95% Lose in FX is a Myth: % Profitability in the US last year | Page 8 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Why you lose money and will always lose 44 replies

1% Money Management is a myth, fib is a myth and so on.. 45 replies

Did we Lose any Brokers? Are we going to Lose a few? 1 reply

Vegas Profitability 3 replies

Risk Multiples and Profitability 1 reply

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

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

  • #141
  • Jun 16, 2014 6:42pm Jun 16, 2014 6:42pm
The profitability report itself is a flaw. It only took those active account into considerations. Non-active accounts are most likely suffering losses and eventually give up are not taken into the statistics.

So the conclusion is the profitability report has a survivorship bias, which tends to convince new blood that forex trading is as easy as abc.
  • #142
  • Jun 16, 2014 8:47pm Jun 16, 2014 8:47pm
The founder of London Capital Group (broker) says the company did a study on it's 200,000 clients and not even a single loser (over 6 months) turned into a winner later. In another video he says 80% of the clients are losers.

Watch the segment at 05:15:

Inserted Video


And his opinion on the forex trader's favorite weapon (MT4):

Inserted Video
  • #143
  • Jun 16, 2014 9:39pm Jun 16, 2014 9:39pm
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....
If all the facts were to be revealed, the chances are that if you offset the small amount by which profitable traders are profitable, with the large amount which unprofitable traders have lost, the chances are that the statement should be more like "....95% of all trader capital is lost...."

Just counting the number of accounts that went green versus those that went red tells a story that is far from the truth about how much money is lost. It is not the number of accounts - green vs red - but the number of dollars by which they went green or red!

-tah
  • #144
  • Jun 16, 2014 9:52pm Jun 16, 2014 9:52pm
Quoting Fractalist
{quote} I disagree, a bit. Sure, they make money off losers. But you are forgetting the spread, which is their main income. I believe that the #1 'desire' of all brokers is simply to fill as many trades as possible. They don't concentrate on holding outstanding positions much at all. They sell to one guy and 1 second later they buy from another. They are net zero most of the time, focusing only on just harvesting pips from the spread. The spread is a near-zero risk money maker for them. Holding positions is much more risky and costly (they have...
You, sir, have hit the nail on the head. I would only add that the market makers also earn profit by a spread on interest rates. They shave off as much as 0.25% long end and add as much on the short end, so your carry trade spread narrows by 0.5%.
  • #145
  • Jun 16, 2014 9:57pm Jun 16, 2014 9:57pm
  •  Leebos
  • | Joined Aug 2012 | Status: I do not believe in a fate that fal | 75 Posts
Quoting HedgePiglet
{quote} Im pretty sure I didn't have a hand in any of these magical %'s. I just chuckle at the vitriol. The thread is simply : It seems 5% is a myth. I have submitted some compelling data. I'd be truly interested in seeing data that moves the numbers towards the 5%. Please? (I'd have thought any sign of good news would invite cheers?!)
I like the well publicised 5% figure. It makes my clients think that I'm something exceptional, and keeps them loyal

However, being as I'm pretty sure that I'm not especially talented, that in itself brings the validity of 5% into question

Thank you Hedge piglet. I only ever visit these forums when a particular title catches my eye and promises to bring the Mingers out of the woodwork and a smile for the onlookers.
  • #146
  • Jun 16, 2014 11:10pm Jun 16, 2014 11:10pm
Given the tone of the forex hopeful; it looks like the forex attracts the broken hearted.
Madam forex is a cruel Mistress..
Places like forex factory are a purgatory for those that are shell-shocked and in denial.
  • #147
  • Jun 17, 2014 1:08am Jun 17, 2014 1:08am
Quoting Leebos
{quote} I like the well publicised 5% figure. It makes my clients think that I'm something exceptional, Thank you Hedge piglet. I only ever visit these forums when a particular title catches my eye and promises to bring the Mingers out of the woodwork and a smile for the onlookers.
That did make me laugh. You are most welcome. It does look pretty bleak on the face of it!
In life you get 3 types of people, those who can count and those who can't.
  • #148
  • Jun 17, 2014 3:19am Jun 17, 2014 3:19am
Quoting Adal
The founder of London Capital Group (broker) says the company did a study on it's 200,000 clients and not even a single loser (over 6 months) turned into a winner later. In another video he says 80% of the clients are losers. Watch the segment at 05:15: http://www.youtube.com/watch?v=O7OLXcKw3gA And his opinion on the forex trader's favorite weapon (MT4): http://www.youtube.com/watch?v=Sso__1EXHc0
Comes accross as a genuine person Simon does. He used to post quiet regular over at trade2win. In fact I seem to remember another CEO stating the 80%-20% figures. They also said the winners tend to stick to a few instruments.

Capital Spreads don't seem to be doing mt4, it's mentioned on their site but the links seem to be dead.
  • #149
  • Edited 6:04am Jun 17, 2014 5:50am | Edited 6:04am
Intertrader use MT4, they are a white label for LCG or they were

i think with Simon it was a case of better the Devil you know and at least seemed fairer than most spread betters,
he regularly used to post on Trade2win answering peoples concerns about platform issues and most things LCG related, he was nt quite so open though as he is in the videos, but did seem a decent person

but what ruthless bunch they are over at LCG i did nt realise he was also the founder,
they kicked him out after a bad quarter, possibly as he was being too fair

Capital Spreads has gone down for usability and fairness ever since he left,
and Intertrader is shocking to use (imo)


anyways thanks for the videos
  • #150
  • Jul 9, 2014 1:24pm Jul 9, 2014 1:24pm
From what i know most people working the FX market is not in it to make profitable trades. Most people are bank employees with targets of when preferably to exchange one currency for another. They dont really trade, because they dont know how to and thats not really their job.
My signature is: "Classified".
  • #151
  • Aug 5, 2014 12:19am Aug 5, 2014 12:19am
Was it mentioned that the balance and the real equity are not the same thing? I am pretty sure that these kind of statistics based on the balance, i.e. closed positions. The summary of the open positions is always negative. Retail traders tend to carry floating losses for a long time, while they realising the profit early.

Many years ago I have seen some numbers from my country. The sum of the balances showed huge loss, and the open positions carried same size floating loss. If that statistics is any kind of indication the real picture is much worse than the one the thread starter wants us to believe in.
  • #152
  • Oct 13, 2014 5:19am Oct 13, 2014 5:19am
If more proof was required that most traders are losers...

Furthermore, the final results of the study yielded that over a four-year period of time (2009-2012), the percentage of investors experiencing losses came in 89%. The average loss of a customer during this period was $13,800 (€10,900).

In the four years combined, a total of 13,224 customers experienced aggregate losses of nearly $220 million (€175 million), with the remaining 1,575 customers earning a combined $17.51 million (€13.8 million).

http://forexmagnates.com/canadas-amf...encing-losses/
  • #153
  • Oct 13, 2014 6:30am Oct 13, 2014 6:30am
Quoting Adal
If more proof was required that most traders are losers... Furthermore, the final results of the study yielded that over a four-year period of time (2009-2012), the percentage of investors experiencing losses came in 89%. The average loss of a customer during this period was $13,800 (€10,900). In the four years combined, a total of 13,224 customers experienced aggregate losses of nearly $220 million (€175 million), with the remaining 1,575 customers earning a combined $17.51 million (€13.8 million). http://forexmagnates.com/canadas-amf...encing-losses/...
Yes that is really a teller about trading.

I`ve checked some stats, and looks like there are on average about 90.000-100.000 bankruptcies / month in the US.
And about ~500.000 new businesses each month, so that is only a 19-20% failure rate for the firms, yet there is a 89% failure rate in trading

http://www.forbes.com/sites/jasonnaz...ll-businesses/
http://www.uscourts.gov/Statistics/B...tatistics.aspx

So obviously if you have like 10.000 or 50.000 its much safer to make a new business because failing there is 69-70% less likely than in FX. Really surprising.
"There's a sucker born every minute" - P.T. Barnum
  • #154
  • Oct 13, 2014 7:17am Oct 13, 2014 7:17am
Quoting Proximus
{quote} Yes that is really a teller about trading. I`ve checked some stats, and looks like there are on average about 90.000-100.000 bankruptcies / month in the US. And about ~500.000 new businesses each month, so that is only a 19-20% failure rate for the firms, yet there is a 89% failure rate in trading http://www.forbes.com/sites/jasonnaz...ll-businesses/ http://www.uscourts.gov/Statistics/B...tatistics.aspx So obviously if you have like 10.000 or 50.000 its much safer...

A couple of points.

1. Businesses fail at a much higher rate than the rate you suggest as many of failed businesses just simply fade away and never file for bankruptcy. http://www.statisticbrain.com/startu...e-by-industry/ ..

2. I tend to think the vast majority of people that come into trading don't approach it like a business, they see it as a get rich quick scheme, which is responsible for the vast majority of flame outs. The reality is that the vast majority of people simply are not cut out to trade as they:

a. don't bother to put in the effort
b. don't bother to put in the effort
c. don't bother to put in the effort
..
...
x. lack the ability to handle losses
y. lack the required patience
z. lack the required mindset
  • #155
  • Oct 13, 2014 7:25am Oct 13, 2014 7:25am
Quoting endroute
{quote} A couple of points. 1. Businesses fail at a much higher rate than the rate you suggest as many of failed businesses just simply fade away and never file for bankruptcy. http://www.statisticbrain.com/startu...e-by-industry/ .. 2. I tend to think the vast majority of people that come into trading don't approach it like a business, they see it as a get rich quick scheme, which is responsible for the vast majority of flame outs. The reality is that the vast majority of people simply are not cut out to trade as they: a. don't...
Yes indeed, seeing a couple of ads on the internet where they hype the success rate, is really a good lure. As in if you start a business you are somewhat more prepared or atleast have basic knowledge about that field of industry.

Most traders are just caught by the hype and want to transform 1$ into a billion, while totally ignoring the other side of the coin which is, what if I lose it all before it happens?

About 15 or 20 people in the industry had a 50.000% growth, while the many more millions had -99% growth, yet just because those 15 people became billionaires from 100$ accounts, doesnt mean that everyone else will, most will lose all their money.
"There's a sucker born every minute" - P.T. Barnum
  • #156
  • Oct 13, 2014 8:50am Oct 13, 2014 8:50am
quite shocking stats as usual,
who would of thought the total pay out was so low,

and after prancing Phils winnings it does n't leave much for everyone else

i thought everyone was a winner, as it certainly seems that way sometimes,

the endless ads on Bloomberg and CNBC with the usual bucket shops is to put it mildly gross incompetence,
miss leading and mostly a down right scam and does nt say much for the industry as a whole

and the emails most receive daily are beyond annoying
make $2000 in 5mins, everyday... really where to i sign up and no wonder so many get sucked in,
if had a dollar for every one of those emails, id already be a millionaire

the stats do clearly show which business its best to be in though
nice odds if you can get them

are we really moron's ? that can't grab a few pips here and there
or is there more to the stats, like 50%+ of all brokers are cheats
  • #157
  • Oct 13, 2014 9:08am Oct 13, 2014 9:08am
Whether the 95% is true or not is not important to me at all.
I have a small question to ask . When the stats are being mentioned about the % of profitable accounts , does it take into consideration the no. of failed accounts/dormant accounts (accounts that were margin called and accounts that were closed after losses being incurred.)
If we look at this forum there were many members who came and later on their ids are no longer posting or doing any activity. My assumption is that they incurred losses and walked out from this arena. The dormant members in the above scenario can be found out ( FF can provide ) but the guest ids can't be tracked.
Striving to Develop & Implement Innovative Ideas
  • #158
  • Oct 13, 2014 9:48am Oct 13, 2014 9:48am
Quoting Carlsberg
quite shocking stats as usual, who would of thought the total pay out was so low, and after prancing Phils winnings it does n't leave much for everyone else i thought everyone was a winner, as it certainly seems that way sometimes, the endless ads on Bloomberg and CNBC with the usual bucket shops is to put it mildly gross incompetence, miss leading and mostly a down right scam and does nt say much for the industry as a whole and the emails most receive daily are beyond annoying make $2000 in 5mins, everyday... really where to i sign up and no...


Look here:

http://lmgtfy.com/?q=BEST+FOREX+HOLY+GRAIL+SYSTEM

186.000 Holy Grails found by Google, yet 89% of traders still lose money. How is that possible ?

Traders are so dumb, really.
"There's a sucker born every minute" - P.T. Barnum
  • #159
  • Oct 13, 2014 10:08am Oct 13, 2014 10:08am
This is really Holy Grail but for those who invent it. Those mass of newbies who read this stuff is mere "money source" for manipulators. That's it.
  • #160
  • Oct 13, 2014 10:39am Oct 13, 2014 10:39am
Quoting Adal
The founder of London Capital Group (broker) says the company did a study on it's 200,000 clients and not even a single loser (over 6 months) turned into a winner later. In another video he says 80% of the clients are losers. Watch the segment at 05:15: http://www.youtube.com/watch?v=O7OLXcKw3gA And his opinion on the forex trader's favorite weapon (MT4): http://www.youtube.com/watch?v=Sso__1EXHc0
The guy in the video makes me think of Mr Bean

This guy is not a trade he is a broker so what does he care about the mt4 platform.It too basic he say and old.

Just the way a lot of traders and people think.IF its old or simple it no good well traders have been making money the same way for a hunderded years before mt4 was ever though off

MY bad if its off topic.

Great thread HP

All the best

Rooi.
We miss 100% of the shots we don't take
0 traders viewing now