October 28, 2010

Is It True That 95% Of Forex Traders Lose Money?

I've been involved in the forex trading industry for several years now, and during that time I have been constantly reminded of the fact that only around 5% of people actually make money from forex trading. The other 95% obviously end up losing money in the long run. However the current disclosure laws in the US mean that all of the forex brokers that are based there have to reveal how many of their customer accounts are actually profitable, and the results are very surprising.

It would appear that the 5% winners 95% losers story is a complete myth because if you look at the full results as reported by the Forex Magnates site, you can see that the number of profitable accounts was on average much higher than 5%.

The lowest figure was from IG Markets who reported that just 20% of their accounts were profitable for the last quarter, whilst the highest was from Oanda who incredibly reported that 51% of their traders had profitable accounts. Anyway the point is that the average figure was between 20% and 30%, so this is significantly higher than the 5% figure that we often hear quoted.

This is a sign that there are a lot of people out there who are making some excellent profits from forex trading, and that it might not be as hard as many people are making out.



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2 Comments on Is It True That 95% Of Forex Traders Lose Money? »

October 28, 2010

Randy @ 3:30 pm:

This number is close to 99%,in China.

October 31, 2010

Greg @ 3:20 am:

Perhaps these figures are misleading. The number of accounts is perhaps not so relevant as how much is in those accounts. My theory is that the majority of small traders (ie accounts of less than $5000) end up losing, whereas the institutional traders with large accounts who have plenty of capital and adequate training to trade it would be almost 100% profitable. Somewhere in between these 2 extremes would be the cashed-up amateurs who maybe are following some kind of a forex trading system and have plenty of capital, but less experience. They probably as a group have the most to lose, and a 50/50 chance of losing it. I'd be interested to know the volumes that are being traded, the amount that is being lost, and some profiling that answers the question most new traders want to ask, do I as a beginner have an even chance of keeping, let alone increasing, my rather modest test account? After all, the average punter gets into forex trading to try and beat the odds, and get ahead of the financial system that tends to suck the life out of the average wage-earning, interest-paying suburban investor.

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