So I’ve read about how 95% of traders are not profitable (5% are profitable) but when I was signing up with my broker, one of the disclosures showed the number of profitable traders for the last 3 years. This number was in the lower 30% range. So what is the deal with the gap between the 5% and 30% numbers?
30% for said broker vs 5% for all brokers prehaps. Some brokers may have better clients than others. A broker with mostly beginners will surly have a low win rate vs a broker with mostly pro traders.
Ok. That makes sense. I was also thinking that the people profitable one year does not mean they are profitable the next year. The 30% number is just a yearly number, so the actual traders that fit in this category probably changes yearly. But still, as a noob, I feel better about 30% than 5%.
Reality is there are only few broker in the market are actually making profit. Maximum number of the trader are losing money and most of them quit the market in between 3 to 6 months, that’s my research said. So 5% trader are actually successful thing is right. But the range of 30% successful trader I guess from the broker you have selected to trade. If you count the thousands of broker and their successful trader then I guess it will be 5%.
Majority of traders do the same thing. Those who work hard and tweak their methods to the point of success will find it hard to share that information after so much sacrifice, the price they paid to reach that state.
Sometimes having a system that is too complicated will make trading a hard task to carryout. Keeping things effective and simple is the best route. Create a plan and sticking to it, every system will experience moments of wins and losses.
Another issue is most traders jump from one method to another as soon as they experience a moment or period of bad trades all in search for a perfect setup with no losses…dream land. There is no 100% successful method. The most important aspect of trading is the risk versus potential reward one has on a trade.
The method has to be systematic and almost identical. Where by if you should take a picture without labels it would be hard to differenciate the trades since they would be so similar.
Finally one needs education for this business just like any other course of study or career path. The typical career does take approximately 3-7 years to be efficient in both study and experience. A short cut to those years is gaining a trust worthy mentor who has been there done that to guide you along the way to help you avoid or get over the different hurdles and phases every trader has to go through, this would be a big plus.
Unless they have independent proof to support their statement, I would take anything like this with a pinch of salt.
Think about it. You are a broker. How many potential new customers do you think you could attract if you quoted a 30% success rate instead of the generally accepted figure of around 5%?
Amendment to the above
FOLLOWING FOREX.COMS EXCELLENT POST BELOW EXPLAINING THAT REGULATED US BROKERS HAVE TO PROVIDE THIS INFORMATION IN THEIR DISCLOSURE, I WOULD LIMIT MY EARLIER COMMENT TO REFER TO NON-US REGULATED BROKERS.
Thank you
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This is a fair point Eddie but this was in the disclosure section at the end of signing up, where everything is doom and gloom. Why lie when you’ve made it this far in the application process? also this is a US broker so I’m not sure if regulations have any sway here for this disclosure.
Edited to add that this wasn’t in marketing material. If it was marketing material I wouldn’t trust it, but it was in disclosure section.
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This is interesting. 30% is quite a bit higher than 5% so to average out there would be brokers with less than 5% profitable traders. Is this due more to traders or sketchy brokers?
You are correct, @yomatt422.
US-regulated forex brokers are required to provide client profitability data to the CFTC and in the risk disclosure statement given to all account applicants. The text below is from the latest version of FOREX.com’s US customer agreement.
For the calendar quarter ending December 31, 2017, there were 33,885 active non-discretionary trading accounts of which 33% were profitable and 67% unprofitable.
For the calendar quarter ending September 30, 2017, there were 34,138 active non-discretionary trading accounts of which 32% were profitable and 68% unprofitable.
For the calendar quarter ending June 30, 2017, there were 34,911 active non-discretionary trading accounts of which 31% were profitable and 69% unprofitable.
For the calendar quarter ending March 31, 2017, there were 33,636 active non-discretionary trading accounts of which 36% were profitable and 64% unprofitable.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
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And I will be a pessimist.
5% of successful traders against 95% of unsuccessful. And every day one person from these 5% goes to 95% because at one point everything loses. And every few months one person from 95% goes to 5%. It is necessary to stop in time and take breaks in trade, so that out of 5% not join 95%.
In general, I’m just kidding, so do not take my words seriously.
@FOREX.com Thanks for sending that over. I was incorrect earlier when I said yearly, the data I saw from the broker I signed up with was quarterly as well. Do you have yearly data that you could share? I’m curious if it still stays at 30% for the year, or if it really is people getting “lucky” for 2-3 months, and not sustaining profitability for a full year.
Its not something that is worth worrying about, i.e. if the % of losing traders with a year’s trading record is 90% or 80% or 70% - its not going to stop anyone opening an account and no specific number is going to mean a difference between personal success by an individual, or failure.
Remember that 90% of all new small businesses cease trading within 3 years. But nobody’s saying, “Don’t open that pizza restaurant, take up forex trading instead, its much safer”.
Hi @yomatt422,
Like the broker you signed up with, we have only quarterly data, since that is the format required by the CFTC for all US-regulated brokers. As far as we are aware, US regulations are unique in requiring forex brokers to disclose client profitability data.
Tom,
I definitely agree that this piece of data doesn’t mean success or failure, but it helps to clarify the risk. 5% success is extremely small, and if it was true, I don’t think I’d pursue forex trading any further. However, 30% success is more manageable and one that keeps me interested. I’m new here, but I’m not looking to make $1m this year, or $200/day. I just want to see if I can build up some money for my kids’ college fund. I’m more interested in getting to $200k-$300k in 5-10 years.
Thanks for all the replies thus far. I’m a little disappointed that the regulations (nor the brokers) don’t call out/provide % profitable traders by year, as that is a key piece of info. I’m guessing this is <<30% range, and would lower the amount of new participants to forex trading, so I’m sure some lobbying occurred here.
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That’s really interesting!
I wonder, and perhaps you can help here, if the tightening of legislation in the US around forex has contributed towards this higher than expected success rate? Could lower leverage, etc, and the driving out of non-desirable brokers have pushed a bigger percentage of newbie traders out of the market, or at least out of the regulated market?
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Eddie, do you think its due to pushing out newbies b/c of the lower leverage? Or that newbies in the US don’t get themselves into trouble as fast as if they had much higher leverage?
This is exactly the discussion I was hoping to have. Thanks again everyone!
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Hi, I don’t know. Possibly a bit of both, in which case recent similar moves by the EU could be a good thing. Of course, if the newbies end up going to offshore unregulated brokers, even the better traders among them may eventually get screwed over by their brokers
Hopefully forex.com will have some figures before the US changes came into force.
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Interesting point, @yomatt422
It seems you would be very disappointed in the regulations (and brokers) outside the US, since they don’t provide any client profitability data whatsoever. 
Hi @eddieb,
While we haven’t conducted such a study ourselves, there was a study conducted by another company into correlations between leverage and profitability. To emphasize, this is not our study, but below is a summary of their findings.
We studied 13 million real trades conducted by users of a major FX broker’s trading platforms to look for important insights into the use of leverage. Let’s start with what might be obvious: excessive leverage can lead to outsized losses. In fact, our data shows that there’s a fairly negative relationship between average leverage used and trader profitability.
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What can I say, I want to have my cake and eat it too 
I do appreciate the responses @FOREX.com !!
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There is no exact calculation for how much % traders are profitable because no one has done a survey and no one has any proof of it.