eToro launches CopyTrader

eToro continues to innovate with CopyTrader, a new function in the OpenBook social networking platform. CopyTrader allows a user to follow other successful traders on the eToro social network. This is a bold move by eToro — they are one of the first brokers in my knowledge to allow such a feature. Social networking is here to stay and those who embrace it will come out ahead. There are several players who are leading the social networking/trade following aspect in the forex markets— we’ll analyze 3 of them today for our readers.

There are a couple of reasons CopyTrader stands out. eToro provides the social networking platform for its own brokerage clients and, as a result, has much greater control over execution. According to Yoni Assia, CEO of eToro, “We have systems in place that are committed to minimal slippage and should give the investor the same P/L as the original trader.” From my own personal experience of talking to countless traders, it is quite common for a system / manager to show profitable results in their live account, but not in the investor’s account as a result of slippage, spreads and volatility. Currensee for instance is an Introducing Broker amongst other things and relies on multiple brokers as clearing partners. When an investor follows another trader using CopyTrader, he/she can be assured there is another human being on the other end placing trades and not an automated system. Assia adds, “Investors using our system can have a real person trading their funds. They can leave comments or see comments left by other investors for any particular trader. This makes the trader more responsible for their trades and creates an environment of trust.” Lastly, eToro has decided not to charge any fees for investors using their CopyTrader function. Investors only pay the spread during execution and no other management or performance fees. eToro is basically offering a managed account program without the high fees.

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* eToro may have systems in place to minimize slippage however eToro is a market maker and cannot guarantee better slippage than other platforms.

** Execution subject to slippage, broker spreads, volatility or other market conditions.

Client retention is a big issue in the forex industry; I see this latest move by eToro creating a win-win situation for the company and its clients. I know other players are not far behind in launching similar social networks. eToro will need to capitalize on this edge as quickly as they can.

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