How Machine Learning is shaping the future of investing

We’ve all seen artificial intelligence (AI) in movies: Whether it’s a friendly personal assistant such as Iron Man’s JARVIS or an ominous creature such as the Terminator. In reality, AI does exist and is used to achieve some remarkable feats. AI and Machine Learning are being used in everything from agriculture to medicine, and are now being used to revolutionise the field of investing.

Machine learning requires a large data set. Since eToro is the world’s leading social investment network, with millions of users, it is the perfect breeding ground for developing machine learning for investments. Our talented data scientists trained algorithms to understand our clients’ financial behavioural patterns, to generate predictive analytics. These analytics are then used to create some of our CopyFunds, a managed portfolio investment product.

The revolution: Teaching computers to think

Machine learning is very different than traditional programming. Rather than teaching a computer to follow a pattern, it teaches the computer to learn on its own. An extremely simplified example would be: if we want to teach a computer to recognise cats, instead of telling it “cats have whiskers” or “cats have tails,” we would instead feed it an abundance of cat pictures, only telling it “this is a cat.” Then, using machine learning, the computer deciphers by itself what a cat is, and will be able to recognise it in the future.

The same technique can be applied in finance, by feeding the computer examples of market behaviour over time, then letting it understand on its own how to recognise similar investment patterns.

How top financial firms use machine learning

The introduction of artificial-intelligence-based solutions for trading and investing has completely reshaped the industry. AI solutions range from being used for technical analysis and pattern recognition, through using predictive algorithms to select which instruments to include in a portfolio.

Machine learning has made these computers so adept at analysis and pattern recognition, that they can match, and even outperform, some of the best analysts in the world. It is no wonder, then, that top financial firms, such as JPMorgan Chase and Goldman Sachs are using this technology. Both companies use the technology to sort through data generated by millions of their clients and to outline the strategies of their investment portfolios.

eToro: Placing the power of machine learning in your hands

Imagine the amounts of data generated by the hundreds of millions of trading actions performed on the eToro platform. It’s overwhelming. However, after proper analysis and filtering, this data can paint a vivid picture of a smart investment methodology. eToro has collated all this data and using the very essence of machine learning, has created an innovative investment product and placed it in the palm of your hands. You helped to create it; you should reap its fruits.

Machine learning CopyFunds

The first machine learning CopyFund launched on eToro was MomentumDD. This CopyFund uses machine learning to locate the top 30 traders on the platform that are most likely to generate positive returns over the next quarter. In its first year of operation, it generated returns of more than 22%, while maintaining low risk.

eToro is launching two more AI-based CopyFunds. With these CopyFunds, eToro investors can take part in the next step of the Fintech revolution and harness the power of Machine learning:

  • OutSmartNSDQ: This CopyFund uses machine learning to locate high-performing assets listed on the Nasdaq100 index, and creates a portfolio based on the sentiment of eToro’s top traders to outperform the index

  • AITrader50: This Top Trader CopyFund selects from the top 50 eToro traders who are most likely to generate a positive return over the next month and bundles them in one investment portfolio 

Machine learning is one of the biggest innovations seen in computing in recent years, and eToro is proud to pioneer this technology for the benefit of its clients.


Your capital is at risk. Past performance is not an indication of future results. This is not investment advice. CFD trading. Data presented is less than 5 years old and may not suffice for investment decisions.