Opinions on Etoro and the like

SkyandSun

Hi all,

I have been considering 'taking a punt' on a site like Etoro.com, where you can potentially make gains (or losses) on the foreign exchange market.

I would only invest a small amount, something I wouldn't be devastated by if I lost, as an experiment.

However, I was wondering if others had feedback or recommendations for a good Forex site - something about etoro and its contemporaries makes me think 'scam'. The way there are quite a few negative reviews balanaced by overwhelmingly positive ones make me think that there's some shiftiness going on - and the fact that from what I can tell, the process for withdrawing any money is convoluted (for instance, in the small print it says that you can only withdraw up to your original deposited amount, which surely defeats the purpose ??)

Is there anyone - ideally with a post history here, haha - who can recommend or give advice in this area?

Thanks. Hope this is the right forum for this question.

John1993_2

SkyandSun wrote: »

I have been considering 'taking a punt'...

...I would only invest a small amount, something I wouldn't be devastated by if I lost, as an experiment.

I have no idea if the site is legitimate, but your language above makes no sense. You don't "invest" in a gambling site like this, any more than you "invest" in a bet on the football, or a bet in which raindrop gets to the bottom of the window first.

Is there a reason why you'd want to gamble on Forex, a world where people are paid billions a year to trade with trillions of dollars, rather than, say, the dogs, where you can at least see which one takes the boggest dump before the off, which lets you think that you have an edge?

bowlhead99

I use spreadbetting sites such as IG.com where you can bet/invest (call it what you like, it can complement a broader investment strategy) on fx rates, interest rates, indexes, gold prices, domestic and international share prices etc including options.

They are a legitimate UK stock exchange listed company which has existed for years. Their spread between buy/sell rates on the various currency pairs are probably not as tight as the most specialist dedicated currency market trading websites but are not outrageous if you are looking to occasionally trade broader directional movements rather than second by second movements in the last 0.0001 of a quoted rates. Also, for a larger spread you can bet 'controlled risk' with guaranteed stops and ensure you don't make a loss greater than what you intended.

Having said IG are perhaps not the cheapest, todays USD/GBP spread at IG is 1.55258 - 1.55268 as I type this. On the screenshot on etoro's front page, which is of course not live, just an example, it is 1.5812 - 1.5818. So IG are taking one pip in the fourth decimal place, while etoro are taking six. Similar for other currencies. So unless they are offering you something very special for their cut, you can see that it is an expensive house for you to be buying and selling in.

Over the last couple of years I have made more than I have lost on currency trades, particularly GBP/USD but I have a particular interest in these markets, having formerly had a USD salary with ties back to the UK and now based in the UK with some investments and cash and expenses in USD. I will occasionally take a position to protect the value of one against the other (so a loss is cancelled out by a gain on my cash balances or investments, or vice versa) or just attempt to 'win' a bit on the side based on my perceptions of the underlying economics.

I have never gone to a random currency broker or a 'social investment network' like etoro and given them cash to make trades for me or copied the trades allegedly being made by my 'favourite traders'

I mean it might be fun, but having flicked to the Etoro site briefly I immediately take issue with their front page slogan "From now on, you don’t need to be a pro to trade like one."

The idea that someone can trade like a pro by copying one (with some delay) is true to an extent but as the market is made up of many participants at a point in time, and every trade has to have two people on either side of it with opposing views, and the vast majority of market participants are professionals, it can only be pure luck that helps you follow a winning 'pro' rather than a losing 'pro' for a particular transaction.

If you are following other people's advice rather than calling on your own experience you are not at all trading like a pro, unless you are just following a set of moving averages which is what many of them do and you could do for yourself very easily, though there is no guarantee of success.

One final thought, I see your joke about wanting to hear from people with lots of posts rather than newbie spammers... Now a couple of us have 'been nice to newbies' such as yourself with a low post count I really hope you will return the favour of being nice, and not start talking about how etoro is working out well and giving us the 'refer friends and earn $100' links once your newbie posting restrictions are lifted

Hope this helps.

sorcerer

I have used Etoro, and I won't be again. First off it's easy to put money in, but not so easy to get money out. They make you jump through hoops to do it.

Most of the "winners" in the so called "expert" take far too many risks and eventually loss all of theirs and yours money. Be very carefull at picking somebody who looks like they make a lot of money.

Another problems is that you could loss all of your money on a bet, and the person you have chosen to follow only loses a fraction, so their risk can be too high for the amount of money put in.

I would suggest it you want to do FX trading learning how to do it yourself and ignore the "experts" on Etoro.

IronWolf

I don't know of that site, so wont comment, but I would always advise going with a reputable broker.

I use SaxoBank which has forex trading as well as CFDs of the currency futures.

But unless you really know what you're doing you will lose all your money. Better off going to the casino and playing blackjack.

JohnRo

I'd advise leaving forex trading well alone, it's a hiding to nothing on retail platforms for all but a tiny, tiny dedicated few. You're on the wrong side of the screen from the start.

I spent the best part of ten years on and off making bits here and there and then losing them again with nothing much to show for it all. Thankfully I've had the self discipline to set a limit and stick to it no matter what, so a small amount lost and no harm done but the enthusiasm and "fun" soon turned to tedium and frustration for me.

A road to riches it definitely isn't. I did gain some insight into my own greed and attitude to money and risk though. Holding on to losing positions too long and closing winning positions too soon, then if you think that's easily fixed, also closing losing positions too soon and holding on to winning positions for too long.

It's a mugs game imho unless you absolutely know what you're doing and I'm not convinced anyone anywhere really does. The secret if there is one, is to stop losses and let gains run but that's so much easier to say than do that it doesn't really mean anything.

SkyandSun

bowlhead99 wrote: »

One final thought, I see your joke about wanting to hear from people with lots of posts rather than newbie spammers... Now a couple of us have 'been nice to newbies' such as yourself with a low post count I really hope you will return the favour of being nice, and not start talking about how etoro is working out well and giving us the 'refer friends and earn $100' links once your newbie posting restrictions are lifted

Hope this helps.

thanks - the comment about wanting to hear from 'experienced' posters was more about reducing the risk of having a paid shill reply: reading on other forums about etoro, there's usually a new user who posts how great the site is before disappearing, which looks very suspicious to me! Same for reviews online of the same site.

And thanks everyone for your comments. I am looking about for something that could potentially make a quick return on an investment, but I guess I also want it to be sensible, which perhaps are mutually exclusive requirements.

bowlhead99

SkyandSun wrote: »

I am looking about for something that could potentially make a quick return on an investment, but I guess I also want it to be sensible, which perhaps are mutually exclusive requirements.

Different people will have different interpretations of what classes of investments are 'sensible' to them.

It is completely possible to make a quick return on various investments, but if your criteria is for a particular type of return (i.e. positive rather than negative) then you need patience.

Otherwise if it were easy we would all be doing it.

SkyandSun

bowlhead99 wrote: »

Different people will have different interpretations of what classes of investments are 'sensible' to them.

It is completely possible to make a quick return on various investments, but if your criteria is for a particular type of return (i.e. positive rather than negative) then you need patience.

Otherwise if it were easy we would all be doing it.

I agree. I believe I am bright and am willing to put the work in figuring things out, spotting patterns, taking educated risks, and so on - so was exploring the idea of whether the FX market was something I could learn about and start to invest in when I felt confident enough.

Are there any other things people here would recommend? As I say, I am willing and able to do my homework on something, but I guess I'm trying to work out what might be best for me to look at.

JohnRo

SkyandSun wrote: »

...spotting patterns, taking educated risks, and so on

There aren't any patterns on which you can take those educated risks that amount to anything more than guesses. That's the real problem. The only control you have is deciding when to get out of the positions you hold open and that's got very little to do with what's happening on the screen in front of you and a whole lot to do with what's going on in your head at the time and what you believe is happening.

You'll need a hefty account balance and cast iron discipline to trade small on margin and be able to ride out and weather short term fluctuations that go against you before they get back to break even or where you wanted it. There's no telling when it'll get there though and all the time you're waiting you'll be paying rollovers and looking at big fat paper losses. If you close out they're real losses. It's not always like that but it often is.

"The market can stay irrational longer than you can stay solvent." Keynes

really is worth trying to appreciate the depth of meaning in that phrase because that's where the frustration with leveraged forex and margin trading lies. There's all sorts of popular throw away quotes and one liners relating to trading and markets but they're all of great significance when understood.

I'll bet that reading these replies here where people are trying to warn you off is probably having the opposite effect, so I'd say give it a go and learn the hard way but you absolutely need to set a limit and then stop when it's gone. Then you can at least say tried that, got the T-shirt.

Ark_Welder

SkyandSun wrote: »

I agree. I believe I am bright and am willing to put the work in figuring things out, spotting patterns, taking educated risks, and so on - so was exploring the idea of whether the FX market was something I could learn about and start to invest in when I felt confident enough.

Are there any other things people here would recommend? As I say, I am willing and able to do my homework on something, but I guess I'm trying to work out what might be best for me to look at.

For a bit of perspective. The World Bank gives the total size of UK stock markets at the end of 2012 as just over $3 trillion. Wikipedia is saying that in 2010, the average daily turnover in foreign exchange transactions was just under $4 trillion.

The question that you should ask of yourself is, what will you be able to spot that will put you ahead of the game which the institutions that you're up against won't spot before you do.