

eToro Makes Forex Trade Child's Play - rms
http://www.techcrunch.com/2007/11/27/etoro-makes-forex-trade-childs-play/

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chaostheory
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)

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rms
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.

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chaostheory
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

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ed
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.

~~~
rms
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?

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mxh
"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.

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rms
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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ereldon
This reminds me of 3D Mail Box, the aircraft simulator meets email inbox.

[http://www.techcrunch.com/2007/10/24/worlds-worst-email-
app-...](http://www.techcrunch.com/2007/10/24/worlds-worst-email-app-gets-
worse-aircraft-simulation-meets-inbox/)

The visual representation of data, huh. These people must make Edward Tufte
cry.

~~~
nickb
Ouch: <http://siteanalytics.compete.com/3dmailbox.com/?metric=uv>

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henning
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.

~~~
henning
Edit 2: Joe Average jumping in on trading is the classic sign an equity bubble
is going to end.

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e1ven
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.

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mattmaroon
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.

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jakewolf
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](http://finance.yahoo.com/q/bc?s=USDJPY=X&t=1d)
long or short anyone would be wiped out with that kind of margin.

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sethjohn
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.)

~~~
jakewolf
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.

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ed
"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.

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rms
Run currencies in a marathon? The Yen is represented by a sumo wrestler?
Bizarre.

