How AI can improve your trading behaviour in real time
We hear about the advantages of artificial intelligence all the time, but can it work for traders’ advantage as well? It’s a great concept, but how can AI be implemented practically? The Armchair Trader’s Editor, Stuart Fieldhouse talks to Ivan Gowan, CEO of Capital.com about the business and his thoughts on the future of the industry.
What role do you think AI will be able to play in helping traders to understand markets better and increase their insights?
When we trade, rational and irrational parts of our brains work simultaneously. We consciously make decisions that we believe to be rational while under the influence of external – and often unrecognised – forces. As such, the result across the retail trading industry is clear: more traders are failing to make a profit. That’s why at Capital.com we offer the most innovative personalised insights powered by AI to help clients understand patterns in their trading and educate themselves on how to stay in control of their emotions.
How is Capital.com contributing to these developments?
Our platform is able to monitor and analyse client trading behavior in real time and provide clients with personalised insights — all in one platform. The procedure is as follows: once a client has placed five trades, our AI system kicks in and analyses their trades for patterns. When a pattern is detected that corresponds to a known trading bias or exhibit behaviour that is deemed to be high risk, we send an instant notification to the client with insights on their trading style with personalised tips and targeted educative content to help them better understand the causes and effects of their decision making.
This approach to education – personalised, context-aware, bite-sized chunks of education at a time when it is extremely relevant – is unique in our industry. Understanding the theories that underpin trading and putting them into practice are two different things, and we see it as our mission to help clients become aware of their emotional reaction to market situations and help them to regain and maintain discipline.
At Capital.com, we want to educate 1,000,000 traders to improve their trading outcomes through personalised insights and learning.
That sounds great for existing traders, what are you doing to help people new to trading learn about the financial markets?
Great question. We provide a dedicated app called Investmate. Investmate gives clients of all abilities access to free, five star-rated educational material that is designed to help them understand the intricacies of trading through courses, quizzes and video guides. What’s more, our Chief Market Strategist, David Jones, provides weekly market rundowns through which clients are able to participate by asking questions about the markets and receiving responses from an industry veteran in real time.
What makes Capital.com stand out?
We have built the most beautiful trading app on the market. It is our desire to provide traders with an experience that is a pleasure to use in all aspects. We have put massive investment into building an app that is the result of continuous feedback from our clients who use the platform. We are customer-driven, tech-enabled.
Do you think the leverage restrictions imposed by ESMA on margin trading will be good or bad for the industry? Why?
Lower levels of leverage for new traders will ensure a more sustainable CFD market, as more successful traders engage with their chosen platform and learn to manage positions in the market.
Capital.com was first to implement the new ESMA leverage restrictions on 1 June, two months prior to enforcement, with all new clients defaulted to the new leverage levels. Less than 20% of our users chose higher leverage.
Comparing the performance of clients on ESMA’s leverage against published industry and historic client performance levels revealed that users who traded using the lower leverage limits traded more successfully – and were significantly less likely to face a margin call. The proportion of users facing a margin call within the first 15 days of trading fell from approximately 30% in the months before Capital.com introduced the ESMA limits to just 5% in June. The size of the average loss fell by over 80%.
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