eToro raises $2.4m more in funding

eToro, the Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term broker startup, has announced that it raised $2.4 million from Social Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term in investors capital. This brings the total funding of the company to more than $10 million. eToro is one of the only brokerage 'startups' per-se as it was founded as a start-up, with institutional investors, and it relies on proprietary technology - its own platform and customized development. Most other brokerages were founded by private investors who bought existing software and small number of them, such as Oanda, Interbank FX and Gain, received investments from institutional investors a few years after the inception when their business model was proven and their finances sound.

eToro is looking to target a different segment of the market than all other brokerages - the gaming/trading segment. With its flashy and intuitive GUI and gaming-like charts and transactions it attracts mostly novice traders or traders crossing from the gaming market. It doesn't however appeal to intermediate or advanced traders. This, in my opinion, is a major problem for the company as the costs of player's acquisition (marketing costs) are only going up, eToro's player value (the potential amount of profit to the broker from a given trader) are relatively low and can be as low as $50. With a costly development and large staff to maintain this may require the company to consider some of its business models.

According to the company its traders have traded over $100 billion on eToro to date. The average transaction size, before leverage, is $50. The company, which has 1.5 million registered users, has 120 employees in Israel, New York, Australia and Cyprus.