FX meets Facebook, and retail trade gets transparent

Mon Jun 27, 2011 11:04am EDT
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By Naomi Tajitsu

LONDON (Reuters Life!) - Ask most market traders to share the details of their order book and you'll be lucky if they ever speak to you again.

The last thing professional traders want is for the rest of the market to know the detailed history of their trades, and the positions they currently hold.

But information sharing is becoming a valuable asset in the online retail trading world, and social network-driven trading sites are helping mainly non-professional investors get a foothold in these ultra-competitive markets.

Online and mobile trading have driven growth in retail currency trading, which accounted for up to 10 percent of the $4 trillion-a-day FX market as of 2010, Bank for International Settlements (BIS) estimates show.

Online trading websites Etoro and Currensee have applied a "Facebook meets Twitter" - like approach in which users build communities to share and discuss trades, while sites rank top players and offer the chance to duplicate the trades of the most successful peers.

Etoro says this transparency helps amateur traders learn more about the market, while its trade-copying feature allows users to combine trades to maximize their impact on the market.

"Once people share their trading activity and their trading profit, they can help to create significant wealth for the entire trading community," said Etoro CEO Jonathan Assia.

Etoro's OpenBook platform is exactly that: The profiles of its more than 1.5 million users around the world include their trading history and detailed performance breakdowns, along with "follower/following" lists.   Continued...