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US Forex brokers profitability report for Q1 2011 14 replies

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Attachments: IBfx's Profitability Report
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IBfx's Profitability Report

  • Post #1
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  • First Post: Oct 6, 2010 9:54am Oct 6, 2010 9:54am
This has got to be a typo:
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Why does it have to be a typo? Because it challenges your belief that you can be profitable trading forex?

This shouldn't be a surprise. Trading is a losing proposition on average.
You are in a maze of twisty little passages, all alike.
Quoting stevegee58
Why does it have to be a typo? Because it challenges your belief that you can be profitable trading forex?

This shouldn't be a surprise. Trading is a losing proposition on average.

Actually, I was referring to the ~30% winners vs the ubiquitous 5%.
I'll bet an account with no trading activity is counted as "profitable"
You are in a maze of twisty little passages, all alike.
Interesting... you might be right.
Quoting stevegee58
I'll bet an account with no trading activity is counted as "profitable"
I Called IBFX when I got this email yesterday and asked this question. The person I spoke with said profitable is defined as an increased balance at the end of the reported quarter verses the beginning of the reported quarter.

So I would take from that the inactive accounts are not listed either way.
Quoting smjones
I Called IBFX when I got this email yesterday and asked this question. The person I spoke with said profitable is defined as an increased balance at the end of the reported quarter verses the beginning of the reported quarter.

So I would take from that the inactive accounts are not listed either way.
So, I wonder if someone makes a deposit, if that is counted.
Quoting Slack
So, I wonder if someone makes a deposit, if that is counted.
Good point. Also, is a $500 account counted the same as a 100,000 account?
  • Post #9
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  • Edited 11:00am Oct 6, 2010 10:48am | Edited 11:00am
Quoting smjones
I Called IBFX when I got this email yesterday and asked this question. The person I spoke with said profitable is defined as an increased balance at the end of the reported quarter verses the beginning of the reported quarter.

So I would take from that the inactive accounts are not listed either way.
Thanks for clearing that up. That was my initial thought too.

Would be interessting to filter out every account with less than x Trades during that period. Otherwise you could open a 1 Nano Lot Position close it at 1 Pip and call yourself profitable for the quarter.

I think another explanation would be that alot of those unprofitable accounts quit and won't get counted as an unprofitable account in the next quarter where new accounts come in and lose.
In Interbank FX’s most recent CFTC email on October 6, we noted our profitability numbers which included only actively trading and non-discretionary accounts.

“Actively trading accounts” we define as an account with any trading activity whatsoever in the given quarter. “Non-discretionary accounts” we define as an account under the sole control of the account owner(s). Therefore, for each quarter, any account which did not execute a trade, or any account which was controlled by someone other than the account owner(s) (i.e. money manager, Power-of-Attorney), were not included.

Interbank FX would be happy to share the method of calculation used to generate the profitability numbers published in the aforementioned Email. Interbank FX calculated the profitability of accounts using the simple equation of ‘Ending Equity’ - ‘Beginning Equity’ + ‘All Withdrawals’ – ‘All Deposits’.

Source: IBFX Blog


Some comments on Forex Magnet
Has FXCM published such a report yet? I am interested to look at it
Quoting benssol
Source: IBFX Blog


Some comments on Forex Magnet
in reguards to the comments on the forex magnet link....... me and many more like me will be partly the reason for the disparity of numbers..... inactive but still live accounts....

at one point i had at least 4 and possibly 5 accounts with ibfx.....

some of my accounts might have as many as 10,000 orders a month while my other accounts might no trades for months on end........


if the typical 95+ number tossed around for the percent of losing traders among us is to be believed, it would make me all the more courious as to why ibfx has 5 times or more the world standard % profitable accounts.......

the reason's of course should be obivious...... but if not, let me offer some possibles......

part might be due to ibfx's virtual non-stop trader education...... and even though i hate to admit, nfa probably deserves some credit...... and a very large part might be ibfx's client base who appear to be dedicated to making it work....... other reasons also come to mind......

//---
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as pipstar mentioned, it would be interesting to see all results from all brokers...... or any sort of fellow trader stats, such as ssi figures patience posts so often for us....


personally i see us all in this together, so any help is very appreciated and does not go unnoticed...... .....h
to trade and code, keep both simple... no call to impress....h
Quoting hayseed
in reguards to the comments on the forex magnet link....... me and many more like me will be partly the reason for the disparity of numbers..... inactive but still live accounts....

at one point i had at least 4 and possibly 5 accounts with ibfx.....

some of my accounts might have as many as 10,000 orders a month while my other accounts might no trades for months on end........


if the typical 95+ number tossed around for the percent of losing traders among us is to be believed, it would make me all the more courious as to...

I think the best explanation is that losing accounts drop out or get inactive and won't get counted while new losers come in so the pool of losers is much bigger. This would shift the numbers greatly to the often heard 95/5 distribution.
Quoting TJPLD
I think the best explanation is that losing accounts drop out or get inactive and won't get counted while new losers come in so the pool of losers is much bigger. This would shift the numbers greatly to the often heard 95/5 distribution.
for some reason i always thought the 95/5 was meant to be reflect current living accounts..... similar to population make up or ssi numbers.... 80% white, 10% black, 10% hispanics ..... people dead or moved are not counted....

if the 95/5 ratio is meant to count total dead and live accounts, i'd wager the number would be 99.9/.1 or worse......

in any event, the more of these types numbers we know, with exact definition, the better......

it would be interesting to compare the current ssi breakdowns for all brokers.....h
to trade and code, keep both simple... no call to impress....h
What should be even more alarming is the drop off in number of accounts... from over 18k accounts to around 16k accounts.

I would suspect the account hemoraging to continue and at probably a much faster rate. I was with IBFX for nearly 7yrs, but at anything less than 100:1 leverage the risk isn't worth the effort IMHO.

As the account number falls it will put the broker in a much more precarious position especially if the remaining traders are all profitable. That will invariably errode the profitability of the broker... we all know /remember what happened to REFCO right?

Yeah we got a bunch of geniuses in the NFA / CFTC. /sarcasm.
Quoting pip_seeker
What should be even more alarming is the drop off in number of accounts... from over 18k accounts to around 16k accounts.

I would suspect the account hemoraging to continue and at probably a much faster rate. I was with IBFX for nearly 7yrs, but at anything less than 100:1 leverage the risk isn't worth the effort IMHO.

As the account number falls it will put the broker in a much more precarious position especially if the remaining traders are all profitable. That will invariably errode the profitability of the broker... we all know /remember...
based on date, the accounts counts were growing form #17.9k(jun09) to #18.5k(dec09)
and there was a low in #16k(jul09)
thx.
Quoting pip_seeker
What should be even more alarming is the drop off in number of accounts... from over 18k accounts to around 16k accounts.

I would suspect the account hemoraging to continue and at probably a much faster rate. I was with IBFX for nearly 7yrs, but at anything less than 100:1 leverage the risk isn't worth the effort IMHO.

As the account number falls it will put the broker in a much more precarious position especially if the remaining traders are all profitable. That will invariably errode the profitability of the broker... we all know /remember...
I can't figure out why everyone is having such a hard time grasping these numbers.

If an account doesn't trade in a quarter, it isn't counted here. Doesn't mean they have or don't have money in it. Here's a shocker...some people wait for certain environments to trade.

If an account is managed by someone other than the account holder, it isn't counted here.

So if IBFX has been reporting that they have more like 34,000 accounts, this makes perfect sense. Lots are managed and lots are inactive. A 2000 swing from quarter to quarter doesn't mean that much.

Anyone who thought that a higher percentage of accounts would be profitable at a deal desk broker (I'm actually surprised that this is as high as it is) is nuts.

Anyone who thought it would only be 5% doesn't get it. There are tons of accounts that only place a couple of trades a month and could well be up. Also, deal desks tend to give customers bad execution after THREE months hoping to get them to make higher deposits before they screw with them. So when you average that in, it wasn't going to be 5%.

At the end of the day, this is great information to have. It is statistically relevant because if you take each broker and they have 10,000 or more accounts each, the percentages of profitability on the non-managed accounts that ran at least one trade in a quarter IS PURELY A REFLECTION ON HOW GOOD THE BROKER'S EXECUTION SYSTEM IS. You can't get around that. 17,000 clients with one broker versus another, you can't assume that the 17,000 with broker X are smarter traders than broker Y. I can't wait to see all of these brokers report this information. This should make it EXTREMELY clear which brokers are worth trading with.
Quoting pip_seeker
What should be even more alarming is the drop off in number of accounts... from over 18k accounts to around 16k accounts.
This trend worries me more than anything else:

(Data Source: http://www.cftc.gov/MarketReports/Fi...FCMs/index.htm )
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Is there any official explanation for this downtrend in Net Capital ?
I must say I find it a cause for concern.
Could it be that they had expenses with opening the australian branch ?
The worst thing I can be is the same as everybody else. I hate that.
Quoting GubyIQ
Is there any official explanation for this downtrend in Net Capital ?
I must say I find it a cause for concern.
Could it be that they had expenses with opening the australian branch ?
I haven't spoke to them about it, but if I recall; I did analysis for several years of data before, and they have always been up and down... but mostly down.

Also, I believe; not 100% sure about this, once a broker goes below a certain threshold, they have to notify their customer base.
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