For all the replies that blame the broker, I think this is highly misguided. I understand the issues when dealing with a business that matches the orders internally, and the fragmented nature of forex trading makes this all possible, but I am certain that if these same traders who are losing money were able to switch instruments to something that goes to an exchange, where there are more established rules, it wouldn't change the outcome of the distribution of winners and losers. Yes there are times where the "bucket shop" seems to steal your money, but a profitable trader very quickly learns how the game is played. If trading Forex, you can't have tight stops that will be picked off, simple as that. Its not like these bucket shops that internalize orders can move the market so drastically in one direction while other quotes from other institutions are way off. My point is that if you look at why traders that trade Forex lose money, it more than likely has nothing to do with the broker, but everything to do with the trader, their method, their psychology. People with $1000 accounts of less clearly cannot trade futures (for the most part), so they have to go gamble elsewhere. If you take a losing Forex trader and you give him more capital and have him trade something on the CME, he will still be a losing trader. And if you take a profitable trader who trades futures, and force him to trade Forex at a bucket shop, he will more than likely very quickly learn the necessary risk parameters for said instrument and adjust his strategy accordingly. He might see that its not the best instrument to trade given the allowances he has to make, but his knowledge will translate to the Forex market. The losing trader doesn't have the knowledge and experience, and this is why he is losing, not because of his broker.
I will agree at forex the bids/asks gotten tighter through the years as it is everyone against IB who is legit and tighter spreads. But when you go to more outside of Euro, spreads widen and at times more than 5-10 pips is not unheard, long term they certainly can make sense as I will do a third of a position in them and hedge at futures broker. The key at futures are using limits, patience is usually rewarded. And all this means great deal to experienced traders as inexperienced most likely going to loss on lack of information.
Obviously I have only a fraction of your experience (and at the moment the only forex I do myself comprises pretty occasional intraday trades on Euro and Pound futures) but over recent years even I've been becoming increasingly aware of what you say, there.
Agree! It all boils down to skills. A real skillful trader who has the real knowledge can adapt to forex or any other market even the extreme low volatile market in a matter of days or weeks. Most will take many years or never unfortunately. To be fair, even the most successful investor in the world don't want to touch the forex market. Warren Buffett lost billions on forex market many years ago. He said spot forex market is very unpredictable. A currency can have very sound fundamentals and valuation, but it stinks. It is not the same as the stock market. He pull out all his funds out of forex market many years ago. I think spot forex market is the ultimate battleground for all traders. It is where the liquidity is and it is where the big players are: governments, multinational companies, banks, hedge funds, insurance company, sovereign wealth funds, investment firms and wealth individuals. Just the governments alone. They have unlimited money to battle against anyone who cross path against their agenda. They don't care about profit. If they said something about where they want their currency value to be at, traders better listen or else they wreak havoc on your account. Nations are fought and lost in the currency war.
There was a futures broker bankruptcy like 10 years ago (the thread about this is still burried somewhere in this forum), and the court documents showed that ~90% of clients lost money. That is by the way way worse than Oanda, who must disclose the number of profitable/lossmaking client accounts (see: https://www.oanda.com/resources/legal/united-states/legal/regulatory-public-disclosures) Its not only FX, its just that short-term punting with charts is a damn difficult proposition.
There's a reason why they chose to report quarterly numbers. The percentage of profitable accounts falls exponentially with time. If you look daily that would be close to 50/50, quarterly 45/55 and yearly that would be 20/80.
Sure. Longterm the numbers are very likely worse. Just saying numbers probably dont look much better in futures.
It may be even worse. In FX average transaction cost would be $30-50 per million (for major pairs). If you take CL your cost is more than $100 ($5 comms + $10 spread per lot * 8 lots per mil roundtrip).
Trading futures currencies is much more cost effective these days over Forex. CL is significantly more cost effective to trade than Forex. A comparable Forex position will cost you twice as much to put on. The general thing at work here is the the less $ you need to get well positioned - the greater the costs of trading is.