social trading Archives

Yoni Assia is the founder and CEO of eToro.

What is eToro and why did you launch it? What was your inspiration? How’s the business doing?

eToro is the world’s leading social investment network. eToro allows a community of traders to interact with each other, exchange views and share tips on a wide variety of investment vehicles including ETFs, stocks, currencies, commodities and indices whilst trading, and even directly copy the trades of another user.

I started eToro with the mission to revolutionize the way people access the financial markets and make their trading experience more social, simple, enjoyable and transparent. By harnessing the wisdom of the crowd, eToro members can benefit from accelerated information exchange, knowledge sharing and the ability to quickly identify the best investment opportunities.

At the core of what we do, we open up the financial markets to millions of new traders around the world. The platform now has over 5 million users across over 140 countries. eToro is the leading social trading platform and we intend to continue our expansion into other countries.

You just relaunched a new platform: what pushed the change and what’s new?

The new platform combines our social app and trading app in one place and features a number of advanced additions allowing people to evaluate markets and other traders’ investment decisions through new live-analysis tools including customised watch lists, diversification checks and charts.

The new platform also creates a safer way for individuals to participate in the market through a suite of advanced risk management tools including a risk score for each trader, the ability to predefine a copy stop-loss when copying a trader, and an option to trade all assets with no leverage.

With these new updates, social remains to be the heart of our new platform. With over five million registered members, traders are able to communicate directly with each other to ask questions, join online discussions and share knowledge and insight through an interactive, real-time news feed.

What’s the opportunity in Russia and China for eToro? Why are these geos important for you? Is trading becoming truly global?

On eToro, a Chinese or Russian investor can invest just as easily on Fiat, BMW, and Adidas or Facebook and Google as an investor in the UK and US. The social element really comes into play when investors in these countries can ask someone on the other side of the world what they are buying and their upcoming strategies. The translation function we have on the platform means that we are breaking down barriers across geographies and language.

We just recently hired a Managing Director in Moscow and have started to scale both this office and the Shanghai office. We see huge opportunities in both markets and the value social trading brings to people in China and Russia.

It looks like you’re partnering with your investors to scale into these geographies — is that the best way to enter these types of markets? Why?

As well as the financial boost provided by our investors, they also provide invaluable insights into the local market. We are getting assistance from our partners Ping An in China and Sberbank in Russia to set up the infrastructure and the potential is still mind-blowing. These markets are bit different because they are not 100% defined as it is in Europe. In Russia for example, they’re in the process of setting down rules and we’re part of the group helping to define the regulation of offshore investing. We’re seeing a similar thing in China too with our operation in the Shanghai free trade zone.

What’s next up for you and eToro in 2016?

We will continue our relentless technical innovation and sustained investment in R&D to further strengthen our position as the category leader. We will also invest in our human potential, focusing on the professional development of our strongest asset – our people.

We have considerable ambitions to establish new markets. Currently our main focus is on Europe, China and Russia, but with thousands of new traders from over 140 countries joining the eToro community every day, the global market is top of mind.

We launched eToro with one simple and clear vision – to revolutionise the financial system and blow open financial markets to millions of new traders around the world. Social trading enables people to make smarter investment decisions and is the way to invest. We’re excited about expanding our platform to new users and open up access to capital markets so the ordinary investor can trade in a simple, enjoyable and transparent way.

Photo credit: Kyle Taylor, Dream It. Do It. via Visual hunt / CC BY

Hart Lambur is co-founder at Openfolio. He was most recently a government bond trader at Goldman Sachs.

What is Openfolio?

Openfolio is a platform where investors share their portfolios—not dollar amounts, but their contents and ideas—to see how their investments compare. Data derived from our network brings fresh insight and increased transparency to personal investing, helping everyone in our community make smarter, more confident investment decisions.

What’s the genesis story of Openfolio? What itch were you trying to scratch?

We were working on Wall Street when we hatched the idea for Openfolio. We noticed how the open culture of our trading desks, where people freely shared ideas and insights, helped everyone succeed. But we also quickly realized that there was no platform, or scalable solution, to replicate that powerful experience in the real world – even though so much untapped wisdom resides in everyone’s extended networks. We wondered: isn’t sharing information about investing at least as important as sharing information on Foursquare… or Tripadvisor… or Spotify?

That experience inspired the creation of Openfolio. It’s a new, open approach to investing, based on the simple idea that people will share their portfolios, in percentage terms, within their networks. Openfolio is a place where investors share insights and ideas, and watch how others put them into action. We all learn from each other’s successes (and mistakes).

Why do you think there’s a lack of transparency when it comes to investing whereas in other industries, we’re so much more likely to share our information? How has this opacity impacted the average investor?

The taboo nature of talking about money and the idea that investing is scary and risky intimidates people from sharing information with each other. There is a stigma that each of us will be laughed at as fools for sharing, when really sharing information is usually a great way to learn. The average investor is left in a cycle where it’s hard to know where to seek advice about best practices, and a large amount of the advice is anecdotal.

As a result, transparency and information is only present in small circles. There are investor communities such as Seeking Alpha, or Stocktwits, but these are largely for the engaged investor, often looking for opinions on specific stocks and bets they want to make. There is also expertise from investment advisors, but it makes sense for that expertise to be held there both for the benefit of the advisors’ business and their clients peace of mind.

Openfolio is designed for personal investors, who are invested in the market, but don’t want to pay 1-2% on assets for expert consultation or fully engage in active DIY investment. Openfolio is an free service that lets you engage with your investments in an informative and non intimidating way, by giving you context into what others are doing, i.e. social validation.

So, once you have more transparency on our investing behavior, what’s the next step? Can Openfolio help us make better investment decisions?

Our mission is to bring about a better understanding of investing behavior, one that complements technical expertise and avoids professional jargon. This understanding will be based on our existing intuition about how people behave. This shift creates an opportunity to bring in people that are interested in investing but may be intimidated by the topic.

This added behavioral dimension can be a really powerful teaching tool, but relies on us accurately characterizing investors based on the info they share with the community. A simple comparison of how your portfolio performed versus the average investor only scratches the surface, the best insights will come from a deeper synthesis.

For example, my portfolio holds USO, a highly volatile Oil ETF. Openfolio tells me that “People who are betting on USO trade it 2x as much as any other stock in your portfolio”. This helps me appreciate the reality of my decisions, i.e. that I own a stock that many people use for short term speculation.

The idea of Openfolio has been tried before (in various manifestations — I’m thinking Covestor, which ended up pivoting to track only professionals’ trades) — what’s different with Openfolio? Why will you guys make a business out of this where others have tried and moved into other things? Are you planning on rolling out replication technology?

The approach many other social services take is putting forth an idea that there is exists a group of high performers, who can consistently beat the market, and the way to use these services is to highlight these experts and let people emulate them. Openfolio is based on the fundamental idea that even if a minority of market beating wizards do exist, tracking and copying what they do is not the point, and is also not sustainable.

Openfolio exists to shed light on what typical investors do correctly, i.e. have a balance of stocks and funds, are sufficiently diversified, don’t trade in and out too much or get nervous when the market moves. By showing how people compare to the average based on clear metrics backed by real portfolio data from the community, we can make it easier to “get it”, i.e. this is what investing is about. It’s not about speculation, or trying to beat the market, often times it’s about deciding on a reasonable core portfolio and maybe understanding some themes (e.g. what are high dividends, diversifying into international and emerging markets), and then remembering to re-invest.

What’s next in the pipeline? Where are you taking the business?

Today, our sole focus is to create a platform that is useful for anyone that has investments, and foster a vibrant, engaged community. This is fun, exciting, and keeps us busy. Tomorrow? Actionable information and advice, backed by community driven data, which may be delivered through a subscription model or integrated into a service to help users understand and choose from different investing services. Having said that, our core product will always be a free.