The Trade Exchange Group and Greenfield Capital, which owns billcara.com, have agreed to a partnership that makes available to any investor in the world, the best ideas of billcara.com in the form of real-time orders to the market.
Because billcara.com is a general publisher, there is no connection to Bill Cara’s management of client accounts in his capacity as a registered portfolio manager.
As readers know, billcara.com is in its 17th year of publishing information to help investors navigate capital markets. In our first year, Forbes editors designated us “Best of the Web” along with Seeking Alpha and Mish. Soon after, Forbes labeled us their “Favorite”, which was quite an honor.
We have enjoyed a readership of many hundreds of thousands from over 120 countries, which is satisfying but a responsibility that we have never taken lightly. As readers know, billcara.com has been my unpaid devotion to public service. In fact, this avocation has cost me hundreds of thousands of dollars. We have never used third-party advertising or received payment from any source in order that our education and information remain strictly independent and objective so that our readers would trust us.
Trust is the most important word in my vocabulary, and now with the Trade Exchange partnership, billcara.com can receive an income from subscribers on that very same basis of trust. You can trust us because we are putting at stake our entire reputation as the “Trader Wizard”. The Trade Exchange puts us in direct competition with about three dozen other publishers to see who can trade most effectively.
Using the Trade Exchange app, which is available at the Apple and Google stores, we will be posting our trade orders to a US securities exchange in full view of the public who subscribe. Users can (i) pass these orders in real-time to their own brokerage accounts, or (ii) merely pay a price to use the information at their discretion or ignore it.
Good news to my Canadian readers whose accounts I cannot manage according to North American Securities Administrators Association (NASAA) rules is that anybody can use my ideas and even link to my trades wherever they reside.
Should subscribers want to link my trade orders to their own investment accounts, they can do so at TD Ameritrade, E*trade, and Tastyworks Options. IBKR will be live in the second half of September. Schwab and Fidelity will come online in 2021.
What is the Trade Exchange and why is it so important?
- Like millions of others, Trade Exchange’s founder Mike Anton was unhappy with the relationship between brokers and their clients who owned self-managed accounts. Working in the electronic brokerage business, Mike and his associates could see how many clients were losing money year after year. This was a problem that needed a solution
- Mike then spent two years in the field working with trade idea generators and individual investors to determine what was seriously missing in the relationship, and discovering ways to build a better bridge between investor readers of publications, publishers, and broker-dealers
- With a couple of friends who had been peer professionals in electronic trading, Mike Anton then founded the Trade Exchange Group in 2016
- What the team discovered was, in Mike’s words, “a broken system that needed an easy button with major broker participation and mutually beneficial analytics”
- They then designed and built the industry’s first system that managed idea flow from known publishers to subscribers where the user has to pay to see an idea. If a subscriber were to like an idea, they could (i) simply click once to forward an order to their broker, or (ii) wait for a better entry point, or defer or dismiss the idea altogether
- The core patented technology of Trade Exchange tracks every idea a publisher shares, every idea a follower receives, every idea the follower acts on, AND the results of the ideas they did not act on. As Mike says, “This is the only mathematical way to hold both sides mutually accountable”
- As the system took shape, Mike Anton moved the company from Chicago to NYC, where beta version1 was launched during 4Q2017
- The publisher must close out the trade at a gain recorded by Trade Exchange. They do not get paid on the idea until it is closed at a profit. Subscribers must pay regardless of whether they used the idea or not if it was a successful idea. The profit from an idea is only one performance metric and calculation. Trade Exchange does not compare IRR of a publisher’s portfolio, just what really happened to each idea
- After a series of improvements, the Trade Exchange now offers a user-friendly mobile app that is available from both Apple and Google stores.
Who are the people behind the Trade Exchange?
- The Trade Exchange team is a group of friends who bought in as fellow entrepreneurs who believed in an industry-changing opportunity
- Patrick Moorhead, head of listings, was a good friend of mine at TradeStation. With Patrick’s deep domain expertise, he has secured about 40 signed partner contracts
- The Chief Marketing Officer is the former CMO of E*Trade. He brought in his good friend, the former leader at Rodale who is credited with building the men’s health subscription business
- The team includes an experienced designer who Mike Anton works with to design all the app flows. They are exclusively focused on actionable alerts
- They hired a Data Scientist to start finding trends and optimizing the experience so that both the subscriber and publisher could get the most out of their relationship
- An advisory board includes a former president of E*Trade, a former CEO at Stocktwits and MarketWatch, as well as ex-consultants for these firms
- The private investor group primarily hails from financial services, all of them believing that what they are building is going to define the securities industry for decades to come.
To whom is the Trade Exchange service directed?
- Trade Exchange is an attempt to redefine the digital medium connecting financial experts to a massive pool of people, mostly retail investors
- The market is presently comprised of about 10 million day-traders who are actively engaged in trading capital market prices and an additional 30 million self-directed investors who do not have time or desire to be in front of a desktop platform for more than an hour a day in researching and making trades.
What services are available to subscribers?
- Users would be able to subscribe to publisher trades to receive winning ideas and take action immediately in their own trading platforms
- The app supports all advanced trading capabilities, profit targets, stop loss, trailing stops
- Notifications to initiate, close or adjust a trade takes just two clicks, i.e., less than 7 seconds, via mobile, to trade on an actionable idea
- Trade Exchange offers API partnerships with TD Ameritrade, E*Trade, Tastyworks, and IBKR with Schwab and Fidelity becoming partners in 2021 so that the millions of clients of these firms can automate their trading around their choices of Trade Exchange publishers.
Who are some of the three dozen publishers?
- Alpha Insights
- Altos Trading
- Aspen Trading Group
- Bahama Capital, LTD
- Barry Steinman
- Bull & Bear Trading
- Contrary Thinker
- Damon Verial
- East Summit Financial
- Fractal Wave
- Greenfield Capital (billcara.com)
- LaDuc Trading
- Mosaic Theory LLC
- Prendergraft Research
- Pro Trade Researchers
- Rick’s Picks
- Rod David
- Seasonal Trader Pro
What are the benefits to the publisher?
- Publishers get more exposure to thousands of potential subscribers and if the trades perform well, they could get more clients to their ideas and more income of course
- This app is an easy to use platform with good functionalities and a marketing plan directed by the Trade Exchange team.
What are the benefits to broker-dealers?
- Improved client satisfaction
- Additional trading volumes.
What Improvements are planned?
- In October, single-leg options will be available
- In 4Q2020, the software will include scale-in and scale-out functionality for publishers
- In 1Q2021, Trade Exchange will introduce an enhanced desktop platform for subscribers.
How did BillCara.com get involved?
Patrick Moorhead, listings head of Trade Exchange, contacted BillCara.com to introduce his company’s new fintech app that was under beta test. I was immediately impressed with the concept of a high-quality marketplace for subscription-based advice, and I immediately showed it to four associates who told me they too were impressed
What I like most is the fact that Trade Exchange is building a roster of publishers who become a roster of “advisors” who are exempt from regulatory control as there is no direct link between the subscriber and the ideas of the publishers. Trade Exchange makes money from the app. The better the ideas, the more subscribers, and the more revenue. As one associate described it to me, “Trade Exchange is like a newspaper looking for good columnists”.
Within a day of my first hearing about Trade Exchange, Michael Eugenides, head of execution, organized a test run. I entered an order for TECK, and it soon became profitable, which was encouraging although that decision had nothing to do with Trade Exchange other than to show me how their simple app works. After I became comfortable, I then set up two small portfolios, one for Precious Metals and one for Biotech, which also became profitable. In fact, all 20 of my 20 orders became successful trades, and I liked the reporting, so I was really hooked.
During this time, I made numerous recommendations to the team. For me, there is always a difference between an idea and its execution in the market. For initial holdings, I scale in and scale out of positions. During volatile fast markets, I am required to trade part positions. It is almost never an all-in all-out decision. Readers at billcara.com understand that trading is not an event, but a process. So, after some discussion, Trade Exchange agreed to make software changes that would make publishers like me comfortable.
At this point, neither Greenfield Capital (owner/publisher of billcara.com) nor Bill Cara personally is an investor in Trade Exchange. Ours is strictly a business partnership where Greenfield Capital, along with other selected publishers, offers investing and trading ideas to the public using the Trade Exchange platform. Payment is made from subscribers directly to the Trade Exchange and from Trade Exchange to Greenfield Capital.
In our case, a portion of the fees earned from Trade Exchange will be paid to the Greenfield techies who are responsible for building and maintaining the billcara.com website. Depending on the income level, the payouts may result in more improvements to the site, and more marketing that will hopefully bring in more participants in the community discussion.
In addition, some subscribers will possibly use the Trade Exchange experience to decide if they wish to become Bill Cara clients in his capacity as a registered financial advisor at Aragon Capital LLC.
BillCara.com portfolio offerings at the Trade Exchange will be:
- Inflation protection stocks (long-term investment)
- Mid-to-large cap Precious Metals (short-term trading)
- Small-cap Precious Metals (short-term trading)
- Biotech stocks (short-term trading).
Possible future offerings are:
- Growth ETF model (long-term investment)
- Yield ETF model (long-term investment)
- Blended (Growth + Yield) ETF model (long-term investment)
- World’s most innovative companies (10 of top 50)
- Put & call options.
Food for thought
There is a clear difference between the Trade Exchange and a securities exchange. The concept of a securities exchange, implemented in 1908 as the New York Curb Market, was a meeting place between buyers and sellers. Over the years, a securities exchange, however, became a financial service to support the needs of listed companies and the member broker-dealers who distributed the securities of a company to raise capital for the company and for insiders. To help accomplish these objectives, the companies and the broker-dealers published sales-related information as an additional financial service. Ergo the name sell-side. The matching of orders, which is a trading service, and not a financial service, could always have been done directly, and now with electronic technology, it can be done via a fintech app. To trade effectively in their own interests, the buy-side owners of accounts need information, which traditionally has been provided by a regulated sell-side financial service. Over the past several decades, independent publishers began to thrive as the public discovered in many cases the value-add from objective sources. The Trade Exchange Group has stepped into the space of matching the best of these independent information publishers with the needs of self-managed account owners. The company stands at the forefront of a revolutionary change in the securities industry.