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FXCM's Profitability Report!!!

  • #21
  • Oct 18, 2010 7:59am Oct 18, 2010 7:59am
Quoting Trader KGB
Most likely it's interest on the dormant accounts at Oanda.
Probably so. Even if the account lost money for several years, once it became dormant it also became profitable no matter how small. A busted and abandoned account account with 15 cents in it would collect interest making it currently profitable.
  • #22
  • Oct 18, 2010 8:07am Oct 18, 2010 8:07am
Michael Greenberg ( forexmagnates ) said:
just cleared this with oanda, they counted active accounts only.
  • #23
  • Oct 18, 2010 8:13am Oct 18, 2010 8:13am
Quoting Trader KGB
Most likely it's interest on the dormant accounts at Oanda.

Oanda's sentiment indicators are some of the best out there, and just as one would expect, the majority of their clientele is near universally on the wrong side of major trends. There's simply no way their overall client base is 50/50 profitable on an active basis, the sentiment indicators show that it would be a mathematical impossibility.
If anything - the mere fact that they are showing a higher percentage of winners to losers (fuzzy math or not) will attract hoards of lemmings believing that is where the pot of gold lies. I see a "correction" on the horizon.
  • #24
  • Oct 18, 2010 8:16am Oct 18, 2010 8:16am
Quoting techno79
One would have to wonder if the size of the account was an issue
Hi techno,

These are good questions, and at FXCM we are planning to go deeper into the numbers and making them publicly available to give you more insight. I can answer one of your questions now at least. Below is a table showing profitability based on account size. The profitability breakdown by account equity is for FXCM US (LLC) accounts and it includes micro accounts.

Profitability by Account Size
http://img808.imageshack.us/img808/9...uitybreakd.png


In the days and weeks ahead we will be releasing more information giving you insight on profitability by currency pair and more.

In terms of trader profitability as a whole, it’s no secret that retail traders like to trade against the market trend, attempting to pick tops and bottoms. In ranging market conditions, this works well. When the market is trending, it doesn’t. DailyFX releases the SSI report showing retail trader positioning at FXCM, and I know other brokers release similar reports along with websites such as Currensee and MyFXBook.com. I have included longer-term SSI charts below showing trader positioning for USD/JPY and USD/CHF which displays very clearly how the majority of traders have traded during recent trending market conditions.

USD/CHF: Retail traders have been long USD/CHF ever since it started trending down from 1.1400, and they have been on the wrong side of the market. If you look below, the green bars indicate that there are more long positions than short positions. A red bar would indicate there are more short positions to vs. long positions. The longer the bar, the more extreme the positioning is. So what did traders do during the most recent downtrend? Trade against the trend and add to those positions as the market continues to move down.

http://media.dailyfx.com/illustratio..._Picture_9.png

Source: http://www.dailyfx.com/technical_ana...timent=USD/CHF

USD/JPY: USD/JPY displays a very similar story with retail traders continuing to buy the dollar as the market has dropped from 91.00 to its current levels.

http://media.dailyfx.com/illustratio..._Picture_8.png

Source: http://www.dailyfx.com/technical_ana...timent=USD/JPY

This doesn’t mean that traders will always be wrong. It simply indicates the type of trading strategy the majority of retail traders use is not consistent with current market conditions. If the market starts to range, then it is likely a larger percentage of retail traders will become profitable if they continue to use the same strategy.
  • #25
  • Oct 18, 2010 8:29am Oct 18, 2010 8:29am
Quoting tar
Michael Greenberg ( forexmagnates ) said:
just cleared this with oanda, they counted active accounts only.
Agh damn! That DOES mean Oanda traders are 2x better. I bet Oanda is running TP's!?

Time for a new boogieman.
  • #26
  • Oct 18, 2010 8:31am Oct 18, 2010 8:31am
Quoting Jason Rogers

Profitability by Account Size
http://img808.imageshack.us/img808/9...uitybreakd.png

Interesting. How is it that the lowest level (27.89%) is still higher than the overall FXCM numbers reported on forexmagnates for FXCM (23%)?
  • #27
  • Oct 18, 2010 8:34am Oct 18, 2010 8:34am
Quoting tar
Michael Greenberg ( forexmagnates ) said:
just cleared this with oanda, they counted active accounts only.
Darn peculiar.. My hat's off to them if that really is legitimate, those are very good numbers.
  • #28
  • Oct 18, 2010 8:38am Oct 18, 2010 8:38am
Quoting shrike
but i dont believe the average Oanda customer is 2x better than the avg customer of the others. A case of creative counting
Why not?
The Oanda user profile is a lot different than the regular MT4 user profile.

Oanda pays interest. Maybe this also pushes the numbers.
  • #29
  • Oct 18, 2010 8:41am Oct 18, 2010 8:41am
Quoting bugscoe
Agh damn! That DOES mean Oanda traders are 2x better. I bet Oanda is running TP's!?
LOL. That's a good one!
  • #30
  • Oct 18, 2010 8:52am Oct 18, 2010 8:52am
Probably because you can't run stupid EAs on Oanda as easy as on a MT4 Broker.
  • #31
  • Oct 18, 2010 8:59am Oct 18, 2010 8:59am
I did do a comparison once of Oanda vs. FXCM's sentiment index over a couple of weeks. Nothing really deep - just a quick squiz of the numbers, but I did come to the conclusion that Oanda's clients were better traders than FXCM's clients i.e. more of FXCM's clients were on the wrong side most of the time. So I prefer to look at FXCM's sentiment index.
Nothing worth having is easy.
  • #32
  • Oct 18, 2010 9:12am Oct 18, 2010 9:12am
Quoting shrike
So does that mean MB Trading is dishonest, since they only have about 25% ?
Im with TraderKGB on this one.

Lower costs of trading with Oanda ...EUR/USD 0.9 spread , around double that with MB


It's a combination of factors ;lowest costs of trading, no stop running and other bucketshop games, interest, leverage "only" 50:1(attracts less gambling orientated traders)
  • #33
  • Oct 18, 2010 10:00am Oct 18, 2010 10:00am
Quoting Cocoflanel
Lower costs of trading with Oanda ...EUR/USD 0.9 spread , around double that with MB


It's a combination of factors ;lowest costs of trading, no stop running and other bucketshop games, interest, leverage "only" 50:1(attracts less gambling orientated traders)
How about advertising? Isn't Oanda one of the few, if only, brokers listed that doesn't advertise?
  • #34
  • Oct 18, 2010 10:20am Oct 18, 2010 10:20am
Quoting Jason Rogers
Hi techno,

These are good questions, and at FXCM we are planning to go deeper into the numbers and making them publicly available to give you more insight....
Thanks, this was very informative. The Table seems to confirm what I notice from my own experience. The smaller the account the harder it is in general. Missed chances, no buffer, a panic that you'll be stuck in that one trade and miss others, and actually missing good trades. And on the flip side, one is more apt to experiment with new theories on a micro than a standard I would assume. But I am El Cheapo so I might not be common.

Which leads me to FXCM and micro's. I tried to open a micro for your promotion of the 25 dollars over the weekend. My email told me I was in a "high risk" category, so instead of opening up a 50 dollar micro account with a free 25 dollar deposit to trade, it told me to open a normal 2000 dollar account.
Does this sound right? Seems backwards to me, but am still evaluating my options...I like to have one micro to try some trades I am confident but not 100% on to see how they go. But I would assume the "riskier" the trader the less they should invest. This was about those...7 or 9 catagories. I forgot about them all, assets and worth and such.

Quoting shrike
wheres at the competition inactive accounts are breakeven (and thus - according to cftc regs - counting as unprofitable).
This makes as much sense as the NFA getting rid of the original way they did stop losses.
  • #35
  • Oct 18, 2010 10:29am Oct 18, 2010 10:29am
Quoting bugscoe
How about advertising? Isn't Oanda one of the few, if only, brokers listed that doesn't advertise?
Funny you say that, I'm seeing a lot of banner ads just now on this site for them.
  • #36
  • Oct 18, 2010 10:53am Oct 18, 2010 10:53am
Quoting Trader KGB
Interesting. How is it that the lowest level (27.89%) is still higher than the overall FXCM numbers reported on forexmagnates for FXCM (23%)?
hey KGB,

The breakdown for profitability by account equity is displaying the monthly average over the past year. Whereas the numbers on forexmagnates is the most recent quarterly figure.

-Jason
  • #37
  • Oct 18, 2010 11:02am Oct 18, 2010 11:02am
Quoting Jason Rogers
hey KGB,

The breakdown for profitability by account equity is displaying the monthly average over the past year. Whereas the numbers on forexmagnates is the most recent quarterly figure.

-Jason
Thanks Jason.

If you're willing to report them, I'm curious on the figures for the ATG group. I thought MBT would be higher since the ECN market tends to attract a more sophisticated trader, was rather surprised to see them fall right in the line with the rest.
  • #38
  • Oct 18, 2010 12:16pm Oct 18, 2010 12:16pm
Quoting techno79
Funny you say that, I'm seeing a lot of banner ads just now on this site for them.

They are being very smart. They knew the numbers were in their favor and now that everyone is forced to publish them, they are capitalizing on the advantage. No accident that the ad campaign just started.

Oanda +2
Others 0
  • #39
  • Oct 18, 2010 2:07pm Oct 18, 2010 2:07pm
Hey Jason...would you enlighten us about what was the criteria used to output "percentage profitability"?

Using round numbers, when you guys say that 30% make money and 70% don't ( out of a certain number of accounts)...... are you guys using individual physical accounts count or aggregated output?

Out of 100 accounts 30/70 percentage would means that 30 accounts make money and 70 accounts loose ( individual formula)

Now if you use an aggregated formula, out of 100 accounts you may have 1 account making 30% and 99 accounts loosing 70% and you still can claim the same 30/70% ratio.

I'm not suggesting anything about you guys , actually what posed that question in my mind was the oanda 50/50. It sounds so "bullish" or should I say "bull sh!t" that I could not resist exploring some smoke and mirror theories.

As far as I can tell the CFTC does not preclude any guidelines between aggregated or individual, so I would almost guarantee that some brokers would jump on the opportunity and use it as a propaganda to mask the actual underlying risk....and.....some dumb brokers like Oanda would push it too far....as i think they did.
  • #40
  • Oct 18, 2010 2:46pm Oct 18, 2010 2:46pm
Quoting Platypus
Hey Jason...would you enlighten us about what was the criteria used to output "percentage profitability"?

Using round numbers, when you guys say that 30% make money and 70% don't ( out of a certain number of accounts)...... are you guys using individual physical accounts count or aggregated output?

Out...
Well, US regulators have been somewhat ambiguous in how they expect everyone to calculate the figures, and from what I am aware, there was no official guidance posted. So I believe there could be some divergence between brokers in how they are calculated.

The probability percentages are based on the number of accounts (individual formula you mentioned). I wish I could post more specifics on the exact formula that was used, but I'm afraid I will only be able to do so once we have more official confirmation.

-Jason
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