Most forex retail traders lose money. Why is forex so difficult?

Discussion in 'Forex' started by helpme_please, Jan 12, 2018.

  1. Interesting stats from IBKR's forex retail traders. Most of them lost money in 2017.

    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?
    matthewyoung likes this.
  2. niko79542


    Ease of access to leverage combined with whipsaw from bank money.
    ih201 likes this.
  3. DaveV


    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.?
  4. Banks make money by cheating.

    How is a retail trader going to cheat?
    ih201, aldrums and d08 like this.
  5. dealmaker


    Most forex trades are OTC therefore small players have no chance...
    murray t turtle likes this.
  6. 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.
  7. sle


    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
  8. Sig


    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.
  9. sle


    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).
  10. erick_red


    Because everyone thinks it's easy and the majority of the case wins their anxiety
    #10     Jan 12, 2018
    lekshum likes this.