With over 5 million registered members from 140 different countries, leading social trading network eToro shares insight with Finance Magnates from its CEO Yonia Assia, following the market Volatility from last week’s Brexit vote in the UK.
The majority of copy traders on eToro were apparently profitable in the immediate aftermath of the vote, even though several trillions of dollars of wealth were wiped off global indices.
The profitable trades were described as a result of traders copying investors in the eToro network who were positioning their portfolios with bets into perceived safe-haven assets leading into Brexit and which netted profitable trade last Friday because of the UK's vote result.
Finance Magnates also reported about another broker whose clients reportedly netted a profit from playing the Brexit vote correctly, in a related post about Saxo Bank yesterday.
Overall the copy portfolio on eToro returned +2.41% on Friday.
Copy portfolio up 2.4% Friday
For eToro, traders had followed a number of investors that sought safe-haven bets in the US dollar and gold leading into the referendum.
Yoni Assia
CEO Yonia Assia said regarding the activity levels on eToro following the result: “Overall the copy portfolio on eToro returned +2.41% on Friday. Of our copied traders, 60% locked in profits that day. This is in stark contrast to the performance of big investment funds out there, with many reporting double-digit losses in a day when over $2 trillion was wiped off global stock markets.”
Traders anticipated leave vote
A majority of traders surveyed at Etoro anticipated the leave campaign to win, as explained by Mr. Assia.
"Many traders on eToro appeared to have moved money away from UK stocks and Sterling into more defensive assets such as gold and the US dollar ahead of Friday, in anticipation of a Leave vote. In fact, a survey conducted on our platform prior to the referendum shows that 52% of eToro traders predicted the UK would vote to leave the EU,” explained Mr. Assia in the statement.
Defensive assets sought
As explained in additional comments from the firms CEO, traders had sought more protective assets in anticipation of the UK voting to leave the EU on Thursday and leading into Friday's trading session.
"Many traders on eToro appeared to have moved money away from UK stocks and Sterling into more defensive assets such as gold and the US dollar ahead of Friday, in anticipation of a Leave vote. In fact, a survey conducted on our platform prior to the referendum shows that 52% of eToro traders predicted the UK would vote to leave the EU,” noted Mr. Assia in the statement.
He added: "It is clear too that many novice traders are seeing the market fallout as an opportunity to find gains. A record level of new traders joined our community on Thursday and Friday, the majority of whom started trading or copying immediately."
Mr. Assia concluded: "During the referendum week, copy AUM on eToro grew at nearly triple the average weekly growth rate. This is further evidence that the event has prompted more people to take interest in the financial market and the opportunities it could bring."
