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Answering a certain question

So I got a message today which im not sure whether it is a question or an accusation. It went along the lines of:

“How come current loses on HF are much smaller than Etoro? Are you simply taking better care on HF and not caring about etoro due to no success fee?”. Well its a valid question and one you are entitled to ask, so let me get to addressing it.

Firstly, it has nothing to do with that. I have only 1,000 of my own money on HF (as all can see) and 10 times that on Etoro at the point in time (5.8 times only if you include current unrealized losses), so it is in my interest to actually care for Etoro. After my unfortunate massive personal loss on saxo in January, trust me, I am not in a position to throw $10,000 down the drain and say I do not care. I wish I was that flush with liquid funds at the moment, unfortunately I am not. Now what is true is that I do not see a long future for myself on Etoro. I see myself as getting back my balance to where it was and then saying goodbye to that site. I have been very open about that.

Now let me get to the main reason why we have not suffered as much on HF, although we have done the same trades on both platforms: GBPJPY,GBPCHF,EURGBP, USDJPY etc. The reason is the nature of the trading on both platforms. Etoro’s system of trading is balance trading, not margin trading:

Assume you have a balance of 1000 dollars. If you commit 500 of it to a trade, you have only 500 left to trade with on Etoro until you close that trade (even if that trade is down only $20 dollars at the time), where as on HF you would still have a margin of 980 to trade with which lets you maneuver if you get caught out of position. This enables you to take other positions and limit your damage. I.e. you do not have to close and take a big loss in equity before you can move. It is that simple.

i.e. On Etoro, the system is set up almost in a way that wants to discourage you go from aiming for high returns. I.e. You can only go for high returns if either you use extremely high leverage with small amounts of your balance or if you use large parts of your balance with then you remain locked in trades for longer. The margin trading on HF ensures that you do not get trapped in such a way. That is why I prefer the system but also why if you make mistakes with calculating your margins, you can also get wiped out very quickly, as we have seen certain others do on HF.

In short, I am not neglecting Etoro or purposely losing money there. It is quite simply that when the market turns against us, as it has for most of 2016, while on Etoro we are locked in trades, with HF we have been able to do other trades due to them using margins and not balances for trades. I hope this makes sense.

Have a good weekend everyone,

Mohammed

4 Comments

  1. Thx for the clarification Mo.

    And thanks for the daily updates (it’s the highlight of my day:).

    If I understand correctly, trading on HF comes with a higher risk but with more flexibility.

    Do you feel like HF is more adapted to your trading style (of which I’am a huge fan)?

    Greetings
    Matt

    1. HF is a genuine trading platform with more flexibility and more options. The danger is that as its margin based someone can make multiple orders with the same funds. I.e. Money is never tied up, which can ne dangerous if people do not manage it correctly. In addition it has never goven errors when connecting and tbhe support team never interferes with trading, which I take comfort in.

  2. Hello Mo.

    I’m with you for at least a month now and you came out better then me. My bad 😉 Shouda have loaded some more funds, but yeh what did a know at that time about rescue funds. I am allmost wiped out on Etorro and I already joined you on HF. But I was wondering do I also need some rescue funds on HF?

    What doesn’t kill you makes you stronger and make HF Mo’s heaven! Keep up the good work, your updates are highly appriciated!

    Cheers and kind regards!
    Wilrik

  3. Hi Mo!
    Thanks for the explaination! Have always been wondering about the differenz of both Systems.
    Regards,
    Thomas

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