes place at a human level. We don’t have a black box that executes trades in the market.”

As chief dealer, Molloy’s function is to maintain and manage the risks that derive from FX Solutions’ book of retail clients executing in the market.

FX Solutions doesn’t charge fees or commissions. All of its revenue is derived from a percentage of the bid/ask spread it provides to traders.

“We are making markets in FX, which involves risk,” Molloy said. “To the extent that we provide liquidity, we incur positions, and we have to manage those with whatever risk management tools we have at our disposal.”

The current monetary crisis in the eurozone is a direct result of faulty assumptions on the part of policymakers, said Molloy.

“The euro experiment was ill conceived, based on the misguided notion that a unified monetary policy can co-exist with separate fiscal policies on the part of member states,” he said.

The threat of contagion looms large, even as a bailout plan is being worked out for Greece.

“The biggest issue right now is ensuring that some sort of firewall protection is placed around the major economies in Europe, and that banks with large holdings of European bonds aren’t forced to take huge haircuts,” Molloy said.

Related articles

  1. CEDX opened on 6 September, offering contracts on Cboe Europe single country and pan-European indices.

  2. The MOU covers certain security-based swap dealers and participants.

  3. Trading Europe From ‘Across the Pond’

    Equity underwriting on European exchanges rose 70% in the first half.

  4. Trading Europe From ‘Across the Pond’

    The analysis is based on transactions publicly reported by 30 European APAs and venues.

  5. A similar service is available on the BIDS platform in the US equity market.