The Silicon Review
In the digital world we live in, artificial intelligence (AI) has become the pillar for developing robust financial strategies previously labeled as hard-to-predict. The latest developments are helpful mainly because machines can not only monitor revised calculations and different data points in real-time but also learn/emulate the trader’s behavior successfully. Trading with AI significantly reduces the risk of uncertainty in a highly volatile market. The potential impact of the trade can also be analyzed while reaching a wide range of investors and traders. Globally, there are various firms delivering excellent solutions for AI-based trading, but RoboSig stands out from the rest.
RoboSig was co-founded by its CIO, Richard Preschern, who was an international competitive tennis player in Europe and also went on to play for Northwestern University in Evanston, IL. He developed the concept of RoboSig’s FX trading strategy while he was a successful FX futures and options trader in Chicago. He originally created the concept to hedge his market-making endeavors as a risk management tool. At that time, it would have required a team of quantitative engineers to execute the first version of the RoboSig FX strategy manually with any sort of scale. Richard wondered if it was possible to build a machine that could do it in real-time, efficiently, and without human emotion influencing any decision-making. It is important to note that the RoboSig strategy would also work in other asset classes, though Richard chose the deeply liquid $6 Trillion/day FX market to make sure every trade the autonomous platform wants to execute is able to be filled with precision. Richard went on to recruit software and quantitative engineers to build the first version. It took years to figure out, but after several iterations, the answer has turned out to be a resounding YES. The rest, as they say, is history.
In conversation with Dieter Marlovics, CEO of RoboSig
Q. Can you tell us about your services in brief?
The primary challenge that leading companies have is the fact that interest rates around the world have fallen to record low levels. In some areas of the world, they have even gone negative. Corporate treasuries, family offices, asset managers, and high net-worth individuals are all looking for ways to increase the yield on their cash without dramatically increasing the necessary amount of risk normally required to accomplish that. With RoboSig software, any of our partners are able to take advantage of the company’s R&D, real-time analysis, and trading signals to do just that. Our trading strategies have a live track since 2016 with over 90% positive months. For those that don’t know what a Sharpe Ratio is, the higher the number, the lower the risk. A world-class Sharpe ratio is usually considered to be 0.75 to 1. RoboSig software produces a Sharpe ratio of over 1.5. Our primary strategy at the moment focuses on the G7 currencies. Large global corporations, which manage cash sitting in different countries, would be able to turn that challenge into a profitable lower-risk opportunity by partnering with RoboSig.
RoboSig ALPHA is our higher return track. Its mechanism is very similar to the RoboSig Cash Management Alternative (CMA) track but incorporates a much higher amount of leverage to produce larger returns. Due to the deep liquidity of the G7 FX market and our asset management, fund, brokerage, and other regulated fiduciary partners, double-digit returns have proven to be equally as consistent for their investors with the RoboSig ALPHA product.
Q. Automated trading systems permit the user to trade multiple accounts or various strategies at one time. How does this help in asset diversification?
While our theory is that the RoboSig trading strategy will work with other asset classes, we haven't yet invested in enough R&D to know for sure, though we hope to do so over the coming years. This doesn't apply to the RoboSig FX trading strategy since our fiduciary partners determine what other asset classes they would like to trade alongside our FX strategy.
Q. Although it would be great to turn on the computer and leave for the day, automated trading systems do require monitoring. How can we prevent potential technological failures?
Great question. Our system has a large number of different risk management algorithms that each and every trade needs to pass through before it is approved to execute. In addition, we integrate with our fiduciary partners’ preferred execution systems, which also have their own risk management checks and algorithms. Since the RoboSig FX trading strategy is not high-frequency trading and is thus not latency-sensitive, this allows us to integrate more rules and limits without impacting returns.
Q. Do you have any new services ready to be launched?
One of our more exciting recent developments is that we are currently forming a minority-owned subsidiary in the UK dedicated to the RoboSig strategies called RoboSig International, LTD. The team in London that we are partnering with is world-class. Having an asset manager like this makes it easier for any type of investor to allocate cash onto the RoboSig platform. In addition, we are continuing to make significant R&D investments to continually improve our product.
Q. What does the future hold for your company and its customers? Are exciting things on the way?
Thanks to our product continuing to do what it was designed to do, we are looking forward to continuing our growth evolution. Our goals are typical of any business: more fiduciary clients allocating a larger amount of their funds onto the RoboSig trading strategy. Our Cash Management Alternative track has also attracted a lot of interest due to its low-risk profile and consistent returns that far exceed global interest rates. We will be working hard to grow that side of the business.
Meet the leaders behind the success of RoboSig
The RoboSig’s management team really is a dream team of veterans with decades of experience in trading, technology, capital markets, economics, banking, and law. After graduating with a degree in Economics from Northwestern University, RoboSig’s Co-Founder and Chief Investment Officer, Richard Preschern, successfully traded various asset classes as an independent trader and electronic market-maker on and off the floor in Chicago from 2000-2014 before focusing on fully automated trading strategies. Currently, at RoboSig, Richard specializes in strategy optimization and risk management solutions.
RoboSig’s CFO and Co-Founder, Dr. Michael Schwaiger had been director of a regional Austrian bank and holds degrees in Engineering, Economics, and a PhD in Commercial Law from Johannes Kepler University.
After fine tuning the RoboSig trading strategy and company growth on the horizon, Richard recruited fellow Northwestern University tennis player, Dieter Marlovics, to come on board as CTO and help take the company and its technology to the next level. Dieter now serves as CEO of RoboSig. Prior to joining RoboSig, Dieter was Partner and Chief Information Officer for Gelber Group, LLC, a highly profitable global algorithmic trading firm he helped grow to over $100 Million in capital. He is also the Founder of ReallyColor, LLC, which has built patented technology that allows users to turn their photos into coloring pages. Digital and physical ReallyColor gift cards have been sold in US retail brands like Toys “R” Us, BJ’s Wholesale, Sam’s Club, and others.