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US Forex brokers account profitability comparison

  • #1
  • First Post: Oct 18, 2010 7:21am Oct 18, 2010 7:21am
http://forexmagnates.com/us-forex-br...ty-comparison/
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  • #2
  • Oct 18, 2010 9:40am Oct 18, 2010 9:40am
Come-on... do I smell collusion or am/was I 10x the hack I thought I was?

Oanda @ 50%
Everyone Else ~25%
  • #3
  • Oct 18, 2010 10:28am Oct 18, 2010 10:28am
I'd say just seeing the number of clients each has is interesting. I really thought many of them were larger. Really makes me want to check out Oanda now, just to see why they are different..
Disregard all prognostications.
  • #4
  • Oct 18, 2010 10:46am Oct 18, 2010 10:46am
After seeing FXCM's acct bal breakdown, which confirmed a theory I had; larger acct = greater profitability avg., and spending time in Oanda's forum over the years, I got the impression they had a larger % of high(er) net bal traders.

Plus, they never used to advertise, so this could cut down the % of newbie traders looking for the (seemingly) low hanging fruit.
  • #5
  • Oct 18, 2010 12:52pm Oct 18, 2010 12:52pm
Assuming the report's numbers are compiled impartially, truthfully and correctly:

So where did the statistics of "99% of traders fail" come from? Clearly, this report proves that this statistic is wrong as what we have suspected all along. Another scare tactics of the "watchdog" organization?

And another observation: the profitability of the account has nothing to do with whether the broker is a MM or an ECN. If you can't make money, you can't make money regardless what kind of broker you have.

That's interesting...
Make your losses in demo. Earn your profits live.
  • #6
  • Oct 18, 2010 1:25pm Oct 18, 2010 1:25pm
Quoting Forexia
Assuming the report's numbers are compiled impartially, truthfully and correctly:

So where did the statistics of "99% of traders fail" come from? Clearly, this report proves that this statistic is wrong as what we have suspected all along....
I notice that on everything one can do, in everytype of business there is, they claim 99% of people fail. If you're not like 99% of the people out there, don't listen to them.

It's interesting that I never noticed that Oanda doesn't advertise, because I always hear about people who trade with them, since I even found forex. Are they really a secret??
And also, some(one) of the other brokers on there, i always assumed would've had a much lower percent or scammish, and yet their success rate is really high. Interesting, yet not totally useful atm imo.
  • #7
  • Oct 18, 2010 1:42pm Oct 18, 2010 1:42pm
I believe there is something skewing the statistics based on the trader attrition rate.

Let's take 10 traders that open an acct on Jan 1.

5 are profitable from Jan 15 to Feb 17. But, by end of Feb they all blow their acct and drop off. Feb 18 broker has a 100% profitability with 5 traders. Feb 22, 10 more traders sign up and the cycle repeats. We now have 15 traders, but after the hypothetical 30 day failure TF, 10 out of the 15 are profitable -- 75%. This number would never go to 0, but would find some equilibrium point to rest at.

Additionally, depending on where the Quarter ends; we had a little acct'ing trick at my old work -- the end of the month/quarter was a dynamic variable, so we "made" our numbers 100% of the time

Someone please check the math, I'm not sure if I'm looking at this properly.
  • #8
  • Oct 18, 2010 2:15pm Oct 18, 2010 2:15pm
Quoting Slack
I believe there is something skewing the statistics based on the trader attrition rate.

Let's take 10 traders that open an acct on Jan 1.

5 are profitable from Jan 15 to Feb 17. But, by end of Feb they all blow their acct and drop off. Feb 18 broker has a 100% profitability with 5 traders. Feb 22, 10 more traders sign up and the cycle repeats. We now have 15 traders, but after the hypothetical 30 day failure TF, 10 out of the 15 are profitable -- 75%. This number would never go to 0, but would find some equilibrium point to rest at.

Additionally,...
Hmmn... that's an interesting point. With the non-inclusion of closed accounts due to non-profitability, the brokers would be able to increase their % of profitable accounts. But checking the tables below, if the "total non-discretionary accounts" means client accounts, a drop in that number is also associated with a drop in "% profitable accounts" in many of the quarters. Does that mean that the % profitable is dropping so fast that even the non-conclusion of closed accounts cannot compensate the drop?

It would be more informative if they can publish the criterias for these numbers.
Make your losses in demo. Earn your profits live.
  • #9
  • Oct 18, 2010 2:39pm Oct 18, 2010 2:39pm
Quoting Slack
Come-on... do I smell collusion or am/was I 10x the hack I thought I was?

Oanda @ 50%
Everyone Else ~25%
I really think that one of the main reasons Oandians may be more profitable is due to the extremely variable position sizing. Allowing a minimum of 1 unit of currency really helps customers who have small accounts. You don't have to go out risking $1/pip to begin with. I think that's extremely important. Losing a dollar or two (at 10c/pip for example) on a trade doesn't hurt anywhere near losing $10-$20. Psychologically, I remember reacting quite emotionally to losses when I was first starting out and I lost amounts like that. After I moved to Oanda and practiced on tiny amounts, I was able to gradually increase my exposure and maintain a balanced emotional state.

That's why I think all these arguments around leverage are overblown - especially by novice traders. If you're just starting out, do NOT think you can make ridiculous returns without months of practice. Do not leverage yourself to ridiculous levels, you'll just blow your account. 50:1 is fine, but for opening a position, 10:1 is probably better. The rest just allows you to take a couple of trades at once. If you're more experienced and already have positive expectation, that's a different story.

Also, Oanda offers great news feeds and fast execution. Pity about the epic fail on Friday.
  • #10
  • Oct 18, 2010 2:40pm Oct 18, 2010 2:40pm
Excellent points, Mindsphere.
  • #11
  • Oct 18, 2010 3:18pm Oct 18, 2010 3:18pm
Quoting Mindsphere
I really think that one of the main reasons Oandians may be more profitable is due to the extremely variable position sizing. Allowing a minimum of 1 unit of currency really helps customers who have small accounts. You don't have to go out risking $1/pip to begin with. I think that's extremely important. Losing a dollar or two (at 10c/pip for example) on a trade doesn't hurt anywhere near losing $10-$20. Psychologically, I remember reacting quite emotionally to losses when I was first starting out and I lost amounts like that. After I moved to Oanda...
This is exactly right...

I think it is aided by the fact that Oanda pays interest. Even if minimal, this can assist a trader. Say you made one trade in a quarter and you closed it at breakeven (or even a minimial loss) and didn't take a trade for the next 3mo -- your interest earned during those months might make up for your small loss or your break-even trade. That would not happen at any of the other brokers listed (at least as far as I know) and for Oanda you'd be in the profitable column...

Quote
Pity about the epic fail on Friday.
What are you referring to here?
  • #12
  • Oct 18, 2010 5:40pm Oct 18, 2010 5:40pm
Quoting InfinitySL
This is exactly right...

I think it is aided by the fact that Oanda pays interest...
Ahh... I think you've hit the nail on the head there. Oanda doesn't purge inactive accounts, as far as I can tell. Even if you leave just a couple of dollars in there it will be considered a "profitable" account due to interest.

Epic fail on Friday - their servers basically died. Their website and mobile gateway was down too. On and off for upwards of 2 hours. They zeroed out the one losing trade I had during that period (after I contacted them), but there were some great opportunities I was unable to take.
  • #13
  • Oct 18, 2010 6:07pm Oct 18, 2010 6:07pm
Many of these run monthly contests and I'm sure those results are included in the mix.

So if you have 500 peeps sign up for a contest there's likely a good number of those that suffer margin call... This will be even easier now.

Does Oanda run trading contests?
  • #14
  • Oct 18, 2010 6:08pm Oct 18, 2010 6:08pm
Quoting Mindsphere
Ahh... I think you've hit the nail on the head there. Oanda doesn't purge inactive accounts, as far as I can tell. Even if you leave just a couple of dollars in there it will be considered a "profitable" account due to interest.
No, Oanda counted active accounts only. Inactive accounts were left out.
  • #15
  • Oct 18, 2010 8:26pm Oct 18, 2010 8:26pm
Oanda has a pretty consistent (from as far as I can see) 0.9 pip spread on EUR/USD. Every trade I have ever placed with them has always gone into profit at some point or another.

Smart traders with a large amount of capital can easily trade profitably with Oanda. I mean seriously, how hard is it to gain a couple of pips a day with Oanda at 0.9 spread.

Unfortunately, most traders (including myself) look for more then a couple pips profit on a daily basis. But I am sure there are a few that truly take advantage of the low spreads.

Sure, I have heard of people who say Oanda has disconnect problems during news hours and spreads that widen when markets aren't very liquid, but so what. If you could take a 3 pips a day, isn't that profit? Of course there are a vast variety of systems out there so what I am saying works for some, but doesn't work for many.
  • #16
  • Oct 18, 2010 8:30pm Oct 18, 2010 8:30pm
Try this. At any random time, go to a 5min or 15min chart. If the previous candle was red/short and the current candle is red/short, open a short position on EUR/USD when the spread is 0.9. You are almost certain to see your position go into at least a pip of profit. (vice versa for green/long).

Of course, sometimes the market will immediately reverse against you and you will be in the hole. But this is a sheer random trade example. If you have a true intraday system that even looks profitable by glancing at historical charts, you can see it isn't hard to trade "profitably", because a profitable day is considered .1 pips in a day.
  • #17
  • Oct 18, 2010 9:57pm Oct 18, 2010 9:57pm
Quoting nebuman213
Sure, I have heard of people who say Oanda has disconnect problems during news hours and spreads that widen when markets aren't very liquid, but so what. If you could take a 3 pips a day, isn't that profit? Of course there are a vast variety of systems out there so what I am saying works for some, but doesn't work for many.

And there ya go... if you are geting 3 pips here 3 pips there all is good but all it takes is that one time for the server to crash or your internet to go out and the 3 pips you were trying to live on... well you catch my drift.

I think you should have a better system in place than just going for 2 or 3 pips here or there irregardless of what the spread is. Too easy for disaster to strike and at 50:1 / 25:1 or whatever leverage you're using doesn't give you much room for error.

That's what keeps the brokers / LP's flush with cash, your indecision and greed.
  • #18
  • Oct 19, 2010 4:25pm Oct 19, 2010 4:25pm
Quoting nebuman213
Try this. At any random time, go to a 5min or 15min chart. If the previous candle was red/short and the current candle is red/short, open a short position on EUR/USD when the spread is 0.9. You are almost certain to see your position go into at least a pip of profit. (vice versa for green/long).

Of course, sometimes the market will immediately reverse against you and you will be in the hole. But this is a sheer random trade example. If you have a true intraday system that even looks profitable by glancing at historical charts, you can see it...


It doesn't work that way. I wish it did, but it doesn't, sorry.
  • #19
  • Oct 19, 2010 9:11pm Oct 19, 2010 9:11pm
Quoting Mindsphere


It doesn't work that way. I wish it did, but it doesn't, sorry.
It can tho =)
  • #20
  • Oct 19, 2010 11:21pm Oct 19, 2010 11:21pm
These numbers just further the point that the market is rigged for big firms and banks to become bigger. I bet those profitable account percentages would be even lower for equities brokers such as E*Trade, TDA, and Scottrade.
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