Finance can be weird these days. R/wallstreetbets, a no-holds-barred subreddit populated by retail investors and amateur stock-flippers fond of the Robinhood trading application, was ground zero for the orchestration of January 2021âs GameStop short squeeze. During the event, the stock price of the ailing video game retailer was sent skyrocketing to unfathomable highs, mostly for lolz and to take on established institutions. On Twitter, SpaceX CEO and Tesla Technoking Elon Musk â follower count: 59.3 million as of August 2021â has indulged in flirting with market manipulation with abandon, by tweeting not only about his own companies but cryptocurrencies big and small. His ââabsurdist posts regarding Dogecoin, a crypto-token intended as an in-joke and represented by a quizzical shiba inu pup, have become especially notorious. While it is impossible to ascertain the exact impact of Muskâs online Doge-related tomfoolery, it is a fact that the price of Dogecoin has grown from $0.005 in January 2021 to $0.31 in August.
The internet, cryptocurrencies, user-friendly trading platforms, and a pandemic-induced glut of spare time have gelled into a perfect storm that has redesigned retail trading as something that feels more like a game, and has transformed social-media friendly investors into quasi-influencers.
But this isnât a new phenomenon: Israeli trading platform eToro, which launched in 2007, has been pioneering what the industry calls âsocial tradingâ features for over a decade. Users on the platform can follow other traders, check out their performances over time and, if they are keen, copy them, by asking eToro to automatically apply the popular investorâs strategy to their own portfolio. The most copied popular investors are rewarded by eToro with perks and a monthly payment of up to 2.5 per cent of the yearly average amount of money invested by their copiers.
Who are the UKâs most popular eToro investors? Their backgrounds range from the conventional â a past in finance or consultancy â to the eclectic. You get no prize for guessing what Britainâs most copied, Jay Edward Smith â who lives in the south of England, has about 30,000 people mimicking his strategy, and is pretty bullish on cryptocurrency â used to do for a living before his life as a full-time eToro trader: he was a professional gamer and eSport organiser.
âThat experience helps with trading,â Smith says. âIf you look at games like chess, poker, strategy PC games like Dota and StarCraft, they all have this crossover with investing and trading. All of those games are about risk management.â
âIn addition, I previously ran big eSports tournaments around the world, travelled to them, participated in them, and I was very used to the kind of online multicultural community that is present on eToro as well.â True to his gamerâs nature, Smith uses Twitch, the video game live-streaming platform, to keep in touch and exchange ideas with his copiers and followers. âMy account on Twitch existed before Twitch existed â when [the platform] was still called Justin.tv,â he says.
South Africa-born Heloise Greeff â third on the UKâs leaderboard with 20,700 copiers â prefers to use YouTube, and regards herself as a âfinancial educatorâ rather than influencer. Unlike Smith, she is not a full-time eToro popular investor; like Smith, she has managed to harness her pre-existing professional skills to triumph in the online trading arena. As an Oxford AI researcher with a background in biomedical engineering, Greeff thinks that trading and designing machine-learning algorithms are âvery complementary skills.â
âI rely heavily on machine learning for both my fundamentals and my technical analysis,â she says. She has a tool able to mine âstrings of wordsâ from eToro and Twitter feeds in order to intuit where the market is going. She has also designed a proprietary algorithm to decide when to enter and when to exit financial positions. âIn my daytime job, I use vital-sign data to predict when patients are going to deteriorate,â Greeff says. âYou can use the same thing to predict when markets are going to deteriorate.â