Samuel Leach: The Fusion Trader

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Karishhma Mago   Contributor

Samuel Leach: The Fusion Trader

Samuel Leach rose to stardom in the media after he left one of the leading independent private banks in the UK. Samuel Leach has a knack for making high returns in the financial markets and started Samuel and Co Trading nearly ten years ago from his bedroom in Watford where he traded the volatile stock and forex markets. He started by buying up undervalued companies recovering from short term downturns in the market and selling for a profit after their share price had recovered. Fast forward ten years and Samuel Leach is not just a trader but an author of his book, The Formula For Success, a TED Speaker, Multi-business owner and an avid start-up business investor.

So how did he do it? And all before the age of 30.

Samuel caught the transition in the financial world of traders making money not from their own brains, but from computer models telling traders when and what to buy and sell. These computer models are also known as algorithms or indicators and can extensively guide their decision making. David Siegel, co-founder of Two Sigma Investments recently stated, “one day no human investment manager will be able to beat the computer." Siegel, himself a computer scientist, now manages more than $58bn and is one of the richest hedge fund managers in the world.

Many Hedge Funds employ High-frequency Trading (HFT) to transact hundreds or thousands of trades in a matter of milliseconds. One use for this is to disguise one large order by breaking it down into many smaller orders. Algorithms can also be used to analyse the markets, potentially identifying trends and market reversals, whilst being able to react and execute on information much faster than any human ever could. The HFT employed by institutional traders is largely different to how algorithms are used on an individual level. An individual may choose to use an algorithm if they have a busy work schedule, so they do not have enough time to dedicate hours to analysing the markets. They can programme the algorithm to execute trades automatically using their existing strategy. The algorithm will then perform this function only when the prescribed criteria is met. This was one of the main advantages to algorithmic trading that first attracted Samuel to creating his own algorithm as his schedule got busier and he had less time to dedicate to watching the markets.

Back in 2015 after months of testing and after many iterations, Samuel developed his own algorithm called Fusion. Fusion took advantage of small price increments on the GBP currency within the foreign exchange market. This became a crucial part of his personal day to day trading allowing him to benefit from these small price increments in real time around the clock 24hrs a day.

Since 2015, Samuel has optimised the algorithm to consider market events that we had not seen previously in the markets, such as Brexit. The result of the Brexit referendum sent shockwaves through the UK’s financial system as it was a surprise result, the entire market was expecting the UK to vote to stay in the EU. Therefore, the market was caught off guard and the GBP tumbled; Samuel and Fusion took note.

Samuel is quoted saying "An algorithm has set rules and variables, taking into account geopolitical factors is hard to code into those variables especially when there is no historic data for such events.” Brexit led to the withdrawal of the United Kingdom from the European Union at 23:00 31 January 2020 GMT. The UK is the first and so far, only country to have left the EU, after 47 years of having been a member state of the EU and its predecessor, the European Communities, since 1 January 1973.

As the algorithm is continually being back tested on new data once these outlier events occur, over time this ultimately creates a rigid and stress tested tool that Samuel has implemented into his own personal trading. Researching further into Fusion we cannot see exactly how the tool works on an intricate level, however, we can see the results which performed significantly in 2020 during the first global health pandemic producing returns of 40% gain on his personal account. On top of those impressive returns, Samuel Leach also gained recognition for his work as one of the top fintech disrupters within the UK ranking amongst top UK banks. With 2021 YTD returns hitting an impressive 19% and with Q4 still left it indicates solid returns so far.

As the financial world ramps up its automation efforts within the markets developing these impressive mathematical models and algorithms is becoming a sought-after skill. With Samuel Leach gaining the limelight within the sector and these impressive results it will be interesting to see how he finishes Q4 of 2021. Samuel is a highly skilled UK trader that we will be watching closely along with the impressive tools he and his team have made such as fusion.

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Karishhma Mago   Contributor