eToro Adds Stocks on its Social Trading Network as Operations Evolve
- Evolving its operations, social trading broker, eToro has announced the launch of stock trading on its network, which adds the asset to its existing forex, commodities, and indices offerings. Forex Magnates speaks to firm to learn more.
Evolving its operations, social trading broker, eToro has announced the launch of stock trading on its network, which adds the asset to its existing Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Read this Term, commodities, and indices offerings. Providing users flexibility, stocks will be available for purchase based on fractional dollar amounts, rather than based on shares. As a result, customers will have the ability to invest in equal amounts among stocks whose shares have difference values. In its initial launch, eToro has made 60 stocks available for trading, of which virtually all of them are large US firms. The equity offering will also be different from other assets as they aren't tradable intraday, with buying and selling transacted once a day; thus comparing the investing in mutual funds.
The stock launch is part of a series of steady activity from the broker, which last month secured licensing from the UK FCA, as well as changing the broker partner for their US based IB operations. Learning more about the current state of affairs at eToro, Forex Magnates spoke with CEO Yoni Assia as well as other company representatives earlier this week. In regards to the UK, we learned that eToro is in the midst of moving its compliance and dealing operations to their new London office, as they have become an FCA regulated firm. Assia explained to us that in addition to logistics, working with the FCA also has led to increased transparency with the firm reporting more information about account and performance data to both regulators and to third parties. He added that in addition to dealing and compliance, eToro is in the midst of building a research team in London that will focus on analyzing the profitability of users and creating tools to help customers with their following.
Transparent Crowdsourced Investing
In launching stocks, eToro hopes to create a system where investors will be able to base their trading opinions on the social sentiment of users towards different companies. Assia envisioned that by viewing ownership levels and analyzing the network’s opinions versus different stock, investors will have an understanding of the demand for any given company’s shares. He explained that “social data is out there and in my opinion is an important data point to look at. For example, if you have 10,000 people who own McDonalds stock, they are the evangelists and very connected to the brand. They represent a global and diversified community from around the world, and their opinions about McDonalds the company is important. Even though they have a bias because they own the stock, being large enough of a community, they can affect the company.” Assia added that “transparent decision making provides a clearer understanding of the market.”
This theory was echoed by Nadav Avidan, PR and Communications Manager at eToro, who explained that when the broker was internally testing the product, he saw cases where users felt uncomfortable owning stocks that they had a negative opinion of the company, and wouldn’t want their ownership to be public on the network. Avidan brought an example that “we were testing buying and selling stocks, and I realized that if I didn’t believe in the company, I wouldn’t want to own the stock and have that broadcasted on the social network.” As a result, eToro believes that combining investor sentiment with social transparency will provide a clearer opinion of how positive or negative the market is towards a company. Using this information, investors will be able to gauge future demand for the stock, and apply that knowledge in their trading.
When discussing crowdsourced data, Assia admitted that it is presently far from an exact science as he said “What is predicting what? Is the network following the trend, or leading it”. However, he added that the data is there and it comes down to understanding how to analyze it. He gave an example of negativity on their social network towards Apple after the iPhone 5 was announced, which followed a long downtrend in Apple shares versus gains in Google.
US Expansion?
Overall, while integrating stocks within the social network, could offer new tools for users to become better traders. Specifically among stocks, which are more often a longer term holding than forex and commodities, the product could become an appealing option for investors. Looking ahead, the question we have is whether eToro’s social stock network can reach the US? Unlike other countries around the globe, trading is the US is dominated by Equities Equities Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling partial ownership in the company.There are many reasons for individuals investing in equities. In the United States for example, equity markets are amongst the largest in terms of transactions, investors, and turnover.Why Invest in Equities?Overall, the appeal of equities the potential for high returns. Most portfolios feature some portion of equity exposure for growth.In terms of investing, younger individuals can afford to take on higher levels of equity exposure, i.e. risk. Consequently, these people have more stocks in their portfolio because of their potential for returns over time. However, as you are planning to retire, equity exposure becomes more of a risk.This why many investors or holders of retirement accounts transition at least part of their investments from stocks to bonds or fixed-income as they get older.Equity holders can also benefit through dividends, which differ notably from capital gains or price differences in stocks you have purchased.Dividends reflect periodic payments made from a company to its shareholders. They’re taxed like long-term capital gains, which vary by country. Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling partial ownership in the company.There are many reasons for individuals investing in equities. In the United States for example, equity markets are amongst the largest in terms of transactions, investors, and turnover.Why Invest in Equities?Overall, the appeal of equities the potential for high returns. Most portfolios feature some portion of equity exposure for growth.In terms of investing, younger individuals can afford to take on higher levels of equity exposure, i.e. risk. Consequently, these people have more stocks in their portfolio because of their potential for returns over time. However, as you are planning to retire, equity exposure becomes more of a risk.This why many investors or holders of retirement accounts transition at least part of their investments from stocks to bonds or fixed-income as they get older.Equity holders can also benefit through dividends, which differ notably from capital gains or price differences in stocks you have purchased.Dividends reflect periodic payments made from a company to its shareholders. They’re taxed like long-term capital gains, which vary by country. Read this Term, with forex interest barely hitting the radar of average investors. However, other than the advent of discount online brokers and the emergence of ETFs as a replacement for mutual funds, there hasn’t much in terms of disruptive innovation in the sector over the past 20 years.
But, that has begun to slowly change as firms have begun to evaluate how they can use emerging trends in technology to create changes. Examples include StockTwits merging of social networks and stock forums into one, as well as Wealthfront’s new approach to long term asset management. As a result, the country could be ripe for eToro to introduce their version of social stock trading. However, without the ability to issue CFDs which are banned in the US, hurdles remain high on efficient ways to implement such a product.
Evolving its operations, social trading broker, eToro has announced the launch of stock trading on its network, which adds the asset to its existing Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Read this Term, commodities, and indices offerings. Providing users flexibility, stocks will be available for purchase based on fractional dollar amounts, rather than based on shares. As a result, customers will have the ability to invest in equal amounts among stocks whose shares have difference values. In its initial launch, eToro has made 60 stocks available for trading, of which virtually all of them are large US firms. The equity offering will also be different from other assets as they aren't tradable intraday, with buying and selling transacted once a day; thus comparing the investing in mutual funds.
The stock launch is part of a series of steady activity from the broker, which last month secured licensing from the UK FCA, as well as changing the broker partner for their US based IB operations. Learning more about the current state of affairs at eToro, Forex Magnates spoke with CEO Yoni Assia as well as other company representatives earlier this week. In regards to the UK, we learned that eToro is in the midst of moving its compliance and dealing operations to their new London office, as they have become an FCA regulated firm. Assia explained to us that in addition to logistics, working with the FCA also has led to increased transparency with the firm reporting more information about account and performance data to both regulators and to third parties. He added that in addition to dealing and compliance, eToro is in the midst of building a research team in London that will focus on analyzing the profitability of users and creating tools to help customers with their following.
Transparent Crowdsourced Investing
In launching stocks, eToro hopes to create a system where investors will be able to base their trading opinions on the social sentiment of users towards different companies. Assia envisioned that by viewing ownership levels and analyzing the network’s opinions versus different stock, investors will have an understanding of the demand for any given company’s shares. He explained that “social data is out there and in my opinion is an important data point to look at. For example, if you have 10,000 people who own McDonalds stock, they are the evangelists and very connected to the brand. They represent a global and diversified community from around the world, and their opinions about McDonalds the company is important. Even though they have a bias because they own the stock, being large enough of a community, they can affect the company.” Assia added that “transparent decision making provides a clearer understanding of the market.”
This theory was echoed by Nadav Avidan, PR and Communications Manager at eToro, who explained that when the broker was internally testing the product, he saw cases where users felt uncomfortable owning stocks that they had a negative opinion of the company, and wouldn’t want their ownership to be public on the network. Avidan brought an example that “we were testing buying and selling stocks, and I realized that if I didn’t believe in the company, I wouldn’t want to own the stock and have that broadcasted on the social network.” As a result, eToro believes that combining investor sentiment with social transparency will provide a clearer opinion of how positive or negative the market is towards a company. Using this information, investors will be able to gauge future demand for the stock, and apply that knowledge in their trading.
When discussing crowdsourced data, Assia admitted that it is presently far from an exact science as he said “What is predicting what? Is the network following the trend, or leading it”. However, he added that the data is there and it comes down to understanding how to analyze it. He gave an example of negativity on their social network towards Apple after the iPhone 5 was announced, which followed a long downtrend in Apple shares versus gains in Google.
US Expansion?
Overall, while integrating stocks within the social network, could offer new tools for users to become better traders. Specifically among stocks, which are more often a longer term holding than forex and commodities, the product could become an appealing option for investors. Looking ahead, the question we have is whether eToro’s social stock network can reach the US? Unlike other countries around the globe, trading is the US is dominated by Equities Equities Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling partial ownership in the company.There are many reasons for individuals investing in equities. In the United States for example, equity markets are amongst the largest in terms of transactions, investors, and turnover.Why Invest in Equities?Overall, the appeal of equities the potential for high returns. Most portfolios feature some portion of equity exposure for growth.In terms of investing, younger individuals can afford to take on higher levels of equity exposure, i.e. risk. Consequently, these people have more stocks in their portfolio because of their potential for returns over time. However, as you are planning to retire, equity exposure becomes more of a risk.This why many investors or holders of retirement accounts transition at least part of their investments from stocks to bonds or fixed-income as they get older.Equity holders can also benefit through dividends, which differ notably from capital gains or price differences in stocks you have purchased.Dividends reflect periodic payments made from a company to its shareholders. They’re taxed like long-term capital gains, which vary by country. Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling partial ownership in the company.There are many reasons for individuals investing in equities. In the United States for example, equity markets are amongst the largest in terms of transactions, investors, and turnover.Why Invest in Equities?Overall, the appeal of equities the potential for high returns. Most portfolios feature some portion of equity exposure for growth.In terms of investing, younger individuals can afford to take on higher levels of equity exposure, i.e. risk. Consequently, these people have more stocks in their portfolio because of their potential for returns over time. However, as you are planning to retire, equity exposure becomes more of a risk.This why many investors or holders of retirement accounts transition at least part of their investments from stocks to bonds or fixed-income as they get older.Equity holders can also benefit through dividends, which differ notably from capital gains or price differences in stocks you have purchased.Dividends reflect periodic payments made from a company to its shareholders. They’re taxed like long-term capital gains, which vary by country. Read this Term, with forex interest barely hitting the radar of average investors. However, other than the advent of discount online brokers and the emergence of ETFs as a replacement for mutual funds, there hasn’t much in terms of disruptive innovation in the sector over the past 20 years.
But, that has begun to slowly change as firms have begun to evaluate how they can use emerging trends in technology to create changes. Examples include StockTwits merging of social networks and stock forums into one, as well as Wealthfront’s new approach to long term asset management. As a result, the country could be ripe for eToro to introduce their version of social stock trading. However, without the ability to issue CFDs which are banned in the US, hurdles remain high on efficient ways to implement such a product.