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Attachments: 95% Lose in FX is a Myth: % Profitability in the US last year
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95% Lose in FX is a Myth: % Profitability in the US last year

Quoting fx_man
This really is amazing how so many broker stay in business handing out all their money to the profitable traders. I guess they're doing it for charity or maybe just to be nice. Get real people. As I stated before just open your eyes and look at the forums full of the brains full mush coming into this market everyday thinking they're going to make a fortune. There is a never ending supply of them being led the to financial slaughter by the trolls of sellers that seldom dreams disguised as indicators and EA's and other crap that could never be used...
ECN/STP brokers don't take or hand you money, they take commisions...
Quoting HedgePiglet
In an effort to deal with this lingering stink we constantly hear about how this mythical 5% of FX traders are profitable and the rest are all losers, I have discovered a public document with some VERY interesting statistics. I have long been an advocate that this 5% rumour cannot be accurate as every trader I know personally is in profit and I have finally found a reputable report that kicks the 5% in its nuts. I do not have info on exactly HOW profitable they are, the numbers only indicate IF the account has turned a profit in the previous year....
I just had a few questions about the numbers your posting here, as I think there is to much information missing to make an accurate conclusion as to the % of traders "actually" making money. For example dose this information include:

1) Aggregated open positions net long/net short p/l
2) Of all the successful traders this year how many of those were successful previous years? For example they show that 45% were profitable (I am assuming this is the EUR/USD pair) suppose those 45% were among the losing 55% the previous year....so while they may have profited this year in reality they would be recouping from previous years losses or having just a break even year or even still at a loss.
3) Years of profit, I like to see a "minimum" of 3 years statements with two years profitability, before determining if someone is profitable or not.

However I do believe the numbers are higher of the 5% for traders that are winning, I also believe the numbers are a lot lower on average over a loner period of time (maybe a clue how 95% of losing traders is calculated...I really don't know). My guess is that these numbers would be around half for example: 45% would be closer to 22% and 32% closer to 13%, if you add some of the variables I listed above, with a decreasing in winnings as time goes on. I guess the real question is it the same traders making money over the long run (such a banks/broker/large traders) or the new up and coming aspiring retail traders who are making the money.
It's me...
Quoting justin7
it's amazing. even with your statistical data of close to 100,000 accounts that you still get replies telling you that you're wrong
The people here who keep telling us that we are destined to lose seem very suspicious to me. I cannot think of any valid motive for them telling us these things.

They can't be working for the brokers or banks. They want us to trade.
They can't be individual traders. If these people go around saying that 95% of people lose, and they continue to trade anyway, what was the point of their 'warning' if even they won't heed it? Maybe they are ex-traders who quit. If so, why hang around FF? How bored must they be?

I have an idea who these people are, but it will probably sound crazy to many of you. It occurs to me that there are government and business interests who don't want people to know that they don't have to work in the regular work world. They want us in their system, being used by their system. They don't want us to know that Work + Intelligence + Courage = Money. They want us to believe it is all impossible and give up.

I think these guys are propagandists working for somebody. I don't see any other motive that explains what they are doing. I think the intensity of their crying just indicates that they are worried because many of us are close to continual profitability. With continued work, research, and practice, I think a lot of us who haven't made it yet will get there. And when it gets out to more and more people that you don't have to work for somebody else who lives off your labor, the exodus will begin.
You know I gave this a thought some time ago, and I couldn't imagine what would happen in that scenario of mine I was thinking what if a majority of working people all around the world started trading, what would happen then? Who will replace them at work o.O ? There might be something there in your conclusion because some time ago trading in futures, options, forex and any other derivative required large sums of starting capital. Like in 100s of thousands of $ and more. Now it's all affordable to common citizen of the world
Quoting merquise
You know I gave this a thought some time ago, and I couldn't imagine what would happen in that scenario of mine I was thinking what if a majority of working people all around the world started trading, what would happen then? Who will replace them at work o.O ? There might be something there in your conclusion because some time ago trading in futures, options, forex and any other derivative required large sums of starting capital. Like in 100s of thousands of $ and more. Now it's all affordable to common citizen of the world
Yeah I used to trade futures, but you need a lot more money to do that than FX. My biggest overall problem in my trading career has always been that I didn't have enough money. The most money I ever had in a futures account was $10k. Most of the time I was trying to trade with $5k or less. Sometimes I started trading with just $1k or $2k. There is just no freaking way you can last long enough to learn much with that little funding. But FX is much better now, and you are right that is a game changer.
Quoting HedgePiglet
In an effort to deal with this lingering stink we constantly hear about how this mythical 5% of FX traders are profitable and the rest are all losers, I have discovered a public document with some VERY interesting statistics. I have long been an advocate that this 5% rumour cannot be accurate as every trader I know personally is in profit and I have finally found a reputable report that kicks the 5% in its nuts. I do not have info on exactly HOW profitable they are, the numbers only indicate IF the account has turned a profit in the previous year....
reputable source and public documentation. So... whats the source then?
Quoting justin7
it's amazing. even with your statistical data of close to 100,000 accounts that you still get replies telling you that you're wrong
Of course it's wrong.
It does not prove that trading the forex is profitable long term, - it clearly shows the opposite. Not a single broker can show a positive result!
It's a money loser across the board. Rather sad if you think of it...
But there is a bright side.
This money pit is a gigantic downward spiral where all the money is transferred to banks and brokers to build ever higher office buildings.
The design is perfect.
'Of course its wrong'. Not your finest material there bud.

The more I read of the report the more I am convinced that this 5% is vapour. As far back as 2011 the LOWEST average over a year was 22%.

So, lets do it this way. I challenge the negative-spinners to bring us ANY proof of this 5%. I have submitted my evidence, backed by specific brokers who you are free to contact for validation. These are their numbers not mine.

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Edit: I am ASTOUNDED by the blind rejection of anything other than gloom by a committed group of posters. In life there is always going to be a raving pessimist. Even on their birthday all they see on the cake is a fire hazard.
In life you get 3 types of people, those who can count and those who can't.
number 95% makes sense, maybe even higher, FX is an incredibly difficult market to trade. Just try to look at the open positions here on FF landing page from time to time and see the details - and look at the % of winning trades - it is so obvious that a big majority of traders lose a lot, they are always short / long at completely wrong levels.

I know many people on institutional level, professional investors / traders, and everyone will tell you that the FX market is the one which is the most difficult to read and that's why it is mostly not that much traded on the buy-side (i.e. hedge funds, asset management firms) because almost all FX focused hedge funds just underperformed heavily and had to be closed. It is the market mostly for sell-side (i.e. market makers - investment banks, brokers) which is making money from the spread, but most importantly from an information / flow advantage (i.e. seeing corps activity, real money vs. fast money activity, order book) which is much easier to transfer into a solid views / trades.

It certainly can be done, but it is very difficult on a consistent basis, especially on the retail side where nobody really has proper tools, news service (like Bloomberg Professional / Anywhere) and where nobody really knows where to go, where to find the informations, how to learn (i.e. no proper / skilled mentors). There are so many people being stuck (and will remain stuck forever) by trying to find mechanical / technical analysis woodoo systems producing money by just applying it without thinking on a consistent basis, but that's not how the game works and there is no such a free lunch out there. There is a non-stop thinking process, proper risk management, extremely important mental side (i.e. having big positions means that you always go to sleep with it - always need to check your BBRY and look at where is the market, even at home, when you wake up at night, when you go out with friends etc.) and many other factors.

In any case, I've been doing it for more than 5 years, currently being an FX PM / trader for one of the biggest buy-side companies in the world, turning over lots of USD millions every single day, but i can tell you that it is a never-ending story, it is a consistent learning, improvement, sometimes very bad moments / periods, a lot of stress and pressure. You have to understand the way the business works and adjust your expectations properly, there is nothing like +100% returns every single year (unless your risk management process is corrupt and you get lucky series).

Just wanted to put some 2 cents after a very long long time.
Quoting HedgePiglet
'Of course its wrong'. Not your finest material there bud. The more I read of the report the more I am convinced that this 5% is vapour. As far back as 2011 the LOWEST average over a year was 22%. So, lets do it this way. I challenge the negative-spinners to bring us ANY proof of this 5%. I have submitted my evidence, backed by specific brokers who you are free to contact for validation. These are their numbers not mine. {image} Edit: I am ASTOUNDED by the blind rejection of anything other than gloom by a committed group of posters. In life there...
as someone already pointed out, the numbers from brokers are wrong because of the interest being made on your deposit. My estimate is that more than 50% of traders blow their accounts in first 6 months of their live trading, depleting their balance to i.e. 10% of the original deposit which is often very small and therefore they do now withdrawn it (but instead they go back to demo and try some new stuff). If traders keep it like that, or if they just forget it there, it can happen that this very small remainder stays there and earns interest every single year - i.e. making the account holder a consistently profitable trader

The same thing has happened to me with my first live account with Oanda which i have blown up 4 years back.
Quoting katrooo
{quote} as someone already pointed out, the numbers from brokers are wrong because of the interest being made on your deposit.
If you read my follow-up post, in order to qualify the accounts had to actually perform a minimum quantity of trades in the year to qualify as a 'live' account.

Roll-over and interest did not count. If it suits you to position yourself in the 60% who lose (a figure I am considerably more comfortable with) then that is your prerogative. It turns out there were several others who generated a profit.
In life you get 3 types of people, those who can count and those who can't.
Quoting HedgePiglet
'Of course its wrong'. Not your finest material there bud. The more I read of the report the more I am convinced that this 5% is vapour. As far back as 2011 the LOWEST average over a year was 22%. So, lets do it this way. I challenge the negative-spinners to bring us ANY proof of this 5%. I have submitted my evidence, backed by specific brokers who you are free to contact for validation. These are their numbers not mine. {image} Edit: I am ASTOUNDED by the blind rejection of anything other than gloom by a committed group of posters. In life there...
I am not a pessimist whatsoever but if you have hard numbers (calling it evidence, from a reputable and public source), why not hand out this source? No offense but your claims mean absolute nothing if you cannot back them up.
Quoting katrooo
number 95% makes sense, maybe even higher, FX is an incredibly difficult market to trade...
What exactly is a 'difficult market'? I agree it is a different market from all the others, but I have not found it to be more difficult than S&P500 futures or live hogs or corn or anything else. The difference in currencies is that, they alone, aren't actually worth anything and so all their valuation is relative without any kind of absolute tethering factors.

Most markets like stocks and futures are trending/persistent markets. Currencies are usually reversing/anti-persistent markets. That causes trouble for people who only think TREND, which is most people. But all that is needed is to simply use the right tools and not the same ones you use on stocks and everything else.

The only way a market could be 'difficult' is if it were random. No publicly traded markets are random. You just need to figure out how they work and not expect them to work like stocks. I certainly don't have it all figured out yet, but I have had better results with swissy than with corn or hogs or anything else.
Quoting Robertk
{quote} No offense but your claims mean absolute nothing if you cannot back them up.
Google around. Or contact the brokers yourself and ask. Its what I did. It just so happens that I stumbled upon a report that supports the info I have been given over several years by any number of large organisations.
I'm not quite sure why all the vitriol? Surely if something emerges that suggests we have at least a reasonable chance of making money in this game, the mood would be jubilant? Yet it suits you to interrogate it as though its spurious. I have just a few minutes ago provided the names of the brokerages in the graph, remember this is not MY report, its an independent report on US accounts. You keep insisting its got to be around 5%. I say, please show me. And when you do, as I have done, I shall call the brokers in question and confirm that what you have provided is legitimate.

At the end of the day I am not an auditor. I simply find this obsession with 5% to be a complete joke. If its 10% then so be it, my position is 5% is a laugh.
In life you get 3 types of people, those who can count and those who can't.
Quoting Mingary
{quote} Of course it's wrong. It does not prove that trading the forex is profitable long term, - it clearly shows the opposite. Not a single broker can show a positive result! It's a money loser across the board. Rather sad if you think of it... But there is a bright side. This money pit is a gigantic downward spiral where all the money is transferred to banks and brokers to build ever higher office buildings. The design is perfect.
just a quick question (or two)

if trading is n't profitable - why are you actually posting on a trading site?

are you just trolling? or are you the good Samaritan we all think you are?
because if you aint trading (as in your eyes and you / we will only loose)
then there is n't much pointing posting or even wasting one minute here

more millionaires are said to be made during the few yrs after a recession,
so you (and us?) might be better spending time elsewhere?

you could even set up a site, Tradersalwaysloose.com
i dunno just a thought

no need to reply unless you really feel the need
Quoting HedgePiglet
{quote} Google around. Or contact the brokers yourself and ask. Its what I did. It just so happens that I stumbled upon a report that supports the info I have been given over several years by any number of large organisations. I'm not quite sure why all the vitriol? Surely if something emerges that suggests we have at least a reasonable chance of making money in this game, the mood would be jubilant? Yet it suits you to interrogate it as though its spurious. I have just a few minutes ago provided the names of the brokerages in the graph, remember...
I am not insisting on the 5%. But 99% of what you said above is simply a subjective opinion on why the 95% lose statistics will do traders no good. You will look for whatever information/merge information together that fits your opinion; which will result in your "report" being subject to false/manipulated information. So unless you can share your special report you "stumbled upon", why should people believe hard numbers in here? You and I both know they will not call brokers to verify...
  • Post #37
  • Quote
  • Edited 8:21pm Jun 12, 2014 7:35pm | Edited 8:21pm
Quoting Robertk
{quote} I am not a pessimist whatsoever but if you have hard numbers (calling it evidence, from a reputable and public source), why not hand out this source? No offense but your claims mean absolute nothing if you cannot back them up.
Here is a source that displays data that's very similar to the OP's. You can decide how reputable they are.

However, in terms of how many traders are long term successful, I believe these figures are overstated, for at least two reasons:

1. The data represents a snapshot, rather than a long term attrition rate. For example, suppose the success rate is 35%, and let's assume that there's some skill involved in maintaining profitability. Then the same 35 skilled traders could be profitable in successive quarters, while many the failed 65 could have dropped out (and therefore no longer show on the br0ker's books) and been replaced by 65 new faces. Hence the number of long term profitable traders is 35, while the number of failures could be potentially as high as 65+65+65+65+...... Of course I'm exaggerating somewhat, in that not all of the 65 necessarily drop out in each quarter, but hopefully I've made my point.

2. If you look at sites like collective2, zulutrade, eToro, etc, it's apparent that many traders (possibly more than 50%) use MM systems that are unsustainable. They don't use SLs, they add to losing positions, they use martingale variants etc etc. Many of these accounts remain profitable for several months before the MM eventually catches up with them, and they crash spectacularly. It's also significant whether "profitable" includes open positions, as many traders don't exit losses, and simply wait for them to return to profit before closing them, a strategy that can also eventually lead to ruin.

I'm merely guessing, but I suspect that the number of career successful traders is significantly less than 10% of all of the hopefuls who quit before they reach the point where they are genuinely profitable. I don't mean to sound conceited, but some of the threads in the Rookie forum demonstrate just how clueless many folk really are.
_____________

EDIT: I just found an old post of mine (here):
According research conducted by PhD student John Forman back in 2012 (refer: here, here), only 30 traders out of a sample of 8000, or 0.4%, were able to maintain profitability for 4 consecutive quarters. However, I attempt to explain why I believe this figure is probably too small, in my post. The subsequent exchange between myself and yunben (posts #304, #308) adds further relevant discussion.

Hence, summing everything up, the best that we conclude is that somewhere between 0.4% and ~33.6% of traders are (long term) "profitable" — and that all depends on how "profitable" is defined.
Quoting hanover
{quote} Here is a source that displays data that's very similar to the OP's. You can decide how reputable they are. However, in terms of how many traders are long term successful, I believe these figures are overstated, for at least two reasons: 1. The data represents a snapshot, rather than a long term attrition rate. For example, suppose the success rate is 35%, and let's assume that there's some skill involved in maintaining...
Will read your post and source tomorrow Hanover, 2AM here in the Netherlands, time for some sleep Thanks
Hi HedgePiglet.

Thanks for starting this thread. It's definitely food for thought. I feel the importance of your premise that a lot more FX traders win than 5%, begs further questions.

I for one, don't even consider if this is accurate or not. It doesn't matter. The market is what it is, the players being profitable or not, are what they are. As a keen enthusiastic new trader, it encourages me in a way but I realise the consistently profitable trader ideal needs to come from within. I will keep going with developing my system as I have already subscribed to the idea that I can and WILL become a successful trader.

The graph you provided prompts a lot of questions, probably not answerable as the data isn't there but interesting to think about.

It seemed that many traders across all brokers suffered a drop to their profitability back in 2nd quarter of 2011, later a drop in 3rd quarter 2012. I really wonder why? It would seem most probable the majors are traded in the majority by retail traders. Looking at various pairs EU, UJ, GU, it doesn't seem to me if prices were dead flat across all pairs.

Why does Oanda have some of the most successful traders? Personally I've looked at their demo MT4. its very responsive but I can't get my head around having the candles starting from NY time not GMT. So that begs a question. How the candles closes in relation to the actual forex day has no bearing on trader success. I suppose its a matter of context. Perhaps successful Oanda traders just concentrate on the open and close in relation to NY and can trade fine like this.


I am sure the brokers have even more data as to the makeup of the successful retail traders. Questions such as how long do these successful traders hold their trades for on average? What pairs do they mainly trade? I've read the most successful traders have larger accounts sizes. Has these accounts sizes grown considerably over the years?


If we presume a conservative 20% of traders are profitable overall. Assuming that FX trading is a zero sum game, with the losers providing their profitability, what overall affect would this have on the overall FX market? Perhaps it may only affect the retail market. Could it change the market? How might it change the market?
Does the percentage profitability of retail traders actually matter to the institutional traders? I realise the questions above are not answerable but would be fun to talk about over beers in a pub.


Perhaps the magical 5% of successful traders was correct back in the 90's when not all traders had so much information, pre-internet. It therefore stuck and suited the purposes of educators selling courses. Its quite funny, I went to a free "learn from the best" trader seminar and he too was espousing the 90% failure, 10% make it. But he can turn you around. But even after paying for courses and then doing a big exam and then being monitored (not mentored) the odds were 70% profitable (I don't know what degree) and 30% giving trading away. He doesn't just trade forex and relies 90% on fundamentals. Which personally I could never ever do.
"It's life, Jim, but not as we know it."
i think the point is that it isn't as hard as some of the pessimists on this forum try to always say for some reason.

There is no evidence backing up the 95% fail statistic is there? Someone please show some numbers behind it like op here did. Not just use 95% because it's something you heard before or because it's on a forum or all over blogs and all over trading courses.
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