Currency broker FxPro is set to become the latest investment platform to dive into the world of “social trading”, in a bid to lure investors who are immersed in Twitter and other forms of social media

August 11, 2013 5:09 pm

Currency broker FxPro set to enter world of social trading

By Vanessa Kortekaas

Currency broker FxPro is set to become the latest investment platform to dive into the world of “social trading”, in a bid to lure investors who are immersed in Twitter and other forms of social media . The online foreign exchange broker is planning to launch a “Super Trader” platform this autumn featuring about 200 forex traders, whose positions can be copied by other FxPro traders. “The whole concept is to give clients access to different [trading] strategies in order to diversify their risk,” said Charalambos Psimolophitis, chief executive of the Cyprus-based platform.He said traders would be picked and vetted by FxPro, based on factors such as their trading techniques, how profitable they have been, and how risky their trades were.

Fellow traders will be able to sort through the so-called strategy providers, according to their risk levels and how many followers they accrue.

“The client will be able to see the risk parameters of the strategy,” said Mr Psimolophitis.

FxPro said it was developing a formula to grade the strategy providers’ risk – which would probably rank their risk level from 1-5, with 5 being the most risky – and would provide a live calculator to reflect the changing risk level of their trades.

The move follows the launch of the CopyTrader function by eToro, which enables users to duplicate the trading positions of successful traders, by placing a percentage of their deposited funds in the same trades.

eToro, a Cyprus-based trading platform and network, has already attracted about 3m members and said almost two-thirds of its users copy other traders’ investments through CopyTrader.

FxPro, which is regulated by the Financial Conduct Authority in the UK and has about 180,000 clients globally, said its Super Trader platform would “open the door for people who just want to allocate money to foreign exchange as an asset class”.

Followers of the strategy providers will be able to set stop losses, which are triggers that can close a trade if a user loses a certain percentage of their funds, for example.

Strategy providers will also receive commission from followers’ trades, but FxPro said it had yet to decide how much.

The growth of social trading has prompted many spread betting and forex providers to offer message boards and other ways for their traders to interact.

However, some trading platforms have also expressed doubt about encouraging clients to follow each other’s trades.

“We are quite wary about the whole social trading subject – particularly where it’s possible for an individual to follow the trading [decisions] of another individual,” said Tim Howkins, chief executive of UK-based spread betting operator IG Group.

“I think there are moral hazards in allowing individuals to follow other individuals [when trading],” he added.