winning traders: from + 23.5% up to + 39.9% profitable

- that old adage that 90 or 95% of traders lose must be another chestnut from brokers — 'give Us your money, WE won't lose it, but You will' -


Another idea: among the 30% or so who are profitable in a given year, it may be that many (or most) of these individuals are not in the ~ 30% that are profitable the following year.

Perhaps the adage needs to say "90 to 95% of traders are not consistently profitable"
 
I've prepared enough tax returns in my day to know that the 95% losing rule is completely untrue. If a trader tries to make it as a living this rule generally holds true but if a trader does it as a part time job to earn extra money the win rate is roughly 2/3rds. If a trader trades any type of leveraged instrument whether it be full-time or part time the win rate is in the area of 5% but for equities with proper money manange management (meaning no greed) the win rate is about 2/3rds. Moral of the story: Keep your day job.

Quote from Wallace:

that old adage that 90 or 95% of traders lose must be another chestnut from brokers —
'give Us your money, WE won't lose it, but You will'

the attached is a report compiled I presume by Forex Magnate's Michael Greenberg
http://forexmagnates.com/us-forex-brokers-profitability-report-for-q1-2011/
who compiled the aggregated results from individual brokers

the report is presumed accurate, broker reporting is a requirement of CFTC regulations:
"Regulation 5.5 requires RFEDs, FCMs and IBs engaging in OTC retail forex transactions
to provide customers opening an account with a prescribed written disclosure statement
and its profitability report for most recent four calendar quarters, during which the RFED
or FCM acting as the counterparty, maintained retail forex accounts (prepared pursuant to
Regulation 5.18(i)(1))."

11 US-only forex brokers are listed, GFT has client accounts which are 39.9% Profitable
and 60.1% Loss, then Oanda, and FXDD, Alpari and Interbank FX all at 30%, Gain Capital
FXCM, MB Trading, FX Solutions, FX Club with an oddball Advanced Marekts who have 50
accounts: "In February Advanced Markets reported $3.4 million in client capital which divided
by 50 accounts results in an astonishing average $68,544 balance per account – 18 times
higher the US industry average of $3800"
incidentally Oanda's drop from their previous 50% Profits is a result of Not including
accounts that weren't trading, but were being credited/debited with interest paid on
the account balance, Oanada remains the leading ? broker with the 25% of the list's
total clients

ok, so the 90/95% losers is a fallacy, or, is it only fx traders who are so profitable ?

it would be very interesting to have similar reports from futures, stock etc brokers and
compare results, but even at 23.5% it's a pretty good return, and although an average
of all accounts, it would also be interesting to know the Big winners % Profits
More...
 
Quote from Wallace:

that old adage that 90 or 95% of traders lose must be another chestnut from brokers —
'give Us your money, WE won't lose it, but You will'

the attached is a report compiled I presume by Forex Magnate's Michael Greenberg
http://forexmagnates.com/us-forex-brokers-profitability-report-for-q1-2011/
who compiled the aggregated results from individual brokers

the report is presumed accurate, broker reporting is a requirement of CFTC regulations:
"Regulation 5.5 requires RFEDs, FCMs and IBs engaging in OTC retail forex transactions
to provide customers opening an account with a prescribed written disclosure statement
and its profitability report for most recent four calendar quarters, during which the RFED
or FCM acting as the counterparty, maintained retail forex accounts (prepared pursuant to
Regulation 5.18(i)(1))."

11 US-only forex brokers are listed, GFT has client accounts which are 39.9% Profitable
and 60.1% Loss, then Oanda, and FXDD, Alpari and Interbank FX all at 30%, Gain Capital
FXCM, MB Trading, FX Solutions, FX Club with an oddball Advanced Marekts who have 50
accounts: "In February Advanced Markets reported $3.4 million in client capital which divided
by 50 accounts results in an astonishing average $68,544 balance per account – 18 times
higher the US industry average of $3800"
incidentally Oanda's drop from their previous 50% Profits is a result of Not including
accounts that weren't trading, but were being credited/debited with interest paid on
the account balance, Oanada remains the leading ? broker with the 25% of the list's
total clients

ok, so the 90/95% losers is a fallacy, or, is it only fx traders who are so profitable ?

it would be very interesting to have similar reports from futures, stock etc brokers and
compare results, but even at 23.5% it's a pretty good return, and although an average
of all accounts, it would also be interesting to know the Big winners % Profits
More...


23.5% is based on qtr basis winning percentage. According to his article:

http://articles.latimes.com/2011/apr/03/business/la-fi-amateur-currency-trading-20110403

75% lose on a qtr basis that result to 98% lose annual basis. For example, this small trader may have a profitable qtr and next qtr, blew his account.

The L.A Times mention of the 615K accounts annual, 605K accounts lose.



More than 90% of small traders lose. They just lose!
 
Quote from emg:

23.5% is based on qtr basis winning percentage. According to his article:

http://articles.latimes.com/2011/apr/03/business/la-fi-amateur-currency-trading-20110403

75% lose on a qtr basis that result to 98% lose annual basis. For example, this small trader may have a profitable qtr and next qtr, blew his account.

The L.A Times mention of the 615K accounts annual, 605K accounts lose.



More than 90% of small traders lose. They just lose!
More...



To become a successful traders, u must join the house (banks, HFT, prop firms, brokerages, hedge funds)




Quote from Maverick74:

Hey Donny boy. Looks like you are getting your sea legs back eh? I knew you would get back into the swing of things here. It's like riding a bike, you never forget. :)

You know it's funny, I was actually going to start a prop firm 101 thread over the weekend as I saw so many threads being started asking the same things over and over again.

The prop business is very big and diverse and I think traders need to understand where their place is in this business. Everyone wants to marry the supermodel, but most of us won't. We get what we get. And that is the same with trading. Everyone on here thinks their special in some way, they can read charts, they are passionate, hungry, etc. The truth is almost everyone in this business is, so that really does not separate the wheat from the chaff so to speak.

This business is about as competitive as professional sports and I don't think most guys on here realize that. For the record Don, there are more then a "few" firms that pay salaries. Chicago is still mostly a "true prop" firm town. Although technically it's a draw, not a salary so you have to pay the draw back from your future profits plus very steep desk fees. So they pay these kids 40k to 55k a year in draws, with desk fees of 2500 to 5k a month and they get a split from 20% up to maybe 60%. But here's the thing, for every guy these firms hire, they toss 100 resumes into the trash. It's that competitive. A lot of guys think...oh yeah, I'll just go work at one of those places. That's not how it works. You are going to be one of 400 guys getting looked at and maybe they choose 2.

They prefer guys that excelled in both academics from a top school and someone who played sports at a competitive level. I would venture a guess that 98% of the guys on ET would not qualify. So where do the rest go? They to places like Bright Trading, Echo, VTrader, etc. It's not sexy, but it's a start. Yeah you are going to have to bust your ass and take some risk. Put up your own money and probably have to teach yourself, but that is life. No one here is entitled to work for Transmarket Group or Gelber or Breakwater or Chopper. The fact of the matter is, Bright serves a niche in the business. My firm serves a niche. Echo serves a niche. All the independent shops that are still around are around because they found their place in the prop world where they can survive.

And to add on to what you were saying Don about the profit splits and risking capital, most firms now they offer splits defer compensation to some degree meaning you actually DO risk your own capital, just not on the first day. But I've got news for all the guys that think you can just walk into these places and lose "their" money. These firms have absolutely no patience for under performers. You are going to be sitting around jocks who are going to eat your lunch. If you can't hit par, you'll be gone in months if not weeks. There is a lot of pressure. Like the old saying goes, be careful what you wish for, you might just get it.
More...


It doesn't have to be a prop firm. It can be either Banks, HFT Firms, Brokerages, and Hedge Funds.

Remember small traders, most of the successful traders begin their career working for the house and not from reading books, subscribing 3rd party educational and system vendors, and reading 98% of ET members advice/lectures on how to win.
 
'a fool and their money are soon parted'

thanks EMG for posting the LA Times article link, I found it interesting since I've not
read such articles elsewhere, but also thought it biased and unbalanced

this idea of the over-the-counter trading, who cares who gets the loser's money, I
don't think about it when I have a losing trade with an fx broker or, at the CME's
Globex when I've had a losing 6E trade

one statement typifying the bias:
"Experts say the unusual structure of the currency market makes it hard for amateurs
to beat the house."
oops ! it's a 3 page article !!!
very biased and unbalanced - page 2
very very biased and unbalanced - end of article

I've always thought and found FXCM to be a straight and up-front company, never
felt the same about GAIN

fx brokers do have a great and profitable business model, but aren't the only ones
selling over-the-counter products, but I am surprised they can churn And replace so
many new clients quarter after quarter

Day-to-Days/Weeks B&H trading offers imo the best profit potential, but as we know
based on the majority of the many various threads here on ET, it's intraday trading
that has people hooked, and in order to be consistently profitable, such traders are
Expert or use a coded Expert system to execute trades

I think the majority of posts are correct, that while the 1/4 results may show profits
without knowing how long the account remained open and what the net +/- was at
closure, the data remains incomplete, and the '+ 23.5% up to + 39.9% profitable'
still doesn't reflect the true profit/loss of traders, but is a smart way to alert individuals
of the potential losses would-be traders face - Before they sign on the dotted line
 
Quote from Wallace:

that old adage that 90 or 95% of traders lose must be another chestnut from brokers —
'give Us your money, WE won't lose it, but You will'

the attached is a report compiled I presume by Forex Magnate's Michael Greenberg
http://forexmagnates.com/us-forex-brokers-profitability-report-for-q1-2011/
who compiled the aggregated results from individual brokers

the report is presumed accurate, broker reporting is a requirement of CFTC regulations:
"Regulation 5.5 requires RFEDs, FCMs and IBs engaging in OTC retail forex transactions
to provide customers opening an account with a prescribed written disclosure statement
and its profitability report for most recent four calendar quarters, during which the RFED
or FCM acting as the counterparty, maintained retail forex accounts (prepared pursuant to
Regulation 5.18(i)(1))."

11 US-only forex brokers are listed, GFT has client accounts which are 39.9% Profitable
and 60.1% Loss, then Oanda, and FXDD, Alpari and Interbank FX all at 30%, Gain Capital
FXCM, MB Trading, FX Solutions, FX Club with an oddball Advanced Marekts who have 50
accounts: "In February Advanced Markets reported $3.4 million in client capital which divided
by 50 accounts results in an astonishing average $68,544 balance per account – 18 times
higher the US industry average of $3800"
incidentally Oanda's drop from their previous 50% Profits is a result of Not including
accounts that weren't trading, but were being credited/debited with interest paid on
the account balance, Oanada remains the leading ? broker with the 25% of the list's
total clients

ok, so the 90/95% losers is a fallacy, or, is it only fx traders who are so profitable ?

it would be very interesting to have similar reports from futures, stock etc brokers and
compare results, but even at 23.5% it's a pretty good return, and although an average
of all accounts, it would also be interesting to know the Big winners % Profits
More...

You're falling to a fallacy here too...

Ok 30% of the traders were profitable that month... but even a loser trader in the long run will have positive months...

so of those 30% how many are consistently profitable during many months or in the long run? Because the traders that are in those 30% this month are not necessarily the traders that will be in the 30% of the next month and so on... i hope i can make myself understood ;)

if they would take the long term profitability statistics then we'd see a big drop in those numbers it is my assumption...
 
Survivorship bias? What about the accounts that are closed?

What about average account age? If you look at all hands at a Blackjack table at one point in time across all casinos in the world, you might see 48% profitable given. But how many players survive long term with proper money management?
 
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