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.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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