eToro Makes Forex Trade Child's Play(techcrunch.com)
techcrunch.com
eToro Makes Forex Trade Child's Play
http://www.techcrunch.com/2007/11/27/etoro-makes-forex-trade-childs-play/
8 comments
I don't think it's stupid (maybe it is if you only thought of it as a finance trading tool) - but like TechCrunch pointed out it's pretty much online gambling in disguise, but legal even in the US (at least that's my guess)
What is the target market for this service? If it's the same market as Draftmix, I don't think this site will be able to attract enough gamblers.
given the appeal of day trading and gambling to a certain portion of the population, I'd wait and see
I think when the US gov starts stomping harder on gambling companies that it deems illegal (which it already has to a degree - even with bad repercussions from the WTC), we'll see what happens with this company
I think when the US gov starts stomping harder on gambling companies that it deems illegal (which it already has to a degree - even with bad repercussions from the WTC), we'll see what happens with this company
I think one of their major trade fairs is held in Las Vegas. They definitely do not call it gambling, but they target the gambler profile.
OK. My title was wrong -- what these people are attempting is certainly very clever and the profit margins are such that they can't really lose.
I agree, although playing online poker is kinda fun.
Watching a tug of war between 2 currencies? Doesn't really have the same appeal.
I think you may have missed the point. Regardless of what the CEO says, eToro is just a run-around on anti-gaming laws; as such it's not really supposed to be a legitimate tool for forex trading.
Far from stupid, I'd say this is actually quite clever. What's more, it's no less moral than betting on fantasy football.
Far from stupid, I'd say this is actually quite clever. What's more, it's no less moral than betting on fantasy football.
OK, I understand that there are many people that like gambling for gambling's sake. I played online poker during its peak and I enjoy draftmix now. I do some sports betting from time to time. There are certainly many people out there who stopped playing poker online after Bush messed it up and are looking for a gambling fix.
I think all of those people are going to keep looking and not even blink an eye at this. When you're betting on which currency goes up or down during a one hour period, there is not even the feeling that skill is involved, online sports betting and poker and fantasy sports.
I just don't think there is a market of people that would prefer to gamble on racing currencies instead of sports. Who is this market? People that have always wanted to day trade but have never tried?
I think all of those people are going to keep looking and not even blink an eye at this. When you're betting on which currency goes up or down during a one hour period, there is not even the feeling that skill is involved, online sports betting and poker and fantasy sports.
I just don't think there is a market of people that would prefer to gamble on racing currencies instead of sports. Who is this market? People that have always wanted to day trade but have never tried?
"there is not even the feeling that skill is involved"
Well, the 'skill' in BJ is pretty thin, it's thinner in craps, almost nonexistent in roulette (if I recall correctly, all bets are equivalent in EV, except for one, which is worse), and completely absent in lotteries and numbers. And that's not to mention "Casino War". People will create their own feeling of skill based on magical thinking. After all, none of those games seem to be lacking for players.
I think this is brilliant; forex outcomes are basically random (yes, they are - if you could predict them, you'd be too busy counting your yachts to be here) so this system uses them as a RNG for games of chance.
Which people love. Wish I'd thought of it.
Well, the 'skill' in BJ is pretty thin, it's thinner in craps, almost nonexistent in roulette (if I recall correctly, all bets are equivalent in EV, except for one, which is worse), and completely absent in lotteries and numbers. And that's not to mention "Casino War". People will create their own feeling of skill based on magical thinking. After all, none of those games seem to be lacking for players.
I think this is brilliant; forex outcomes are basically random (yes, they are - if you could predict them, you'd be too busy counting your yachts to be here) so this system uses them as a RNG for games of chance.
Which people love. Wish I'd thought of it.
We'll wait and see, I guess. Certainly it is a clever loophole and the gambling business is a good one.
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This reminds me of 3D Mail Box, the aircraft simulator meets email inbox.
http://www.techcrunch.com/2007/10/24/worlds-worst-email-app-...
The visual representation of data, huh. These people must make Edward Tufte cry.
http://www.techcrunch.com/2007/10/24/worlds-worst-email-app-...
The visual representation of data, huh. These people must make Edward Tufte cry.
The pets.com of online trading.
Edit: The reason conventional trading software is complicated is because traders want every tool and advantage they can get if it's their own money they're risking (they also probably like the illusion that they're making rational decisions). I don't get this little PlaySkool dealie that made TechCrunch.
Edit: The reason conventional trading software is complicated is because traders want every tool and advantage they can get if it's their own money they're risking (they also probably like the illusion that they're making rational decisions). I don't get this little PlaySkool dealie that made TechCrunch.
Edit 2: Joe Average jumping in on trading is the classic sign an equity bubble is going to end.
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I think it's somewhat dishonest, but clever in it's dishonesty.
The way I read the site, it's basically acting as a gambling site, giving minigames that people can bet on, and luring the gambling crowd into the game, but they're using a loophole in the US rules against gambling.
It reminds me a little of DraftMix in that way.
The way I read the site, it's basically acting as a gambling site, giving minigames that people can bet on, and luring the gambling crowd into the game, but they're using a loophole in the US rules against gambling.
It reminds me a little of DraftMix in that way.
Seems pretty damn brilliant to me. Gamblers LOVE Forex. I can't even count the number of excellent poker players I know who pissed it all away either there or day trading.
I agree with your assertion that skill probably has little or no effect on that game in the short run (and hell, maybe not even in the long) but people tend to credit skill wherever they win and luck wherever they lose. Anything with sufficient volatility will satisfy people's desire for both.
That said, I don't think they're in the same market we are, and I don't think they'll be too successful. Forex is far too esoteric for the common man, even with nice little animations of foot races, and probably too unpredictable for most of the rest. I don't know how many people read The Economist, but their target audience is some subset of that.
I agree with your assertion that skill probably has little or no effect on that game in the short run (and hell, maybe not even in the long) but people tend to credit skill wherever they win and luck wherever they lose. Anything with sufficient volatility will satisfy people's desire for both.
That said, I don't think they're in the same market we are, and I don't think they'll be too successful. Forex is far too esoteric for the common man, even with nice little animations of foot races, and probably too unpredictable for most of the rest. I don't know how many people read The Economist, but their target audience is some subset of that.
It's in no way a gambling site from what I read on techcrunch. Sounds like they just take forex quotes and instead of displaying them in a graph or with tickers, they use competitive games and you get to watch your currency duke it out with the other currencies.
The fishy part is them leaving off bid/ask spreads off the site. Couldn't find them while taking a quick glance.
They also use 400:1 leverage meaning for $25 you can trade $10000. You're wiped out in a 0.25% price move. Looking at the yen today http://finance.yahoo.com/q/bc?s=USDJPY=X&t=1d long or short anyone would be wiped out with that kind of margin.
The fishy part is them leaving off bid/ask spreads off the site. Couldn't find them while taking a quick glance.
They also use 400:1 leverage meaning for $25 you can trade $10000. You're wiped out in a 0.25% price move. Looking at the yen today http://finance.yahoo.com/q/bc?s=USDJPY=X&t=1d long or short anyone would be wiped out with that kind of margin.
Crikey, 400:1 leverage!? I've never heard of such a thing before. Is there anywhere else where a regular guy can get this kind of leverage?
(As to the term 'gambling', I think people are using the broad definition by which day-trading and other such financial transactions are termed a 'gamble' rather than a 'very risky, poorly informed financial investment on such a short time-scale that one can't possibly make informed predictions of price movement'. Similarly, I believe that poker is often legal because it's a 'game of skill', but that doesn't mean it's not also a gamble.)
(As to the term 'gambling', I think people are using the broad definition by which day-trading and other such financial transactions are termed a 'gamble' rather than a 'very risky, poorly informed financial investment on such a short time-scale that one can't possibly make informed predictions of price movement'. Similarly, I believe that poker is often legal because it's a 'game of skill', but that doesn't mean it's not also a gamble.)
Most online forex brokers push people into 200:1 using a "mini" account that trades in lots of 10K. Normal size accounts trade in lots of 100K. I'm guessing they have the little ones to get some people making big returns quickly and then bump them up to larger and safer accounts.
I remember reading something in Jack Schwager's Trading Wizards book where someone talked about successful hedge funds not using more than 5-10x leverage.
I remember reading something in Jack Schwager's Trading Wizards book where someone talked about successful hedge funds not using more than 5-10x leverage.
"I remember reading something in Jack Schwager's Trading Wizards book where someone talked about successful hedge funds not using more than 5-10x leverage."
Leverage doesn't mean much if you don't know the beta (a measure of risk) of the security. I think for most hedge funds the amount of leverage varies wildly based on what's being traded, so it's tough to apply a single rule of thumb to an entire market.
Leverage doesn't mean much if you don't know the beta (a measure of risk) of the security. I think for most hedge funds the amount of leverage varies wildly based on what's being traded, so it's tough to apply a single rule of thumb to an entire market.
You can get 400:1 leverage at most "retail" forex brokers. You will have fewer options if you want _lower_ leverage, not higher. Something like 90% or more of traders lose all of their money, and the market maker gets to keep all of it, so they have all the interest in offering insanely high leverage. You are practically guaranteed to wipe out your account at 400:1.
Run currencies in a marathon? The Yen is represented by a sumo wrestler? Bizarre.