Why do most retail forex folks lose money?

H

helpme_please

My broker, Interactive Brokers, mentioned that it has the highest percentage of profitable forex traders. I am generally very happy with IBKR for stocks investing. I thought of perhaps venturing into Forex.

This is what I found.
http://www.financemagnates.com/fore...ofitability-report-more-accounts-and-profits/

It is true that IBKR is the best. However, what shocked me is that the best had only 45.5% of profitable forex traders. In other words, most forex retail traders lost money. I think other asset classes like stocks and bonds fare much better.

What is so difficult about forex? Forex virgin seeking expert opinions from elite traders here. Thank you in advance.
 
forex is the easiest of all vehicles for beginning traders. It is so simple because it is all spreads. But the leverage can really get you. 40 to one is what ib gives me. That is more than enough rope to hang yourself. Unlike stocks, which can be a long term investment and held forever if not on margin, most forex traders who must always trade on margin to make a difference over time get squeezed out when it moves against you. I don't trade stocks and I don't think any amatuer should trade stocks. I wouldn't trade them unless I could spend at least 12 to 16 hours studying their balance sheets like Warren and Carl do. Any idiot can trade forex. It's just a matter of guessing what a small handful of central bankers will do. The only thing I can think of that is easier than forex is nat gas, where all you have to do is guess what the weather will do.
 
the first and best trading book I ever read was from my mentor. It was like 500 pages of dry statistics. You had to skip to the last chapter to read the conclusion which was, "No matter how smart you are and what you think you know, nobody can predict rates." And to this day, many are still trying.
 
well I dont have any stats. Firstly I seriously doubt that 45.5% stat, over what time period? I hear much more often, 10% or 5% of traders are long term winners. I have heard 1% of retail traders from a partner at a prop firm. IMO, forex is just like any other market, I dont see any reason why it would be easier. Herd behavior exists on all markets. They differ in volatility and trendiness. Big difference is you dont have access to lvl II data trading spot forex, also CFDs are big with forex and you pay more commission and you usually get terrible entries/exits, your broker is your counterparty and they will quote you whatever. There's also a lot of people out there who will sell you strategies, indicators and whatnot with no intention of providing value just selling junk and taking your money, a lot of it is targeted at forex traders. I think the biggest reason is a lot of new traders jump into forex because its so easy to access, and they are green with no experience. No money management, no strategy (or unproven/tested strategy), no understanding of how risk can play with your emotions.
 
Predicting the future
Managing your losses as said with 100:1 margin common, can be tricky.
Trying to let profits run.
Spreads are pretty big really which East you aswell.

Because of the above most trade forex, with tight Sls, intraday, and is a fast spikey pain in the arse.
 
Hi loyek590,

May I ask which book was that? I do not mind going through 500 pages of dry statistics since you said it is the best trading book. Another question ... was it really necessary to go through those 500 pages of dry statistics if you can just read the conclusion with the benefit of hindsight?

loyek590 said:
the first and best trading book I ever read was from my mentor. It was like 500 pages of dry statistics. You had to skip to the last chapter to read the conclusion which was, "No matter how smart you are and what you think you know, nobody can predict rates." And to this day, many are still trying.
More...
 
The IB stat includes anybody non US who buys dollars to then buy a stock for instance. I.e. they are not FX traders but did an FX trade in their account, which is profitable, so they could then do another trade in a different product class.
 
yeah, i do that
just21 said:
The IB stat includes anybody non US who buys dollars to then buy a stock for instance. I.e. they are not FX traders but did an FX trade in their account, which is profitable, so they could then do another trade in a different product class.
More...
 
Also I could tell you the answer to the question in the title, and there is a very good reason most are loosing, but then it might affect my profit
 
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