RETAIL e-FX CLIENT
take the knowledge of other traders that are more experienced and trade with them, either in an automated or semi automated fashion,” he says. His view is given some added weight by the Aite Group research, which found evidence to suggest that Forex social investing firms were producing a level of investor profitability of at least 50 per cent, compared with 30 per cent among US ‘self-directed traders’.
Zulutrade
traditional and first-time investors. Half of the firms surveyed in the Aite Group research reported triple- digit percentage increases in live account holders.
Impact of social investing
Lemont of Currensee believes social investing will significantly boost the size – and transparency – of the Retail Forex market. “Automated trading systems could dramatically increase the volumes in the Forex markets with the Forex brokers. Services like Currensee clearly reveal who the good brokers are – the honest brokers – and who are the ones who aren’t playing fair or in the best interest of their customers. We only work with the top brokers who give the best spreads,” says Lemont.
Nabat of Tradency says the growth of the social investment market will be bolstered by the positive impact the trader leader or mirror model can have on the returns of ordinary investors. He believes that the social investing model will become common place on Retail trading platform offering trading in a variety of asset classes – not just Forex – within the next three to five years. Tough he feels that Forex is particularly suited to this type of investing. “Forex is the only asset that is active 24 hours a day, six days a week. Tere are infinitive opportunities to trade. Tere is no other asset so liquid,” he says. Nabat believes that until the advent of social investing, Retail Forex traders were in a sense “flying alone”. “Now users can
176 | october 2011 e-FOREX
“What this whole industry is about is a way of lowering regulatory barriers that have made it very hard for good investing strategies and brains to get discovered,” says Klein of C2.
While research from Aite Group suggests that the social investing Forex market is being driven by a younger less experienced demographic of traders, the market is not homogenous. Klein suggests that C2 – which according to Aite Group research is experiencing a 500 per cent annual growth in live accounts – is attracting more sophisticated Retail Forex investors. “We appeal to a certain demographic. People who know what a Sharpe Ratio is. We are built for programmers and people that want to do black box trading. We have APIs for them. We have interfaces to popular back-testing solutions such as TradeStation or NinjaTrader,” says Klein.
Meanwhile, Aite Group research has found that eToro is attracting a younger audience than those courted by traditional banks and brokerage firms. eToro’s customer base is typically male, aged between 25 and 44.
FX Social Networks: Key Operating Statistics - July 2011 Estimates
Source: Aite Group
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