FXCM Release Extra Forex Trader Profitability Statistics
Just in case you hadn't noticed, today is October 18th 2010. Today is the day that all those new CFTC regulations come into force, and when a forex trader opens a new account brokers must now reveal to them quarterly account profitability statistics covering the previous year. FXCM have done just that, and here are their numbers:
|Quarterly Report||% Profitable||% Unprofitable||Total Non-Discretionary Accounts|
|Sep – Dec, 2009||26%||74%||22,371|
|Jan – March, 2010||25%||75%||19,049|
|April – June, 2010||23%||77%||17,771|
|July – Sep, 2010||23%||77%||15,023|
Comparing FXCM's profitability statistics with Interbank FX's that we published last week reveals firstly that FXCM's clients seem to be slightly less profitable than Interbank's, with an average of 24.25% against 29%. Secondly FXCM has slightly more active non-discretionary accounts, a quarterly average of 18,554 against IBFX's 17,525. Note that FXCM's figures include only accounts with FXCM LLC. I anticipate that FXCM's figures will increase far more than Interbank's for the final quarter of 2010, when lots of dollars that left the United States in search of a balmier forex trading climate on this side of the Atlantic are forcibly repatriated courtesy of the CFTC.
In addition to the legally required statistics, FXCM have also released to us additional information, breaking down profitability by trading account size:
|Equity Range||% Profitable|
|$0 – $999||27.89%|
|$1,000 – $4,999||40.52%|
|$5,000 – $9,999||42.36%|
It's interesting, although not unexpected, that traders with larger accounts are more often profitable. However it's still true to say that in all categories most traders are unprofitable.
Note that we're not really comparing like with like here, since these figures are monthly averages. The "official" numbers instead cover individual quarters. Comparison between the two tables does provide additional evidence for the suggestion we made when we analysed Interbank FX's trader profitability statistics. FXCM's figures confirm that if you increase the time period you use when assessing profitability, the percentage of profitable traders decreases. Unfortunately this additional data doesn't include the number of traders in each equity range. Nonetheless the lowest percentage in the monthly figures is 27.89%, compared with the largest of 26% in the quarterly figures which certainly rams that point home. FXCM have assured us that as they crunch more numbers they will release additional statistical data to us, so hopefully in the not too distant future we'll be able to come to firmer conclusions about variability in profitability between different groups of traders.
However the unavoidable conclusion from all the numbers that have been crunched and then released so far is inescapable. Most retail forex traders lose money.
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