Inventing an easy way to make money

eToro

Ever since I remember myself I tried to make money. When I was 12 I took my brother’s D&D miniature figures (he used to buy them and paint them) and sell them to my friends at school. At 13 I got the material cost issue and simply took his paintings and copied them and sold copies. At 14, I bought Firecrackers  and sold them at school and so on. 
I learned about the stock markets early too, and was inspired by the way you could buy and sell stocks and make money. I started looking at stocks when I was 14 and started trading when I was 16, msking lots of profit in the Dot-com_bubble (which was mostly lost 2 years later in the crash) and ever since I am looking for a way to break the markets. Both my Bachelor and Masters degrees in computer sciences were focused on auto trading, which seemed like a sure way to make money, trying to invent an algorithm that finds arbitrage in the markets and code it. That never really worked for me (like for most people) as I never found a sustainable algorithms to make me rich. My Bachelor degree final paper was on Minority games (the known El_Farol_Bar_problem) which basically teaches that the markets act in a special way unrelated to the asset class it is based on, and that bubbles and busts are a part of market dynamics.

At eToro we translated the challenge of making money in the markets, to a social challenge, instead of trying to solve the problem – we crowd source it, have as many people as you can bring to try and make money, then give them tools to see and copy what everyone is doing. It should act as a Genetic_algorithm gradually making sure only the best stay at the top .
Why do I believe social trading must work ?
Assuming tools for the crowd help the crowd discover the top traders, and assuming there is such thing as good traders, the crowd will gradually learn how to spot the top traders, or the top spotters, and will be able to magnify the alpha (profit above the market) that the top traders generated.

This is in fact proving a basic concept in economics coined by Adam Smith the invisible hand “by trying to maximize their own gains in a free market, individual ambition benefits society, even if the ambitious have no benevolent intentions” .

Our thesis is that.the bigger the network and efficiency of tools for collaboration, the more profitable the network will become (we have already witnessed significant proof that copying is more profitable than manual trading), and are working with several top universities (MIT and Columbia ) to prove it both mathematically and empirically .

We have so much data now, that the problem became a Big_data problem, with 2M+ trades a month and quants both in-house and external. We are trying to come up with algorithms that analyze the social indicators and find Alpha .
We will build the network and the crowd will find the way to make money (you are welcome to join the crowd – every individual ambition benefits society ).

*Disclaimer – in the pursuit of making money, there is always risk, and in high risk trading you should always be aware of the risks and willing to loose in order to gain. (I passed ethics course)

About Yoni Assia

Founder and CEO of Etoro.com