Trading can often appear as simple as pressing the right button at the right time. However, within this the industry, there are risks as high as the rewards.
One way to mitigate against this risk to operate like an institutional trader, a sector often made up of major corporate machines, mutual fund families or even pension funds.
However, operating alongside these financial giants are retail traders, working alone and lacking the key supports provided by well-oiled machines.
That’s until now.
Chasing Returns is an Irish startup founded by Ann Hunt, who spent 10 years on Wall Street building risk management platforms.
Hunt, with a BSc in Computer Science, felt retail traders weren’t given the support structure that underpins much of institutional trading.
And after a spell investigating ways to change that, Chasing Returns emerged, offering professional quality tools to help people trade smarter.
“When I went to look at retail traders, the thing I noticed was that, as they were not on professional trading floors, they had no suitable support,” she said.
This takes in technological support around managing risk, but also, perhaps more interestingly, “the people support”, according to Hunt.
“Yes, on the trading floor you have a full-time mentor. Essentially there’s a risk manager on the floor. Chasing Returns, so, is a digital risk manager for retail traders.”
The way of offering people that edge is particularly interesting, with Hunt’s interest in trading psychology playing a major role.
'I came through a pre-accelerator in NDRC first. It was there that I learned my first idea just wouldn’t work.'- Ann Hunt, Chasing Returns
Chasing Returns’ clear performance analytics reveal insights into people’s trading behaviour, allowing them to take advantage of good habits, and avoid the pitfalls that hold them back.
There are several key areas with regards this, with Chasing Returns looking at everything from the amount of sleep a retail trader gets right through to the form of the trader.
“On the second point,” said Hunt, “it’s all a stats game”.
“If you start a losing streak, and you get emotional, you put on a much bigger trade to win it back. Or maybe you start trading really quickly, at a faster rate than when you are performing well.”
Chasing Returns monitors this and lets retail traders know when they’re falling into simple traps, providing valuable assistance when decision-making is at its most critical stage.
Though this is a far cry from Hunt’s original business idea, which was swiftly set aside before she joined NDRC’s LaunchPad programme in 2014.
“I actually came through a pre-accelerator in NDRC first,” said Hunt. “It was there that I learned my first idea just wouldn’t work. But the programme helped me look at a problem, and come up with a solution. So I came back to LaunchPad with Chasing Returns and took it from there.”
The logic behind the company is sound, and could maybe even be extrapolated away from trading, into other areas of critical human decision making under pressure.
Chasing Returns is currently working on a piece of research with a neuroscientist who specialises in looking at performance coaching in sports and traders.
“We now know that decision-making in life is impacted by what just happened in the last few hours,” said Hunt. “We're full of human biases, and recent events trigger behaviour of later events.
“A good platform like that of Chasing Returns helps to empower people to make rational decisions. But really, the main benefit from what we see is in trading.”