The US retail forex industry is now
showing obvious signs of slow
down,
the number of non-discretionary retail forex accounts
held with US
based reporting brokers
down to record 97,206,
the lowest count
reported since Q3 2010
when first such report was released.
The extreme
regulatory climate
has made it extremely difficult
for American brokers
to attract new clients.
However, out of the top ten forex clients
listed
the lowest recorded level of profitability
was circa 32%.
It’s fascinating how many of us would receive
a paradigm lightening
bolt to our pre-conceptions
when hit with the kind of figure that led
this article.
I’m not alone in taking ‘at face value’
some of the data
and assumptions
that come our way as forex traders.
Instinctively I
‘knew’
that the unsubstantiated figure often hurled around trading
forums;
that only 10% of traders are profitable, was nonsense.
Go now --> FXCC
Having enquired at director level
and read a comprehensive investors
intelligence report,
the reasonable figure for success was estimated at
20%,
double the previous assumption,
but 39% certainly took many by
surprise the first time it was published,
even more so that the top ten
USA brokers have clients
enjoying a 32% success rate.
There is, however,
a caveat, my twenty percent figure
includes spread betters who could in
theory
be skewing the data
due to being much worse traders (en masse)
than pure play forex traders,
a theory worth examining at a later date.
Go now --> FXCC
A question often raised by these type of success stats is
“are a tiny percentage of successful traders distorting these figures?”
But generally percentages, averages
and the distribution of random data
doesn’t work like that,
and we should already know this being traders.
If circa 40% of trades are profitable
then the figure for the percentage
of actual traders being profitable
will be fairly close to that number.
In the first paragraph we posed the question
why are so many traders
unprofitable?
Well armed with this new information
I wonder if that
assumption shouldn’t be examined in more detail.
Go now --> FXCC
Firstly, out of the
circa 97,000 live accounts held in the USA
roughly one third are
profitable,
now not all of these account holders will be full time
dedicated sole occupation forex traders,
some accounts would be used as
‘punting’ accounts,
folk who bet as opposed to trade
(and we can save
the obvious cerebral discussion
on the difference for another time).
