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
