Ayondo Review 2020 : Social Trading Broker Test with 1,200 underlying assets
From the very beginning, Ayondo has increasingly focused on a quality-oriented certification process for authors of trading signals. The trades – whether with or without Social Trading – are now handled through an in-house trading platform with 1,200 underlying assets. Costs of trading signals are only relevant when the signals are drawn and are not imposed on uninvolved customers.
Pros and cons of the Ayondo rating:
- certification of signals is quality-oriented
- clear markups on spreads for Social Trading
- German limited company for Social Trading, UK broker for trading
- more than 1,200 underlyings
- demo account also available for Social Trading
- relatively wide spreads
- market making
- no development environment for trading signals
Broker in the test: our Ayondo experience
1. Trading conditions: narrow spreads with surcharges for Social Trading
Ayondo charges the cost of Social Trading signals via a surcharge on the spreads. Accordingly, the spreads are shown in two variants. The Social Trading spreads are significantly (in some cases more than two times) wider than the spreads in the conventional trade. While the spreads are the biggest weakness in the Ayondo test, the illustration through markups is transparent and ultimately more customer-friendly than what many competitors in this segment have.
The (indicative) Social Trading spreads of Ayondo in selected underlyings
- DAX 2.5 points
- Dow Jones 4 points
- FTSE 100 2 points
- EuroStoxx50 2 points
- DAX-Future 5 points
- EuroStoxx50 Future 5 points
- Bund Future: 4 points
- EUR / CHF: 4 pips
- EUR / GBP: 3 pips
- EUR / JPY: 4 pips
- EUR / USD: 3 pips
- Gold: 6 points
- Gold Future: 11 points
- Shares GER, GB, US: 0.12%
The supplements for the purchase of Social Trading signals are used, among other things, to finance the remuneration of authors who provide trading strategies on the platform. Depending on the quality level of the signal provider, the remuneration is between US-$ 1-5 per follower lot.
The possibility to trade CFD's on futures at the actual billing rates of the futures exchanges is a plus in the Ayondo evaluation for those who disapprove of the rates of market makers. That the spreads of the CFD's on futures are significantly broader than those of the “in-house” contracts is a fact both proponents and opponents of market making can claim as an argument for their respective standpoint.
2. Underlyings respectively trading venues offered: more than 1,200 underlying Assets
The instrument catalogue is a twofold crucial criterion in the Ayondo test. Firstly, the number of scanned markets increases the number of meaningful trading signals. Secondly, this is particularly true for Social Trading brokers since the quality of the strategies published through the platform is also affected. The networking effect of a Social Trading platform is drastically reduced if the underlyings are limited to a few major leading indices, FX main currency pairs, and “mainstream shares”.
The CFD instrument catalogue of Ayondo
- 1,200 individual shares
- CFD's on 13 index futures
- CFD's on 7 spot indices
- CFD's on 11 ETF's and ETC's
- CFD's on 8 interest rates/bonds
- CFD's to 7 commodities/precious metals
- CFD's on 32 FX currency pairs
The underlyings consist of approximately 1,200 individual shares, 13 index futures, 7 spot indices, 11 ETF's/ETC's, 8 interest rates/bonds, 7 commodities/precious metals and 32 FX currency pairs. Among the CFD's on futures are contracts on FTSE100, FTSE250, S & P500, DAX30, CAC40, and SMI.
3. Order functions of the trading platform: basics only
The trade platform TradeHub is limited to the essentials in terms of its scope of functions. It is an in-house development that has been in operation for several years. To issue an order, an order ticket is opened. After entering the desired quantity, the required initial margin is displayed. Its height also depends on the chosen financial lever, which can be changed by any user and can also be switched off completely.
After entering the desired “trading direction” and a price, the platform automatically determines whether it is a stop or a limit order. The orders can be equipped with take-profit and stop-loss. For some markets, guaranteed stop-loss orders are offered, which are subject to a higher minimum distance at the market rate. There are no explicit additional costs for guaranteed SL's. OCO orders are also available.
Seasoned traders who make experiences with Ayondo due to the offer in the field of Social Trading are likely to be accustomed to additional order types by other brokers. It would be desirable to have trailing stops which in case of profitable positions automatically adjust to the rates.
4. Analysis functions of the trading platform: social signals with the “Sentiment Trader”
A large part of the traders who make the Ayondo experience should have become aware of the Hessians' exposed, strictly quality-oriented offer in the area of Social Trading – and should therefore show great interest in technical innovations. The broker has responded to this with the “Sentiment Trader”.
According to the broker, this is a development of StockPulse GmbH. This is described as a German FinTech company which has specialized in the calculation of trading signals through social media analytics. The company has apparently been active since 2010 and offers “innovative analysis possibilities” with which the psychology of the stock market can be measured. The pick algorithm is described as the “heart” of the product portfolio of StockPulse. Due to many years of research work, this would enable the identification of trade signals.
Algorithms evaluate communication on the internet
The idea of using movements in social networks and other areas of the internet as a basis for rate prognosis – by no means only developed by StockPulse – will become increasingly important in the future. So far, however, it is unclear how promising the method really is. In the case of the “Sentiment Trader”, algorithms examine how the price of a share has reacted in the past to web communication data. This is used to calculate patterns which also have a significant meaning for the future.
Charting and analysis remain unaffected
In some of the relevant forums, it is not uncommon to find this or that Ayondo experience report from a customer who is concerned about the broker's renouncement of elaborate charting tools. At this point, be reminded of the decentralized philosophy of Social Trading which presupposes the availability of charts and analyses on the internet and therefore does not consider a complete technical solution as necessary. It is unquestionable that not all traders can adapt to this philosophy. This is particularly likely for those who are not used to the use of third-party offers in this area.
5. Regulation, deposit guarantee and risk limitation: German-British benchmark in Social Trading
At this point, the regulatory environment and the deposit protection are the subjects of the Ayondo test report. There are two companies behind Ayondo. Social Trading as a service is offered by the Ayondo GmbH, based in Frankfurt on the Main, Germany. The company is legally established as a contractual intermediary of DonauCapital Wertpapier AG based in Ruderting, Germany, and is registered as such in Bafin's intermediary register.
The trading platform is operated by the London-based Ayondo Markets Limited company. It falls under the responsibility of the British FCA (Financial Conduct Authority). The customer deposits are secured by the British deposit guarantee facility FSCS up to GB-£ 75,000 per customer. Since 2015, there has also been an insurance policy with the insurer Lloyds London, through which deposits are secured up to € 500,000 per customer. This should also include funds tied in open transactions.
The broker offers guaranteed stop-loss orders for a part of the underlying assets as well, which exclude slippage to the detriment of the customer and thereby neutralize the specific realisation risk in CFD trading. However, the orders are not available for all underlyings and require a greater margin to the market than SL's without a guarantee. There is no insurance premium either.
A clear plus in the test concerns the broker's refusal to ask for additional contributions, introduced in 2015: if a customer account shows a negative balance, Ayondo will refrain from claiming compensation. In the wake of the “franc shock” several CFD and FX brokers had made such waivers.
6. Automated trading: only in the context of signals
The import of automated trading systems into the trading platform TradeHub is not possible outside the Social Trading offer. Neither does the platform include a development environment for automated trading systems. The “auto-execution” general terms therefore refer exclusively to the implementation of signals which are published as part of the Social Trading by signalling traders and subscribed to by customers. These signals can be copied automatically to your own trading account. It is also possible to copy the portfolio of another follower.
However, users of the platform can see from the descriptions of the strategies whether an approach is a purely mechanical/quantitative approach – or whether discretionary/visual elements are added or even build the main component. However, no details about the signals can be found in the descriptions, which are mostly quite short and written by the authors of the signals.
7. Account opening and minimum deposit: plausible demo account
The account is free of charge. When opening an account, the minimum deposit is € 1,000. New customers can opt for both a CFD account and a Social Trading account. The latter must either be opened as follower or signal transmitter – the combination of both is not possible.
Deposits are possible by bank transfer and credit card. Some new customers who experience Ayondo for the first time fail to do credit card deposits. For security purposes, the broker only permits cards with 3-D security procedures. American Express credit cards are not accepted. A fee of 2% is charged for deposits with most cards.
The usual restrictions apply as far as laws and regulations against money laundering are concerned: disbursements are made automatically in favour of a credit card as long as the payments of the card exceed the disbursements.
It is possible to open a demo account in advance of a live account. According to the broker, this can be used for a period of 21 days. According to the company, the demo account is supplied with the same data feed as the live account. A significant plus in the Ayondo test report: the strategies of the signal authors can also be tested via the demo account.
8. The broker among competitors: Gekko-takeover and backed by Donau Capital Wertpapier AG
Traders considering to make the Ayondo experience should as usual look at the background of the company. Too small brokers may not be able to offer favourable terms in order to permanently secure their coverage. Customers of such providers – in the worst case – take the risk that their broker is either taken over or ceases to do business.
In the case of Ayondo, such concerns are presumedly unfounded. The company has been active in the market for many years and has with Donaucapital Wertpapier AG a large cooperation partner in the segment. According to the company's own presentation, DonauCapital AG is “usually active in higher to highest ranked forms of investment as far as risks go”.
Until spring 2013, Ayondo was exclusively active as a Social Trading platform. Customers were able to link the trading signals via interfaces to the accounts of other brokers. In 2014, the trading platform of the British broker Gekko Global Markets was taken over and reissued as Ayondo Markets Limited based in London. Since then, the company has been operating as a Social Trading service provider and a broker through two companies. Both companies are owned by the Ayondo Holding AG, which has emerged from the Next Generation Finance Invest AG and whose participation portfolio also included Gekko Global Markets.
The German newspaper “Börsen-Zeitung” reported in July 2015 that Ayondo had gained market shares in the CFD trade and was to be placed “in the midfield of all providers”. This classification referred to CFD trading as a whole. In direct comparison with eToro and Wikifolio, Ayondo was reported to be the market leader.
9. Additional services and new customer offers: bonuses on the first (large) deposit
In addition to the “Sentiment Trader”, which is the subject of the section on the trading platform, the main part of the broker's additional services consists of webinars.
The webinar offer is large and clearly goes beyond alibi offers with sales character: some events include more than a dozen dates. In addition to the live participation, participation is also possible via a webinar archive. For example, discussions take place on the fundamental and chart-based constitution of certain markets, strategies, fundamental analysis, and the like.
New customer offers with deposit bonus
In more or less regular intervals there are new customer offers which are relatively discreetly advertised, but are quite substantial, though. In February 2016, for example, bonuses on deposits of up to 20% respectively € 15,000 were called. But that does not yet justify an improved rating. Firstly, you had to pay at least € 10,000 for a 10% deposit bonus. Secondly, the bonus credits were blocked for payouts until the sum of the generated spreads reached at least twice the amount of the credit.
10. Customer service and internet appearance: well done
Customer service is available by phone and email. A plus in the Ayondo test report: orders in CFD trading can also be transmitted by telephone without surcharge. There are separate hotlines for CFD trading and Social Trading – which is especially interesting for those who have an experience with Ayondo as originators of trading strategies, and would like to find a personal contact if necessary.
The internet appearance of the company makes a good impression. In the area of Social Trading, the graphically underlined “trader career” illustrates with only a few words the requirements and remuneration for each individual quality level. In the area related to CFD trading, you can access both the regular and the Social Trading spreads of the entire underlying assets catalogue with one click.
Conclusion of our Ayondo experience
Ayondo is one of the best addresses in the field of Social Trading. German-British regulation and the strong background of DonauCapital AG are not even the most important criterion for quality: the authors of the signals are faced with a strict certification process with ascent and descent options and a clear rejection of major risks. Other platforms generate a greater number of strategies through a more lenient access policy, but in our opinion, the key to the Ayondo evaluation is quality – a broad portfolio of unsuitable strategies is by no means better than a small portfolio of good strategies. Ayondo is the right address for anyone who wants to make money with Social Trading – be it as the originator of a strategy or as a trader.
Our Ayondo rating as a school mark: 2.2