Investing

Flow Traders (AEX:FLOW): Making Money On Volatility

Amid falling markets the Amsterdam-based Flow Traders soar. But as US-yields turn negative and commodities lose terrain it seems like all investing opportunities fade away. Insert Flow Traders (AEX:FLOW): This liquidity provider makes profit during mass swings on markets.

Using high-frequency trading computers, the company carries out a huge number of transactions in milliseconds based on algorithms that are continuously calculated by computers. Flow Traders earns only a fraction per transaction, but with very large numbers this is very lucrative. Flow Traders portrays itself as a market maker and liquidity provider in the Exchange Traded Products market. In this way Flow Trader ensures that investors can always buy ETP’s, also when spread is high. That means that they continuously issue bid and ask prices. Flow Traders earns money in various ways. It benefits from the price differences between bid and ask prices, which investors are willing to trade in ETP’s or other financial instruments. Secondly, it makes a profit on the underlying or related financial instruments on which they hedge the resulting exposures. This results in a business plan which is highly benefiting from volatile times like we are currently in.

The company with a market cap of one billion euros is one of the biggest of its kind in Europe. The company has grown rapidly in the US in recent years and achieves an increasing share of its sales in that region. In addition, it is also active in Asia.

The corona virus has led financial markets to drop to yearly lows and is only expected to drop further. And remember: the higher the spike or the drop, the bigger the profit for Flow Traders. So either way Flow Traders is going to profit from the current trading environment. Only a slowly changing market is bad for Flow Traders, but several things will be huge catalyst in the nearby future which will result in volatility: Either further interference by central banks, or a corona vaccine will boost stock upwards again, or the corona spread will deteriorate and fear will increase at such rates that a financial crisis is upon us, but both scenarios are beneficial for Flow Traders.

The Golden Investor parks his wealth temporarily in their hands to stay safe, when gold stops dropping The Golden Investor will step into some low floating gold miners again. In this way The Golden Investor will benefit the best from the corona crisis and its aftermath. Right now investors sell all their assets, including gold for liquidity, but as the disastrous damage of this outbreak will come to light gold will gain again. For now it’s better to stay safe and step in later. Eventually gold will show a great safe haven on the long term, the current sell-off only shows how gold is a great liquid currency. It is very natural for a currency to drop in value as the economic engine slows down. But as investors will see, the decade long bad central bank policies will drive down the value of currencies, including the dollar. The debt based economy is only lasting because of quantitative easing measures, but it seems as if this phenomenon won’t last. For now The Golden Investor transfers part of its wealth to Flow Traders. The 1000% percent increase of Alpha Pro Tech the recent week provided a great step up for The Golden Investor to continue to make big plays.

Disclaimer: The writer of this article holds Flow Traders (FLOW.AS) stock, this article should not be interpreted as investment advice or anything like that.

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