If you’re happy with mediocre, then go with vanilla, but if you want more from your investments, read on.
September 26, 2021
For those of you who already have IFA’s or Wealth Managers in place, you may think you’re taken care of as far as your investments go. Don’t rock the boat, and if it ain’t broke, why fix it? Etc. etc.
If making 7% a year with your Investment Manager qualifies as ‘not broke’, and you have no interest in increasing your return on investment, then 7% is better than nothing. But, I can tell you, that if I had made such small returns during my time as a proprietary trader, I would have been fired.
Traders are in the business to make money. Not a little bit of money, but a lot, and I will explain how this can be done by our traders, but not by your Wealth Manager.
If you’re easy to please and happy with mediocre, then go with vanilla, but if you want more from your investments, read on.
The average return by traders on The Portfolio Platform was 58.8% in 2020, and so far this year, it is looking like that number will be even higher for 2021. It doesn’t’ have to be ‘broke’ to want something better. It’s your money, make it work for you, or in this case, make our professional traders work for you instead.
If you’re new to TPP and the modern world of investing, then take a few minutes out to read this and we’ll explain what you’re missing and how it’s been made possible.
About TPP :
In 2019, two traders were introduced by a broker to a world they referred to as ‘copy trading’. It was eye opening, and they immediately saw the potential. In the past, professional trading strategies were only really available to hedge funds. The world of derivatives is a complicated one and takes years to master.
Both founders had been trading derivatives for 20 years each, so there wasn’t much they didn’t know between them. But, as I said, in the past they had only been able to apply their trade for institutions. Essentially for the rich fund managers to get richer.
However, this new software made them realise that they could now link individual accounts to their own. Investors could connect their accounts and copy every trade that was made by them, onto the investors’ portfolio.
They had found a way to make huge profits for clients by ‘autotrading’ their accounts for them. These two traders had been making a lot of money in the city for years, both for themselves and for the institutions they worked for, and now they could do so for anyone who chose to connect to them.
‘Copy trading’ software, has been misused for years by large brokerages who are only interested in enticing people onto their platform. They want volume more than profit for their clients, as every time a trade is placed, they make money.
Each broker states proudly on their sites just what percentage of retail traders lose money in the markets. The average is around 75% and this is jaw-dropping. This is what happens when people who don’t know what they are doing, ‘have a go’.
The problem is that people now want more control over their investments; actually, this is the cause of the problem rather than the problem itself, the problem is what results from their actions - trading their own accounts. We absolutely applaud investors wanting more control, everyone should want control; everyone should want to see exactly how and where their money is invested.
However, this does not mean that everyone should suddenly have a bit of a guess as to what stocks might go up in the future. The best traders in the world are paid millions to do this, what makes the average retail investor think they could do just as good a job?? The answer to this is unknown.
Brokers who advertise that ¾’s of their users lose money, simply don’t care. They make money every time you trade. Losing the money is your problem not theirs.
This unbelievable statistic, and this blatant misuse of trade copying software, is what gave these two traders the idea of The Portfolio Platform. Rather than making it a ‘social trading platform’ for amateur retail traders to swap ideas and chat about the markets, TPP took out the amateurs, and replaced them with professionals.
If investors could link to their own trading accounts, then presumably they could link to professional traders from all over the world? And thus was born: The Portfolio Platform.
How does it work?
Lane Clark and Edward Davies, both professional traders themselves, wanted to use the copying software to help investors. 75% of investors should not be losing money, they should let the other 25% do it for them. Or, if they could find the best of the best, then maybe just the top 10%.
They used their experience in the markets to find the best traders out there. This search will never end as trading strategies will always adapt and improve over time. It’s a future-proof platform in the sense that it will always showcase the best.
When a new trader or team is found, and they meet the strict requirements set by the founders, they will start a performance record. Once the selection team are satisfied, the strategy will go live for investors to use in their portfolios.
Every time a trader places a trade, the same trade will be placed in the investors account per pound under management.
How can it benefit you?
IFA’s and Asset Managers aren’t traders. They create huge funds, pick stocks to put in them, sit back, and do nothing.
Generally speaking, over time, stocks inflate, so money can be made by doing this and if you’re looking for minimal returns, letting inflation increase your portfolio should work fine. It’s probably worth bearing in mind that the FTSE isn’t far off the level it was at 20 years ago, so this might produce some money, but it will never produce a lot.
What the Portfolio Platform can do for you, is link you to actual traders whose job it is to make as much money as possible whilst still remaining within the risk parameters we set them. Our traders have been doing this for years, but only recently have retail investors been able to harness their wisdom, and profit from it.
Retail traders lose money. It’s not an easy job if you don’t know what you’re doing, but most of the traders behind our strategies have decades of trading experience in the financial markets. Why risk your own inexperience, when you don’t have to? You want more from your portfolio, and you can now get it.
So, how can the traders make so much more money than an Investment Manager?
Professional traders use what is called ‘margin’ and ‘leverage’. Increasing risk at the right time can be hugely profitable, as our traders show, but one thing most of your investment managers will do time after time, is sit there stupidly in a falling market.
By trading derivatives, our traders are able to go long the market, or short just as easily. While generally speaking they will be long equities, as over time, most indices will increase in value, from time to time they will either take profit and go flat, or short sell hoping to make money on a market drop.
Being flat is a much underrated position. If markets have been rising, and the trader has leveraged their position, often the best thing to do is to sell out and wait for the next opportunity. Investment managers and IFA platforms will just sit out a falling market and this can be a very expensive decision.
Empirical evidence would suggest that the market will come back, and this makes for a huge money-making opportunity. However, if you didn’t sell out, you can’t buy back. Our futures traders will have an average leverage of about 3. This means if you invested in £10,000 worth of stock, our traders will buy the equivalent of £30,000 worth of the same stock. If it moves 1%, you will make 3% as you bought 3x more with the same amount of money.
This strategy means you can be in a upward trending market, making extra capital on the way up, then, if it looks like time to take profit, the traders can sell out, and wait. If the market drops back down, buy in again and make the profit all over again.
Some traders will also short one market, and be long another. All leveraged so all looking for increased return.
Derivatives if used properly, give traders a huge advantage. Risk is not just about changing your portfolio from having fewer bonds to more equities. That in itself is one dimensional. If you pick a bad time and the market drops, you lose more, and your IFA will just tell you that it was ‘market conditions’ and there was nothing they could do.
That may be the case, but that is because they aren’t traders. There is nothing they can do, but there is something we can do. Modern technology means that you don’t have to be a trader yourself to make the same returns as professionals. Now, you can simply ‘autotrade’ your portfolio, which quite literally means it will trade itself and copy the best.
If you want more from your portfolio and this is something you might be interested in, please email one of our team here.
This truly is, the modern world of investing.
Click here to book in a call with one of our expert traders or directors, to discuss how to go about setting up your own portfolio with The Portfolio Platform.
“TPP might just be about to revolutionise investment for the retail market.”
- London Stock Exchange 2020