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

"O**** - 32.5% in Profit"

I don't know about the other brokers, but I do trade through O****. They pay interest on carry trades, so I'm assuming most of their profitable clients are holding carry trades. But, a more important point needs to be made here - just being profitable one year means nothing. What matters is profitibility after 5 years, 10 years, etc. There's the rub, and that's what Mingary is pointing out.

I do disagree with one thing - most millionaires don't provide society with anything useful. They're rich because they're societal leeches. I see no intrinsic value in selling junk we don't really need, nor is speculating in real estate serving any real function either. Nor for that matter is dribbling a basketball or acting in a movie much use to society.

trading forex doesn't help society either , and nobody is twisting your arm to buy their ' junk ' . Obviously lots of people do like their junk or they wouldn't buy it and the junk seller wouldn't be rich . ( by the way , society is helped by these rich people employing other people to make this junk )

why are we trading forex if the purpose isn't to get rich? ( assuming the success rate is as low as people think )

why do people want to hate on rich people? lots of rich people are good, quality people that support their local communities

I think even if i'm rich I'll still be trading bucket shops. It's more fun than video games.

hey, i definitely agree with that, i will always be trading forex , no matter how rich i get!

Feel the same. It's fun trading forex and the bonus

Definitly agree, i trade because i love it...much fun then video games, profit is just a bonus

And another study, this time from Poland.

According to the study, about 81% of clients of forex brokers in Poland realized losses on their accounts, while 19% of the clients have achieved gains. The study encompassed results gathered between the 1st of January and the 31st of December of 2013.

http://forexmagnates.com/exclusive-p...ults-unmasked/

This was over a one year period. If they were to extend that to three years, I'm pretty sure the number would go to over 90% losers.

Good info

But how do you - or the Forex Magnates article - explain the original post of this thread in which the stats show many traders are in fact profitable?

95%+ Men who day trade are losers. But the success rate of woman are much higher than 5%.


http://vantagepointtrading.com/archives/13922

The reason is mentality and ego of men are dominating in nature. Most men never learn from mistakes or have a wrong attitude. Women who come to trade are more determined to win and more readily able to learn. It is a interesting read.

Good thread.

I get tired of reading things like "Every time i open a trade it goes against me, my broker must be a scam!" or better yet, "Fore is a scam".

Or things like, "i was winning but then the broker started to widen spread etc and i lost it all". So at what point did you stop and think what you where doing is wrong rather then blaming something else? Id say never. It is just so much easier to find a reason for your failure other then blaming yourself.

The 95% of traders lose figure has been around for a long time with no real evidence. Just assumptions. But if you are loosing then it makes it easy to believe and easy to justify your loosing is just due to the fact your part of that 95%. If 95% where winners and you kept loosing im sure you would be saying that figure cannot be true.

When reading threads and hearing how people trade it is easy and in fact a great learning tool to see how not to trade. Forex is not easy, and i think the mistake is often made that it is and therefore when you loose you just cannot comprehend it, and begin to believe that something else must be causing it.

And how is this 95% calculated exactly anyway? Is it the actual percentage of people who loose everything or just a little then give up? Lets say someone trades 0.01 lots in their first year to practice, makes a yearly loss but then begins to win in their second year of trading all whilst another person is just beginning their journey...

And just like one of the posts stated, usually people who make big bucks dont go around telling people about it. In fact they dont need to as you can tell by looking at them and their lifestyle generally.

It is easier to believe something if you can imagine it and so if you read post after post of negative comments regarding fore and the large percentage of losers then you are going to begin to believe that this is reality and that your a destined to fail. Anything more would just be luck.

Why would someone buy lottery tickets but scoff at the mention of trading forex? Because of all the positive stories regarding wining the lottery. People can make this psychological connection. You dont hear many stories about 99% of people loosing at the lottery, just about the 1% who win.

But just stop and think and compare to other things. Lets say you want to become a pro sportsman or woman. These people train all there life but what percentage actually go pro and make a career out of it? Im sure its fairly similar.

Or how about becoming a company CEO. How many people actually start at the bottom and work their way up to be CEO of a large organization? Anyway, ill try and wind up my rant here....

Great thread..
Lots of detailed insights.
In Post#1, HedgePiglet basically says.."Heres some annual figures that prove that the proposition that "95% of traders loose money" is Boloney?"
The data offered are part of the returns by major Fx retail broker (US) to CFTC, for the profitibility of their client profile at EoY.
It doesnt include largely less regulated non US brokers or the raft of under/unregulated bucketshops that populate the larger marketplace. **
The odds from the data, suggest that, on average, in the case of retail traders using these biggest, most regulated and most reputable brokers,
ONLY 2 in every 3 will loose money in any given year. Not 95%.

But the proposition "95% of traders loose money" doesnt mention a time scale? And IMHO assumes the qualifier "OVER TIME".
In other words it refers a comparison of the equity realised on exiting the account with the equity and capital theyve invested in the course of operating the account... further discounted by their cost of labour and the prevailing "Risk-Free" rate.
So while the data is persuasive in an annual context, it doesnt prove what I understand to be the meaning of the 95% proposition.
That would need data on % of account holders that CLOSED their accounts with less capital than invested over the trading period of the account, in the previous year, and possibly and the average age of those accounts. Internally available but not published stats.

What can be INFERRED .. not proven, however is that when compounded over 3/5 years the 65% loss rate could reasonably result in a figure much much closer to the mythical 95% than the 65% suggested by the data provided. And that I think is the real point.

Sadly Mr HedgePiglet, far from proving your case the CFTC figures rather contradict it.

But lets face it.. does it really matter?
The quote "95% of retail traders loose money.." isnt a statistic, or a Urban Myth to be proven or refuted..
Its a proxy for saying, long term..
"Retail Fx trading for the vast majority, is a mugs game."

Have I missed something?

** See Polish and recent French reports .

Few links to information that covers the topic and may help you to avoid the costly mistake of leveraged forex trading:

http://www.financemagnates.com/forex...accounts-down/

http://www.theforexguy.com/forex-traders-lose-money/

http://thereformedbroker.com/2011/04...-boiler-rooms/

........


If you unwrap the nice "hundreds of millions USD a year" marketing hull around retail forex the only thing that remains is gonna be your pain in the end!

Keep smiling!