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Yesterday prop firm FundingPips announced the launch of its new brokerage brand Tradin. It appears to be pronounced in the same way you would say ‘trading’ if you were a roadman in the UK and is regulated in Mauritius, having received approval for a license in July.
The first thing I have to say is this was actually smart marketing. The way they did it was to set up the Tradin brand a couple of months ago but sell it as a live trading show and media platform.
Since then they have done hundreds of live streams and built up a decent following across X and YouTube.
To convert that into a brokerage business is a good idea. Firstly the broker already has good brand recognition before even going live.
Secondly, it’s a useful organic marketing tool.
This is how tastytrade started and you can see from their success how a media platform creates a good funnel of leads for a business.
Incidentally, the type of content is very similar to tastytrade’s. You have a few ‘traders’ live streaming, talking and providing educational analysis every day.
Whether or not that will continue, we’ll have to see. However, for now, they are getting a lot of views. Most daily streams get 2k – 3k views. This is far better than what IG gets for their live streams, by way of comparison.
Another obvious benefit of this is that it’s all (in theory) organic traffic, with no marketing spend. Consequently, you can accept customers via reverse solicitation rules to a broker in Mauritius.
The final part I think is interesting is the wider cross sell from prop trading. The FundingPips brand is big and they get a huge volume of traffic to their main website.
That appears to be both organic and paid – FundingPips currently has 130 ads running across Meta’s platforms, for example.
The cross sell now works with the FundingPips site and social channels able to provide different channels back to the Tradin brokerage brand. You can see an example of this above on the FundingPips homepage.
The company’s co-founder Khaled Ayesh also has a big following on X and other social media platforms. He can just go ‘hey bro, go look at Tradin’ and nothing will happen because he is not doing any direct marketing.
This may sound so obvious it’s not worth talking about. But take a step back and think, how many Mauritius-regulated CFD brokers have a CEO with almost 100k X followers, who can funnel traffic to that broker organically? Maybe the Dominion Markets owner and that’s it?
Clients aside, you also have to wonder why FundingPips did this and my guess is that it’s due to margins.
Something we’ve looked at before is the fact that in the CFD industry, you tend to have a small number of heavy hitter clients, who generate the bulk of your revenues.
In the prop space, this is probably still happening but, almost by definition, it cannot happen in the same way.
A brokerage deposit can end up being millions. The most a prop firm can make in one transaction is its highest priced challenge.
For FundingPips, the highest price they seem to be charging at the moment is a little north of $500.
If they wanted to be as big as the largest CFD brokers, they would have to sell 1m+ challenges at the highest price possible, which is unlikely to happen.
To top that off, hedging out the risk in a broker is much simpler than it is in the prop space.
Overall there are good arguments to be made that, although the prop model is fun and useful, it is not as good as the regular broker model.
However, the other interesting question is whether FundingPips can actually make this work.
Running a prop is comparatively easier. You do not have to worry as much about payments, banking, regulations, advertising restrictions and so on.
For example, it would be much, much harder for a regulated broker to market and produce content in the way that prop firms are doing today.
A knock on effect of that is culture or mentality. To draw a comparison, many brokers that work solely on the IB model find it extremely hard to work in the way that a firm like Plus500 does.
I would not be surprised if the same thing happens with props moving into the broker space. If you are accustomed to little or no marketing restrictions, easy access to paid ads, then you may end up just finding the broker model annoying and too much hassle. Let’s see what happens.
