IB has most number of profitable traders (2014)

wrbtrader said:
How's this possible when so many so call bashers say over 90% of traders are losers. Wouldn't it even be more of a shocker if some of those % profitable traders are using TA.

Seriously, there are many brokers not on that list and talking to one a few days ago...38% of their day trading clients that are trading futures (not forex) are profitable traders. Many of those profitable traders use charts to make trade decisions.

Anyways, those stats must not be true because nobody makes money using TA and only a "small percentage" are profitable. Brokers must be lying to have stats that contradicts the bashers. :cool:

P.S. sarcasm
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Not every person with an account is a trader, I'm sure plenty are investors. Also the rate of failure is less for swing-traders than day-traders.
 
debitspread said:
Obviously it's a question of timeframe. The %Profit of ~30% across brokers in that table is for a single year. If you have a 70% chance of loss any given year, then over a 5- 10 year timeframe your chance of loss tends toward 100%. Hence the '95%' number you often hear.
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A few years back someone posted a 5 year stats of about 10 brokers. Not sure how folks gets their hands on this type of info from the broker unless they are brokers themselves that worked at the firm. I don't remember the specific numbers back then but they look similar to the stats roberk posted but just different brokerage firms.

Yet, the numbers aren't detailed enough to make any serious conclusions. For example, stuff I would like to know the average profit per account "after" commissions, average capital, detailed numbers on day trading, swing trading, position trading and other stats instead of just saying a vague number like 38% profitable.

Autodidact said:
Not every person with an account is a trader, I'm sure plenty are investors. Also the rate of failure is less for swing-traders than day-traders.
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The data I mentioned...that particular broker surveyed their clients...they were day traders. Most brokers actually do surveys of their clients. I believe the rate for swing traders was close to that of day traders. As for investors...I don't remember seeing any information about such. ;)

For what its worth, Dukascopy has yearly, quarterly real trading competitions...day traders and swing traders (the top performers) are close. Yep, many use chart analysis for trade decisions based upon some of the interviews of the winners.
 
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wrbtrader said:
How's this possible when so many so call bashers say over 90% of traders are losers. Wouldn't it even be more of a shocker if some of those % profitable traders are using TA.

Seriously, there are many brokers not on that list and talking to one a few days ago...38% of their day trading clients that are trading futures (not forex) are profitable traders. Many of those profitable traders use charts to make trade decisions.

Anyways, those stats must not be true because nobody makes money using TA and only a "small percentage" are profitable. Brokers must be lying to have stats that contradicts the bashers. :cool:

P.S. sarcasm
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I think 90% was referring to an individual trader with small capital, not hedge funds or sophisticated traders eg Frank M. Cerisano Jr ....
 
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dealmaker said:
I think 90% was referring to an individual trader with small capital, not hedge funds or sophisticated traders eg Frank M. Cerisano Jr ....
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I'm really not interested in stats of hedge funds or multi-million dollar private traders. Thus, the info I quoted doesn't involved such. I'm more interested in stats of capital of 5k - 100k.

Another stats I would be interested in the length of inactivity for those profitable. For example of that 5 year stats I saw some years back...someone that made a profit for example 4 months and then had an inactive account for the remaining years...did those stats include profitable accounts of traders that had inactive accounts for most of the statistical period.

Regardless, as I stated, the stats that's reported to the NFA really is too vague unless there were more detailed stats reported but not shown with the vague info we see here posted online at various forums.
 
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debitspread said:
Obviously it's a question of timeframe. The %Profit of ~30% across brokers in that table is for a single year. If you have a 70% chance of loss any given year, then over a 5- 10 year timeframe your chance of loss tends toward 100%. Hence the '95%' number you often hear.
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Actually, the report seems to describe a single quarter. So for IB, if we assume independence for each quarter and for each trader, then annualizing gives:

1 - ( .465 ^ 4 ) = .953

i.e., a 95.3% failure rate (and that's for the best brokerage in the list -- the worst in this list would score, by the above extrapolation, an average yearly failure rate of 99.7%!). Of course, each quarter is not independent for each trader, so the real failure rate is probably significantly lower -- but it still seams reasonable to assume that the failure rate accelerates when stretched out over time, and many other analyses (including published academic papers) seem to confirm this.

That said, I think it's also true that the oft-cited "95% failure rate" is more of a rough approximation than a hard statistic. Surely quite a few traders make money almost every year and dramatically outperform the market, and this too seems to be backed up by the few academic papers that have data at individual-trader granularity.

Also, any given broker probably has quite a few newbies who trade actively for a few weeks, then drop out, vs. some veteran traders who are consistently profitable and stay for years. The differences in time frames, capitalization, and experience muddies the meaning of "failure rates" for trading -- it's not nearly as clear as more familiar stats such as MLB batting averages.

I'm not surprised that the stats are particularly bad for retail forex where the broker sets the spread rather than allowing their clients to trade in a competitive market (e.g. forex futures on the CME or an ECN with competitive setting of the bid/ask). If the spread is not set competitively, I'm sure people are paying far more spread on every trade, and that really adds up over time. This is also (to a lesser degree) a problem in equities, where there is competitive setting of bids/offers on the exchanges, yet some players can jump the queue through "broker internalization", "broker priority", or "sale of order flow to wholesalers".
 
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Are the stats just for forex trades, or do they include the profitability of any account that made a forex trade?

In 2012, Michael Greenberg of Forex Magnates reported on this, but it wasn't clear.

http://www.financemagnates.com/fore...ty-is-the-largest-and-most-profitable-broker/

"Update: I’ve just confirmed it with IB, their numbers include all clients who’ve traded forex in a given quarter. Since IB has a massive clients base it means that if someone trades equities for a living and made an fx trade just once in a quarter – they would be included in this list. It explains how come IB has so many clients – most of them are not active forex traders but just traders who’ve traded forex at least once."
 
Percentage of profitable and unprofitable IB accounts:
  • 44% profitable.
  • 56% unprofitable.

Would this be considered 44% profitable and 56% unprofitable out of 100 accounts?
  • 44 profitable $10,000 accounts up 5% = $10,500 each.
  • 56 unprofitable $10,000 accounts down 60% = $4,000 each.


:)
 
I believe trader performance overall follows a standard bell curve distribution. If we view the whole amount of traders as group, most are breaking even in the middle of curve, on one side on the tail we have a small tranche of traders losing large amount of their account equity, on the other side we have a tail consisting of a minor group of traders making outsized returns.

graph-1-01.jpg


Then it comes to IB, I do know there is a lot of professionals trading there, like CTA's, Managed Accounts/Managed Futures businesses and small HF's. They also have a 20k limit to open an account, this weeds out non-liquid beginners forcing them to other brokers.
 
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