Research by MIT researchers on eToro trading network reveals increased ROI for guided copy trading
Researchers at the MIT today revealed the results of research on social trading behaviour within the eToro investment network, that demonstrated higher gains for financial traders that responded to copy trading recommendations. According to MIT researcher Dr. Yaniv Altshuler’s research, providing the name of a specific `guru’ to copy enabled online traders to uplift earnings by 6-10% compared with trades used without social networks and 4% when compared with unguided copying where copied gurus were selected without the benefit of a specific recommendation. This research suggests that “tuning” social trading networks by providing carefully selected copy recommendations can increase gains and boosts average returns per user, while preventing “bubbles” in the market.
Normally in social trading networks individual traders pick and choose their own traders to copy based on a number of factors including instrument traded, risk levels, gain and percent of positive returns. For this research, 6000 active traders were each provided with the opportunity to use a $20 coupon to copy a specific guru on the eToro network. Matches between targeted traders and gurus were based on an innovative algorithm designed to maximize gains throughout the trading network. Other control groups that showed much smaller trading performance increases were traders who copied gurus with the highest returns, and a group where recommended traders were randomly selected without the benefit of using the algorithm.
“Social trading is now going through a process of evolution making it more powerful than ever,” said eToro CEO, Jonathan Assia. “We are thrilled to finally have proof from a world renowned research institute like MIT Media Lab that social trading yields higher returns than individual trading. This validates our core value in which we believe that profits are linked to the wisdom of the crowds.”
eToro is the world’s largest investment network, with over 2 million registered users in over 140 countries and thousands of new accounts opened each day. eToro leads the social trading revolution through its community powered network, which enables every investor to see, follow and automatically copy the actions of other investors in real time. eToro’s mission is to open the financial markets to every individual and make them accessible through a simple, transparent and more profitable way to trade and invest online. By harnessing the wisdom of the crowds every member of eToro’s social trading network benefits from accelerated information exchange, knowledge sharing and the ability to quickly identify the best investment opportunities.
eToro’s open Guru Program allows expert and talented traders to earn wide reaching recognition and monetize their trading expertise by earning rich monthly rewards. eToro’s wide range of award-winning web-based and mobile social trading platforms appeal to every level of trading expertise, and provide an amazing investment experience that caters to the needs of the consumer investor.
Hayden Richards is the Associate Publisher, Chief Operations Officer and Co-founder of IntelligentHQ. He specialises in finance, trading, investment, and technology, with expertise in both buy-side, sell-side. Contributing and advising various global corporations, Hayden is a thought leader, researching on global regulatory subjects, digital, social media strategies and new trends for Businesses, Capital Markets and Financial Services.