Online retail day trading has become one of the newer hobbies/habits for those stuck at home during the ongoing COVID-19 pandemic.
No one can play Call of Duty forever.
Perhaps. But one of the interesting—if perhaps natural—consequences of the Covid-19 pandemic is the rapid and massive explosion in individual investors signing up for online brokerage tools. Many are now investing online for the first time and they are doing so in droves, whether to take advantage of zero-commission fees, trade on volatility and buy the dip in market values or, it’s even been suggested, to simply satisfy an appetite for risk taking where other traditional outlets, like casinos or sports gambling, cannot during the lockdown.
For firms who have designed these apps during the fintech boom, these are also heady days. While the democratization of investing has gone on for decades, technology, user experience and demand have now come together to create new opportunities to make personal investing more sophisticated than ever before. This is also a function of awareness and education, as more investors have become aware of order routing commission agreements, high-frequency trading and other conflicts that have received high-profile media and regulatory attention in recent years.
Enter Streak. The venture-capital backed startup has gone all-in on that theory by offering an application with sophisticated, code-free algorithms that are pre-loaded into the app and ready to deploy. The thinking goes that by building everything into a single app it’ll bridge gap between casual investors and proprietary trading desks. As more people work and trade remotely, the idea is that enterprising investors will want the agility and convenience of automated trading strategies to match their own thinking and their lifestyle.
Recently, Streak expanded from its roots in India to a global platform, beginning with the US, and Co-Founder and CTO, Vipul Divyanshu, sat down with Traders Magazine to discuss the state of play in online trading, the motivations behind the platform’s design, and the types of users they are looking to attract.
TRADERS MAGAZINE: Why is this the best time for Streak to enter the US market?
Vipul Divyanshu: There are a few reasons. First, we’ve seen that the current market environment has created a whole new cohort of day traders, so demand for this type of application is high, and we expect that will continue to grow. Second, it’s true that for many years personal investing has been a hot space for disruptive technology, even in the early days before robo-advisors.
Streak comes at this from a wholly different perspective. Our application was built to democratize investing — both in terms of access and regarding technical sophistication — in a still-developing financial market in India. That allowed us to think carefully about the individual investor, markets where they’ll want to play, the information and tools they may need, and their relationship to the application. We took that same approach to our US offering. Today, we believe there is a desire for that kind of transparent and intentionally-designed platform, particularly with respect to constructing more complex trading strategies and deployment of algos. So, we’re all in.
TM: What are some of the practical and technical issues that still distinguish leading trading applications for retail investors from the rest?
VD: In short, the standard has gone up significantly. Apps that were designed a decade ago are nowhere near the level of user interface and experience that consumers expect in every other part of life. Investors using an app to do their trades now expect a lot of simplification, , more effective and elegant execution possibilities, and even different cryptocurrency options to get their trades done. Moreover, they don’t want to be staring at a screen at home all day to initiate the separate legs of those trades or to identify a newly forming opportunity. At the same time, creating an automated algo strategy requires investment in coding and software and data feeds that can cost tens of thousands of dollars. So the applications that will thrive are those that can combine these modalities: next-generation UX and UI, far better data and charting capabilities, and robust automated algo trading that are pre-published and ready to deploy without any coding or additional cost.
TM: Whom do you see as the primary market for Streak?
VD: We find that Millennials and Gen-X traders are much more knowledgeable and sophisticated than their counterparts from prior generations were at the same age. So, their expectations are much higher when it comes to trading tools.
TM: How have all the coronavirus precautions affected the trading business?
VD: Much to everyone’s surprise, day trading has exploded since the lockdown began in force. Online brokers saw record new account openings during the first quarter of this year and at some firms day trading was up more than 30% during March alone. Part of the reason for this was the market volatility during March, which made day trading very appealing.
TM: Most casual traders aren’t that familiar with advanced algorithms. How is Streak designed to educate them, and provide for safe and effective algo deployment?
VD: One of the core propositions of Streak is that traders are curious, and are looking for tools to explore how to make algorithms to work for them — both from a set-and-forget convenience standpoint as well as to hone a trade execution strategy that more accurately aligns to their theory on the market or a given instrument. For instance, there is a superfast back-testing engine that allows users to discover how a given algo behaves over the duration of the trade. They also have a “paper trading” option that allows them to simulate the trade in live markets, before risking actual capital. Both these features add to a more systematic and disciplined decision-making approach. And finally, the app itself analyzes a user’s activity over time and showcases algorithms based on user preferences and trading style. In the end, we want users to feel comfortable with their execution choices and sought to design the app to fine-tune their individual preferences with the user over time.