Trade idea

Trade ideas (or trading ideas, or "Electronic Alpha-Capture") are investment ideas, typically equity related, ("long" i.e. buy, or "short" i.e. sell) which are sent by institutional stockbrokers to their institutional clients (i.e. this is not a service provided to private clients). They typically propose a trade in a specific stock and are developed by the individual idea author’s (e.g. a salesman) own knowledge of their client’s particular area of investment interest, so will take into account: the client’s investment style, portfolio size and the sector and geographic focus. Recipients of trade ideas can be hedge funds, bank’s proprietary trading desks and money managers. Trade ideas are sent to the client with a recommendation to buy or sell, an investment value (e.g. $2 million) and often a timeframe and an indication of level of conviction. The most active consumers of Trade Ideas are funds using quantitative or systematic strategies.

Brokers only send trade ideas to their most valuable clients. In return for receiving ideas that provide superior investment returns they are rewarded with increased commission payments from their clients. Trade Ideas are therefore highly performance related. Only brokers providing consistently good ideas are rewarded by the client and only those clients prepared to pay for them will continue to receive the brokers’ ideas.^[1][2]

iResearchFX recently brought a new concept in trading ideas. Everyone can publish trading ideas within the iResearchFX community. There are many authors exchanging trading ideas and contributing market research to both brokers and investors. In iResearchFX, trading ideas are divided into two groups: forecasts and signals to buy or sell certain financial instruments. All trading ideas are published by the authors in the way of market research, not investment advice. That makes publishing trading ideas in iResearchFX an unregulated activity by an authority of any country.

See also

• Alpha capture system

References