FVP Holdings
Interview with Keith Walker (CRO) at FVP Trade by Finance Magnates.
28 Jan 2021

Title: MAM accounts & Quantum Trading Algorithms 28/1/2021

How are you and how did FVP Trade perform in 2020?

I am doing fine and have some good news to share. I became a father last year, so have been learning to juggle between work and family as well as I can. 

As for the company, we had remarkable performance in the final six months of 2020, which was driven by extreme volatility from greater liquidity in the markets. Even though there was a notable slowdown in the final quarter of the year, largely due to uncertainty with the US election, we expect trading volume to pick up going into 2021 from a stable Biden administration, and as vaccine-rollouts give a renewed hope for global economies to recover from Covid. 

Despite the slowdown, was 2020 still strong for FVP Trade?

Active clients increased 17% during this period and net profit is up 21%. It all had to do with the effort we spent expanding globally over the past 2 years with a strong focus in Asia.

Overall, we are very happy with the results achieved in the second half of the year, and we believe that it was a massive success which can be sustainable.”

On behalf of our CEO Mr Jonathan Greene, we want to thank all our customers for the support and trust they had given to FVP Trade. We will continue to deliver a reliable and safe platform for our customers to grow their wealth for many years to come.

 

Next let’s get down to education, can you share with us more about MAM accounts and how does it work? 

MAM stands for Multi-Account Manager. Other brokers might also refer to this type of account as a PAMM (Percent Allocation Management Module). It’s a technical software setup that allows for multiple client accounts to be automatically consolidated into a single, centralized terminal for the account manager to trade from. In our case, we use a single installation of the trading terminal program MetaTrader 4 (MT4) to trade each strategy. The MAM is set up on the broker’s server side, so allocation is instantaneous.

This solution fully automates the process of distributing profit/loss and trade volumes across all accounts, mostly removing the potential for human error with trading via multiple copies of MT4. When we enter a trade into our central MT4, it automatically executes the trade across all attached client accounts at the exact same time, opening trades at a size in proportion to the equity level of each account. So many of our trade entries and exits are incredibly time critical, and each extra second saved can potentially be worth thousands of dollars.

What percentage of my portfolio should I allocate to each manager? Should I use more than one MAM account?

It’s really up to you, depending on what your risk tolerance and diversification strategy is. We have clients who prefer to have their investment broken up across several different trading strategies and instruments, although most prefer to. Market conditions are always changing, and day-to-day, the money markets will be moving differently to the commodity markets, which will be moving differently to the equity markets.

 

What are some of the differences between MAM accounts and other automated trading services (e.g. expert advisors, social trade copying, etc…)?

Having your account managed by a professional trader is an entirely hands off experience where the manager does all the work involved with trading the account. Money managers can either employ good traders and/or use quality trading algorithms to do the trading for traders. The market is too complex and has far too many variables for a single algorithm or robot to operate consistently and effectively, therefore we use a combination of both with multiple risk parameters to achieve the best possible result according to the client’s risk profile. 

Can you tell me more about the trading algorithms used by your firm?

As you know, Qfinity Labs belongs to our group (FVP Holdings) and they specialize in Quantum Computing, especially in Quantum Trading Algorithms. Through the past few years, they have developed several profitable algorithms which analyze market events, financial news, price patterns and earnings reports to make quality trading decisions. Having the power of Quantum computers allows the algorithms to make better price predictions and achieve a high success rate. However, it is not 100% fail proof and losses can occur from time to time. Nonetheless, we are confident of its long term performance and will highly recommend it to all our trusted customers.

How are fund managers typically compensated for their services?

Most fund managers run on a profit-share and high water line basis. That is, they take a percentage cut (often between 5-25%) of profits and don’t take a further fee unless they surpass that profit level in the future. This is to prevent a manager from taking a loss, and then taking a cut of what essentially is a recovery of losses in the following months. Yes, we do adopt this high water line approach when we compensate our managers.

Also very common, especially among Hedge Funds are flat annual management fees, where managers charge a percentage of the overall invested equity balance. We do not charge flat annual management fees in our MAM platform.

Do MAM accounts utilize leverage? Is this something I can customize based on my risk tolerance?

All accounts utilize leverage, however it is up to your MAM provider to keep the risk under control, this is something that should always be discussed before your initial investment.

Can I see the performance of my MAM account in real time? How should I evaluate the performance of my fund manager?

We’ve always had the philosophy that monitoring your account in real-time is an unhealthy way to follow your account. Investing in the markets is a long-term undertaking, and following the short-term ups and downs, especially for inexperienced investors is a great way to develop an ulcer. We do however provide our clients with a tracking link page, which is regularly updated and gives them both visual and statistical analysis of the standing of their investment.

How you evaluate your manager’s performance should be down whether their strategies and results are in line with your own personal investment goals and risk appetite.

Many thanks for your time Keith! 

The pleasure was all mine, good luck and take care!