Interesting stats from IBKR's forex retail traders. Most of them lost money in 2017. https://www.interactivebrokers.com/en/index.php?f=3731 Why is forex so hard to make money? For elitetraders who trade multiple asset classes like stocks, bonds, commodities, forex, why do you think forex is harder than the other asset classes?
I don't know why forex is so hard to make money, but I can't help but notice from the link, that mathematically, every year, the forex trader performance is very close to 50-50 luck, less a couple percent for commissions. Do you have other retail account performance links, for equity traders, options traders, etc.?
Unfortunately, I don't have similar links for other asset classes. However, based on anectodal evidence, investors in bonds, equities and real estate seem to have a higher chance of winning. Maybe options traders also have a difficult job like forex. I don't know many options traders.
Because equities or bonds are investable assets (so they have real world drifts) while FX is stationary. So you get roughly 50/50 winners and losers, with a small tc scrape
Exactly. Equity traders fool themselves into thinking they're responsible for their profits rather than the upward bias of equity markets. Forex traders don't get that benefit, so statistically you would fully expect the vast majority to lose money even in completely fair markets when you account for trading costs.
Hmm (waiting for my friends to show up for dinner so bored stiff). In a frictionless world the expectation would be that half makes money and the other half loses it, with the whole group normally distributed. Once you account for the frictions, the mean should get skewed by the average transaction cost times the square root of time (or multiple of that depending on the trading frequency).