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

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

  1. Visaria

    Visaria

    Cheers ...just as an aside most non retail speculators lose in probably the same proportion.
     
    #21     Jan 13, 2018
  2. Sig

    Sig

    Would love to read those papers if you have them, sound very interesting.
     
    #22     Jan 13, 2018
  3. https://www.financemagnates.com/for...iencing-losses/#sthash.ID5Rlr4w.LBTGDWPb.dpuf

    According to the results of its exclusive study, nine out of every ten individual customers experiences net losses – the sample size included both FX and CFD (Contract For Difference) traders in France, in what has become the first comprehensive assessment of these instruments in this manner.

    Furthermore, the final results of the study yielded that over a four-year period (2009-2012), the percentage of investors experiencing losses came in at 89%. The average loss of a customer during this period was $13,800 (€10,900).

    In the four years combined, a total of 13,224 customers experienced aggregate losses of nearly $220 million (€175 million), with the remaining 1,575 customers earning a combined $17.51 million (€13.8 million).
     
    #23     Jan 13, 2018
  4. DaveV

    DaveV

    So where did the remaining $202 million ($220M - $18M) go? Is this article implying that the brokers got more than 90% of the total? Or did it go to traders outside the sample?
     
    #24     Jan 13, 2018
  5. sle

    sle

    Interesting. My thinking was that random trading is more or less is a random draw from the market which should asymptote to the distribution of the market. I am guessing that once you start chaining random returns that is not true any more, but it's not intuitive to me yet. Very interesting, would really like to read the paper!
     
    #25     Jan 13, 2018
  6. Ok...glad @Xela jumped in on this one. To reiterate my point, there are selective forces at work that make the distribution not a normal statistical distribution. To explain those selective forces, someone with the requisite background to understand the inner working sufficiently to explain:
    But it brings me back to my earlier question, I wonder how those numbers look when corrected for those that do not outperform treasuries.
     
    #26     Jan 13, 2018
    Lukas V and Xela like this.
  7. Handle123

    Handle123

    Forex draws in underfunded/undereducated young traders often start with next to nothing of trading accounts, so the first 100 to 150% they make in a year goes straight for commissions, don't tell me you don't pay commissions, you are gullible. When forex started Euro/US Dollar spread was 3 pips, hmmmm $30 bucks !!! Yea, you not paying commissions, they paying more than I would trading futures. And if currency is seldom traded, paying huge spreads. Only gullible Americans dumb enough to keep falling for the book "How many ways to screw thyself".
     
    #27     Jan 13, 2018
    dealmaker likes this.
  8. d08

    d08

    I think to qualify as a "forex trader" in this list, all you need to have is authorization to trade forex. Then there are people who are futures traders but did 2 forex trades a year. Would be interesting to know how "forex traders" are determined.
     
    #28     Jan 13, 2018
  9. sle

    sle

    Just FYI, a quick glance at the tick data - median b/o for EUR is 0.4 pips. Also, 1 pip is more or less equivalent to the bid/ask spread you see on the spooz and even 3 pips is miles tighter than what you get in VIX futures. You should mainly compare bid/offer to the volatility that the asset is realizing.

    PS. But I agree with the spirit of what you are saying, just being a sticker for details :)
     
    #29     Jan 13, 2018
    Handle123 likes this.
  10. comagnum

    comagnum

    I take that comment was sarcastic - quarter after quarter about 45% of IB retail Forex accounts are profitable. I like these odds a lot. :D


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    Last edited: Jan 13, 2018
    #30     Jan 13, 2018