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Thanks for talking to us Josh. First and foremost, why the switch to XTB?
To be perfectly honest, I had been at City Index (Gain Capital) for a decade and fancied a change. The industry has grown so much over my tenure that you have to constantly evolve to keep ahead of the competition. I felt that the time was right to move to another fast-growing broker and continue my own personal development.
I met with Jakub Zablocki, one of the founders of XTB, and his vision for XTB and how he saw the company growing over the next decade was really powerful to me. We want to develop into a truly multi-asset broker that’s focused on ease of access, high tech, low cost and unbeatable customer experience and I’m excited to play a part in bringing that to reality.
What sets XTB out above the other brokers out there?
The market is super competitive right now, especially after the influx of brokers from offshore locations, which has created a price war and this has affected many brokers margins. As a result, some of the larger brokers have had to look at ways to cut burgeoning costs by moving to a low touch model and we feel that ultimately clients have suffered massively as a result.
Leveraged trading on volatile markets is complex and clients need dedicated support. So one of the aspects which sets XTB apart is our motivation to give clients a much higher duty of care and support throughout their trading journey.
One aspect of this is in our education offering, which I believe is one of the most comprehensive in the industry. As with many brokers, we offer weekly live webinars, monthly seminars and trading masterclasses.
However, we don’t just stop there. We also offer weekly trading clubs at our offices, which gives clients the opportunity to come in for a beer or coffee and chat about the markets with our analysts and other likeminded traders. We also offer one of the most comprehensive video trading packages around with dedicated lessons and tutorials from some of the worlds best mentors and professional traders such as Jack Schwager, Kathy Lien and Steve Ward. All of this is completely free with an XTB account.
As the industry consolidates and brokers can no longer complete on pricing alone – what do you think is the most important part of the broker/client relationship?
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Without a doubt it’s client support. As I mentioned in your last question, leveraged trading is a complex product and we’ve seen over the past few years with the Brexit vote, Trump election and Italian elections that markets can move hard and fast. So it’s our duty to prepare clients for this and make them feel supported at every stage of their journey.
This point becomes even more important because we believe that due to lower leverage, many firms revenues will fall and as a consequence, they will have to cut costs and this will likely result in a worse customer experience too. Fortunately XTB has a considerably lower cost base than many of our competitors due to our own efficiencies and that means we can continue to invest in customer experience and support.
As the ESMA restrictions have reduced the amount of leverage available to retail clients, what’s you view on the criteria to upgrade to professional status?
Fortunately, the criteria needed for a client to elect themselves as professional is not open to interpretation. According to COBS 3.5, a client must meet at least two of the following three sets of criteria;
(a) the client has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;
(b) the size of the client’s financial instrument portfolio, defined as including cash deposits and financial instruments, exceeds EUR 500,000;
(c) the client works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.
On top of this, we undertake an additional assessment of the experience and knowledge of the client as part of our decision whether we feel its appropriate for the client to become an elected professional.
That being said, at XTB we made the decision to continue to give elected professionals many of the same high protection they would have enjoyed as retail customers, such as Negative Balance Protection and Client Money segregation.
So even as an elected professional, we are trying to minimise the protections they would normally lose and we are doing this as part of our motivation to give our clients a high duty of care.
You’ve worked at a few brokers over the years and seen all sort of different types of clients. What’s the one thing that sets clients who make money apart from the clients who don’t?
From my personal experience the clients who don’t tend to do well trading are those who have a higher rate of winning trades but tend to cash out trades too early and run losing positions. The clients who do well tend to do the opposite. I feel certainly the advent of mobile trading has probably exacerbated this aspect too because clients now have easier access to their trading accounts and this raises the temptation to close trades earlier than they should. In fact we teach different strategies for managing trades in our in house classes.
And finally, what are your top three online resources you think traders should be looking at everyday?
Good question! To be perfectly honest, it depends on the type of trader you are. If you are a day trader, you will be much more short term focused and so I would probably be looking at Twitter for breaking news, economic calendars and trading communities such as Tradingview. Those traders who tend to look at longer term positions using weekly or daily candlesticks should in my opinion be less focused on breaking news and should concentrate on their analysis.
For me, I tend to trade longer term positions as that suits my personality a lot more. I cannot handle trading on short term timeframes as my personality means I get a little bit too involved in the trade, plus I cannot dedicate so much time to it with my work schedule. And this for me is an important point for new traders. They should create a strategy that works for them and the markets they trade.
For me, I set out my view on where I believe the market has probability of turning to and set out my trades and closing orders accordingly. My stop loss is set at a level where I believe the rationale for entering the trade has been proved false and it closes the trade. This I find is the best strategy for me and my lifestyle. Other traders should adapt to their own personalities and lifestyle.
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Richard started the Good Broker Guide in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously acting as multi asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2000.