Currensee: A Support Network for Traders Risking their Personal Fortunes on the Foreign Exchange Market
If following the stock market’s swoon hasn’t been enough to sink your confidence in capitalism and the financial industry, you may want to try your hand at currency trading on the foreign exchange market. Enormous amounts of money slosh from border to border on the “forex” market, as it’s called—the equivalent of several trillion dollars each business day. Giant investment banks like Deutsche Bank, UBS, and Citi are the biggest traders, but thanks to the emergence of “retail” forex brokers such as FXCM—the currency-trading equivalents of online trading houses E*Trade or Schwab—it’s possible for individuals to play the forex market as well.
But currency trading can be a lonely, scary pastime for individuals. For good reason: most forex brokers allow account holders to leverage their trades at ratios of 100:1 or more (meaning they can put 100 borrowed dollars to work for every dollar of their own), so they can turn a tiny percentage change in the value of one currency against another into a huge gain in a matter of minutes—but just as easily lose their entire stake. As the FXCM website blandly states, “Trading foreign exchange with a high or even moderate level of leverage may not be suitable for all investors.”
Now there’s an online community based in Boston’s historic North End where forex traders can collaborate, share strategies, educate one another about the opportunities and risks of currency trading, and exchange kudos (or sympathy notes). It’s called Currensee. It’s currently in an invitation-only, beta-testing phase, but CEO Dave Lemont says the site will open to the general public this summer.
“It’s a very exciting asset class to trade in,” Lemont says of the forex market. Unlike the stock exchanges, currency trading isn’t plagued by bear markets, since a decline in one currency always means a gain for some other currency. (Making a profit is just a matter of picking the right side.) But one problem for traders, says Lemont, is that they’re alone a lot. “Currency trading is a 24-hour opportunity, because the markets rotate in their opening hours. So you might be at home on your computer at night while the kids are asleep, still trading,” he says. “Like anything you do, it’s an important decision, and you’re using your own money, so you want validation from other people. We are social people—we like to have interaction.”
Blogs and message boards provide some of that interaction. But it’s hard to know whether the people sharing their opinions online are putting their money where their mouths are. “I could be telling you to go long on the euro, but maybe I haven’t made a trade in two years,” says Lemont. “We would like to get other people’s opinions, but we like the opinions of trusted sources—information that is backed up by someone’s own trading history.”
The whole idea with Currensee—and the source of the name—is that members must be active currency traders, and are encouraged to let other members see information about their trading positions and performance, in the form of account data streamed directly from the sites of their online brokers, such as FXCM.
Currensee has many of the trappings of a Facebook or a MySpace, including personal profiles and friend networks, but Lemont says the company doesn’t use the social networking label. “We call it a ‘forex decision-making network,'” he says. “What we mean by that is that we try to take the real trades that people are making and provide information about those trades—either the trades themselves, or aggregated data—back to members, to help them make decisions about the trade they’re in or the next trade they’re going to make.”
Currensee’s co-founders are Israeli natives Avi Leventhal and Asaf Yigal. Leventhal is a longtime independent currency trader who offers forex courses and lectures around the world. (Which is a big business unto itself, by the way: “It’s easy to be unsuccessful just by doing it wrong,” Lemont says, so it’s advisable to seek training before you start trading with real money.) Yigal is a software engineer and former Israeli Navy researcher who helped found storage-management software startup Onaro, another Boston-Israel startup that was purchased by NetApp last year for $130 million.
Lemont says the original idea for Currensee came from Leventhal’s forex trainees. “He’d finish a class and they’d say, ‘Avi, that was a great class, but can we trade with you? Can we watch what you’re actually going to do?’ He recognized the oppportunity to build a virtual world where people wouldn’t have to be co-located to gain the information they needed to make better decisions.”
With Yigal as lead product architect, Currensee has built a system where traders can see each other’s profiles, including their win-loss percentages and information about their preferred trading strategies, which often veer into the extremely technical, with names like “Fibonacci retracement” and “Elliot wave theory.” Members can also join virtual trading teams, which allow them to monitor one another’s trades in real time and initiate instant-message chat sessions if they want to debate the finer points of a trade.
A “friends feed” reminiscent of a Facebook news feed shows what each member’s trading teammates are up to, in the form of short missives like “Jeff closed a short position on the GBP/USD at 1.4799 7 minutes ago” or “Kosman and Stefan are now trading together.” Currensee also provides charts and graphs full of what Lemont calls “social indicators,” or aggregate statistics about activity on the Currensee network—for example, the percentage of members who are trading long on the Australian dollar versus the U.S. dollar.
Traders looking at that data might decide there are good reasons to go long themselves, or they might decide to do the opposite, on the theory that the market is about to turn. Or they might want to plug such data into their own technical models and see what comes out. “The point is we are providing a new depth of analysis that traders haven’t seen before,” says Lemont.
So, how does Currensee plan to generate currency of its own? In at least two ways, according to Lemont. First, the company will earn commissions from brokers every time it sends new clients their way. Second, while the basic Currensee platform will be free, the company plans to introduce subscription-based analytical tools to help members feel even more informed. “There may be analyses that we do that are much more in-depth [than the basic social indicators] that will cost you $50 or $100 a month,” says Lemont. Such an amount probably wouldn’t be prohibitive, given that active forex traders have minimum brokerage deposits of $25,000 to $50,000.
Currensee has fewer than 20 employees so far, mostly software engineers. The company, which was previously known as Tradual, has received venture funding from North Bridge Venture Partners in Waltham, MA; Lemont declined to tell me how much the company has raised, but reports last summer pegged the amount at $4 million, of which the company had collected at least $2.4 million. The company has been testing its basic platform on a small, hand-picked group of traders—only about 80, Lemont says. But there are an estimated 1 million to 2 million independent forex traders around the world, and Currensee hopes to rope in a few thousand of them by the end of this year.
Lemont thinks the site will have a viral appeal that will make growth easy. “This is the kind of idea that when you tell people in the trading world about it, they get very excited,” he says. “The proof is in using it, and integrating it into the workflow of how you trade. You can go to a million websites and read all the blogs and the economic news, but we want to provide unique, differentiated information based on real facts about real trades.”
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