Samuel Leach of Samuel & Co Trading, based near Central London UK, closed the deal in early November, having developed a high-specification trading algorithm for a European Investment Fund, with bolt-on service provisions for future upgrades and development. Speaking with Khaleej Times, Samuel had this to say on ‘Algo’ trading, this growth sector and his role in it.
What is driving the demand for ‘Algo’ trading?
It’s essential to first try and quantify the scope of growth in this sector. Taking the recent comment from ARK’s Cathie Wood as one example, she is now saying that their expectation for artificial intelligence in the enterprise software space would deliver a market cap opportunity of $30 trillion, that is now being marked up to $80 trillion over the next 10 years. This is a massive area for the near future, and people want to get in.
There is also the utility of algorithms for every type of player in the market, from beginner to the most prominent investment firms, as well as Establishment entities including Central Banks. When I was starting to trade whilst still at university, I adopted an algorithmic approach to cancel out the human responses to market fluctuation, and then I started developing algorithms to continue this approach. It helped me at the beginning of my trading career, and it can help others. It has become my trademark almost, leading to being ranked the seventh top Fintech Distributor in the UK, and recognised as one of Yahoo Finance's Top Traders To Follow in 2020.
At the other scale of operations, the biggest players still need AI to process the sheer volume of data from the matrix-like global economy, identify trends and optimum entry and exit points, whilst also benefiting from economies of scale. For both, there is a risk management element as well, as natural human responses to the market are potentially the weakest link in Trading in any sector.
Where is ‘Algo’ trading going to go from here?
Commentators are talking about a CAGR of a little over 10% over the next few years. The US is looking like it will remain the largest market, but there is likely to be fast growth in Asian markets as well where the role of technology is critical.
It is difficult to see the limit of AI impact on any part of life, however, we do see some trends in the ‘Algo’ trading side of things. March 2020 was high performing month for my US Equities algorithm as it rode the COVID-19 stock market crash. Likewise, JP Morgan noted that in the same month 60 per cent of $10 million-plus executions were via algorithms. I see that expanding as the demand for fast execution combines with the ongoing need for improved data and growing confidence in the technology. ‘Algo’ trading can also assist in managing the cost of bulk transactions, as well as mitigating a range of market risks, whilst opening new markets to funds and investors.
Where next for Samuel Leach?
That’s a really good question! Obviously, I am delighted with the deal on the bespoke algorithm that we have just completed on. There is more work to do on that, and I am looking forward to working with partners to deliver future goals for them.
As I have shown in my book The Formula for Success: How to Win at Life Using Your Own Personal Algorithm, algorithms have been so important for my life as a trader and all the other things that I do on YouTube and Instagram and in training. So no doubt that will be a key part of everything that I will go on to do.
I am passionate about Trading, and always have been and always will be, but I have some projects away from the trading floor that I look forward to progressing and promoting.