Samuel Leach: The Trader Retail Brokers Hate!

Samuel Leach

The pandemic spurred new retail investors in the stock and forex market. A survey by Schwab found that 15% of current retail investors began playing the market in 2020. "A big part of this growth is Generation Investor, the large number of people who are bound together not by their birth years but by when they got started in their investing journey, who are now on a path to ownership and reaching their financial goals," said Jonathan Craig, Charles Schwab senior executive vice president and head of investor services.

JMP Securities estimates the brokerage industry added roughly 10 million new clients in 2020, according to app download data from SimilarWeb. More than 6 million of those clients flocked to Robinhood. With 2021 being no different, the retail trading boom has continued strengthened by the epic short squeeze in GameStop's stock in January. JMP estimates that more than 7.8 million new retail clients entered the market in January and February.

Schwab found that these new investors are not just young people. They are also an older cohort discovering investing for the first time. Schwab said that a generation of investors has a median age of 35, compared with pre-2020 investors whose median age is 48. More than 50% of Generation Investors are millennials, 22% are Gen X, 16 are Gen Z, and 11% are baby boomers.

Schwab found that Generation Investor was more financially impacted by Covid-19. About 55% of respondents said they started investing during the pandemic to build an emergency fund, and 53% said they began to gain an additional source of income. This has continued throughout 2022, although somewhat rocky, with the S&P dropping over 20% between January and July this year. Since then, it has made a strong recovery, however, analysts are predicting heightened volatility for the remainder of the year as consumers battle with high inflation and a cost-of-living crisis.

One rising trader Samuel Leach from Watford, Hertfordshire, has built a name for himself within the trading world by developing algorithms that trade the stock and forex market. Leach and his team have built various trading algorithms that retail and professional traders can utilize in the markets. Recently Samuel teamed up with a European software company to deliver a customized algorithm to trade the markets, with high-performing results.

Samuel Leach from NDD broker has become one of the most hated traders by retail brokerages and, at the same time, the most loved by retail traders and professional funds for delivering high-yielding results during turbulent markets. So why do retail traders dislike Leach's approach to the markets? To understand this further, we must explain precisely how traditional CFD (contract for difference) trading brokerages make money. Often, retail brokers will act as a market maker and run a trading book against their clients, regardless of whether they are trading a spread bet, CFD or an FX contract. This means that when you open an FX position with them, they can take the opposite side of your trade, and your position will not be traded in the market. If your position makes money, the broker will be out of pocket. If you lose money, your broker will make a profit of the same amount as your loss.

Now, as you can see, Leach's two main algorithms, BeastMode and Fusion, are up a combined +60% Gain YTD compared to the S&P 500, which is currently down 11% YTD as traders flock to utilise these trading tools. You can understand why retail brokers are unwelcoming to Leach and his algorithmic team of traders. This group of growing algorithmic traders are for sure a bunch to watch in the future space as the group grows. I spoke to one of the algorithmic traders, Daniel, who wanted to keep his Identity anonymous using both algorithms on a £100,000+ portfolio. He mentioned, "I use an NDD broker (No Dealing Desk, which ultimately means the broker is not market making at all and is placing the trades directly at interbank market rates, so I know my broker is not hoping to lose to make a gain. It allows me to focus on managing my algorithms rather than worrying if my broker is trying to play me. So, I use YLD FX, a fair and NDD broker".

After further research into YLD FX they recently were quoted in the following Bloomberg article that 68.2% of their clients in May 2022 were profitable. Now, this is highly rare as most brokerages state that 70-80% of their clients lose money on their platform. They credit the volatility within the VIX (volatility index). However, Leach has recently released a VIX algorithm. Could this explain the increased customer profitability at YLD FX? Overall, this group of algorithmic traders is attracting significant attention from institutional trading firms, and we will monitor their algorithmic performance in future articles.