"Relationships will be even more important in the trading industry," Yaacov Heidingsfeld, CEO of TraderTools, emphasised while talking to Finance Magnates' Jonathan Fine at FMLS:24. He stressed the importance of brokers strengthening their relationships both "downstream with the traders and upstream with the liquidity providers."

Heidingsfeld is regarded as a veteran of the retail trading industry. He co-founded TraderTools in 1997, which now offers technology solutions for liquidity access and distribution in the FX market.

"The Broker Doesn’t Even Know That He Was Lied to by the Customer"

"Acquiring liquidity and getting into a relationship with a liquidity provider is the easier part," Heidingsfeld said. "What defines a good liquidity provider are fill rate and latency, but the problem starts elsewhere. The problem starts with the type of flow you are passing on to the liquidity provider."

"All the brokers in the industry will have customers coming to them and telling them, 'My flow is soft and easy to handle; I want tight spreads'. The broker then goes to the liquidity provider and says, 'I have a new client coming on board, and their flow is amazing'. The liquidity provider will give them a good stream and spread, only to be disappointed in a week."

"In most cases, the broker doesn’t even know that they were lied to by the customer," Heidingsfeld pointed out.

"With Tools... You Can Observe Trading Patterns"

Stressing the granularity of the process, he explained that such a process must be "down to the trader: the time of day that they’re trading, the currency pair they’re trading, and the time of day that they’re trading."

He revealed that some of TraderTools’ customers have clients coming to the market with 10 lots of gold to execute during the Asian opening hours when there may only be 5 lots of liquidity available. This moves the price significantly until the liquidity is replenished, and as the day goes on, the prices return to a natural equilibrium.

Now, with the help of technology, companies can prepare to tackle such scenarios.

"With the tools now available to the market, such as large language models, you can feed the historical data and train the model with real-time information; you can observe trading patterns," Heidingsfeld explained. "You can see customers trading similar instruments at repeated times of the day, identify when something is unusual, and access real-time dashboards showing you this information."

TraderTools has also developed a solution called PriceOn, which allows brokers to manage trading flows more effectively and efficiently, ensuring clients benefit from superior execution and competitive pricing. Earlier this year, ATFX integrated PriceOn into its operations.

"Every single customer has a unique tag," Heidingsfeld added, "and with the computing power and tools now available in the industry, the ability to categorise those traders in real-time is possible. This categorisation is based on the currency pair, the time of day they are trading, and even the length of time they hold positions."

"What You Take with You Is Your Relationship"

Despite these technological advancements, Heidingsfeld believes relationships will be even more important in the industry.

"Relationships have become even more important because right now, people move from organisation to organisation," he said, adding, "When you move from one organisation to another, what you take with you is your relationship."

He advised new brokers to "use the tools available to understand the flow your customers are providing so that you can accurately represent that flow to the sources of liquidity and protect those relationships."

"Relationships will be even more important in the trading industry," Yaacov Heidingsfeld, CEO of TraderTools, emphasised while talking to Finance Magnates' Jonathan Fine at FMLS:24. He stressed the importance of brokers strengthening their relationships both "downstream with the traders and upstream with the liquidity providers."

Heidingsfeld is regarded as a veteran of the retail trading industry. He co-founded TraderTools in 1997, which now offers technology solutions for liquidity access and distribution in the FX market.

"The Broker Doesn’t Even Know That He Was Lied to by the Customer"

"Acquiring liquidity and getting into a relationship with a liquidity provider is the easier part," Heidingsfeld said. "What defines a good liquidity provider are fill rate and latency, but the problem starts elsewhere. The problem starts with the type of flow you are passing on to the liquidity provider."

"All the brokers in the industry will have customers coming to them and telling them, 'My flow is soft and easy to handle; I want tight spreads'. The broker then goes to the liquidity provider and says, 'I have a new client coming on board, and their flow is amazing'. The liquidity provider will give them a good stream and spread, only to be disappointed in a week."

"In most cases, the broker doesn’t even know that they were lied to by the customer," Heidingsfeld pointed out.

"With Tools... You Can Observe Trading Patterns"

Stressing the granularity of the process, he explained that such a process must be "down to the trader: the time of day that they’re trading, the currency pair they’re trading, and the time of day that they’re trading."

He revealed that some of TraderTools’ customers have clients coming to the market with 10 lots of gold to execute during the Asian opening hours when there may only be 5 lots of liquidity available. This moves the price significantly until the liquidity is replenished, and as the day goes on, the prices return to a natural equilibrium.

Now, with the help of technology, companies can prepare to tackle such scenarios.

"With the tools now available to the market, such as large language models, you can feed the historical data and train the model with real-time information; you can observe trading patterns," Heidingsfeld explained. "You can see customers trading similar instruments at repeated times of the day, identify when something is unusual, and access real-time dashboards showing you this information."

TraderTools has also developed a solution called PriceOn, which allows brokers to manage trading flows more effectively and efficiently, ensuring clients benefit from superior execution and competitive pricing. Earlier this year, ATFX integrated PriceOn into its operations.

"Every single customer has a unique tag," Heidingsfeld added, "and with the computing power and tools now available in the industry, the ability to categorise those traders in real-time is possible. This categorisation is based on the currency pair, the time of day they are trading, and even the length of time they hold positions."

"What You Take with You Is Your Relationship"

Despite these technological advancements, Heidingsfeld believes relationships will be even more important in the industry.

"Relationships have become even more important because right now, people move from organisation to organisation," he said, adding, "When you move from one organisation to another, what you take with you is your relationship."

He advised new brokers to "use the tools available to understand the flow your customers are providing so that you can accurately represent that flow to the sources of liquidity and protect those relationships."