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Empowering the trader
Yoshi Yokokawa & Alpaca – Digital Entrepreneur of the Year & Fintech of the Year, Japan - How a Japanese fintech is changing traditional processes
Darryl Yu 22 Feb 2017
 For any trader in the marketplace the ability to execute and automate trading ideas is key to standing out in the financial industry. However, with the drive towards automation comes the challenge of implementing various types of trade ideas without facing technological constraints such as programming. “Traders usually have to write complex programs to build automated trading algorithms. Because I was not a programmer, I was not able to code my trading rules,” explains Yoshi Yokokawa, CEO of Alpaca. “I wanted to have a service that could automate my trading rules with ease without having any programming skills.”

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Having worked for several years in the trading and investment banking world, Yokokawa along with his college friends in 2015 co-founded Alpaca, a trading platform that leveraged on artificial intelligence technology to learn about the trading patterns of their users. “The AI learns from the historical trades to build automated trading algorithms,” says Yokokawa. According to Alpaca the company has already created around 15,000 trading algorithms ranging from types of currency pairs to the time frame in which a trade should be executed.
 
Currently Alpaca has two main web applications, AlpacaAlgo and AlpacaScan that cater to both high-end and causal traders. Moreover, Alpaca aims to work with brokerages, banks and trading firms in developing their backend trading processes. “For the sell-side we are building various types of prediction models by using deep learning. For the buy-side we are building systems to automate and duplicate their trade decision-making process,” says Yokokawa.
 
For Yokokawa, the launch of Alpaca a couple of years ago was a technical feat as it involved not only learning about AI technologies but also involved sourcing large amounts of creditable data. “There was no such previous R&D done using deep-learning to automate trading rules, we had to be very creative to try out many methods to build our own deep neural network model,” Yokokawa recalls. “The right user experience was also challenging to achieve, they normally want a fast training speed and iteration. We had to be even more creative to shorten the training while maintaining the accuracy.”
 
Yet despite the initial challenges, Alpaca has been able to give it’s close to 5000 users the ability to build automated trading algorithms within a few minutes. For the company’s enterprise clients, Yokokawa has shared that the company had three clients working with their technology and has 10 more institutional mandates in the pipeline. Last August, Alpaca partnered up with Jibun Bank, a mobile-only Japanese institution, and provided the bank’s customers with Alpaca’s deep learning engine.
 
When reflecting back on Alpaca’s journey over the past couple of years, Yokokawa advises other potential financial technology players to build a platform that looks to solve a real problem. “Initially we were building a general purpose AI model with deep-learning which we could not find the business for. Then we decided to solve the pain of the traders, and utilized our technology for that, from which we learned that a problem always comes before the solution,” notes Yokokawa. In addition, Yokokawa stresses that building a service is very different from building a business. “Initially we thought that building a good service makes a good profitable company. However, we learned that there are many functions that make up a good company that maintain and grow a good service,” he says.
 
Looking to the future Yokokawa and his team of 13 people in the United States and Japan will continue to grow the business in Japan. “We are focusing on Tokyo first so most of our future customers will come from here. We are not aggressively selling ourselves internationally at the moment,” highlights Yokokawa. In regards to appealing to the causal trader Yokokawa will aim to find additional trading opportunities for their users to take advantage of. “We want to bring
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