We are pleased to publish the following guest post, courtesy of Jeff Wilkins, Managing Director, IS Risk Analytics.

The trading mantra we all learned from last year is to expect the unexpected and be prepared for anything. As we move into 2021, this remains the most important insight for all retail brokers to remember. While we have not seen a repeat of those unprecedented spikes from March and April 2020, volatility levels remain highly elevated compared to previous years.

Jeff Wilkins

Various micro and macro factors have already had an impact on the markets, with the ongoing Covid-19 crisis, a new U.S president and the emerging impact of the Brexit deal already set to be among this year’s major themes. Retail brokers need to be able to navigate these turbulent markets while also managing the extreme swings in P&L that are now a familiar part of their everyday business.

At ISRA, we believe that systems, liquidity, risk models and teams need to be the best in breed in order to not just survive, but thrive. This year in particular we will see the start of a paradigm shift in risk models for FX brokers. We know from speaking to our clients on a regular basis that they are growing tired of the unpredictability and impact the volatile markets are having on their revenue streams. But rest assured there are efficient ways to fix this issue and at ISRA, we’re here to help.

For example, in order to manage risk more effectively, we’ve been demonstrating to retail brokers the benefits of viewing their P&L as separate revenue components, instead of one complicated overview. This detailed approach gives them the ability to more accurately predict what their month-on-month revenues will be, empowering them to smooth their revenue streams and be able to plan and budget more effectively for the future.

This year is already shaping up to be another eventful year for retail brokers, with the continued rise in volatility having breathed new life into FX and the precious metals markets in particular. Yet in order to benefit from this new market environment, we believe that brokers will need to focus on their risk models, systems and liquidity now more than ever. As mentioned above, the paradigm shift in risk is already starting to happen. In order for this to be successful, brokers need to have a rock solid foundation in place.

At ISRA, we know that our customers love what we offer and we are always reinvesting to ensure our services and technology are always best-in-breed. Our aim is not to reinvent the wheel, but to focus on making that wheel better at all times to ensure our customers experience consistent success.

Navigating the Unknown

In order to trade the global financial markets successfully, it has always been essential to have the backing of reliable insights and in-depth market knowledge to help mitigate risk and capitalise on opportunities. ISRA has unparalleled oversight of over $1 trillion per month in notional volume and has produced a White Paper, ‘Navigating The Unknown’, with insights from the FX and precious metals markets in 2020. To download the White Paper, visit:

https://www.isriskanalytics.com/data-insights-fx-precious-metals-markets-whitepaper/