Two big brokers are encouraging ordinary people to try their hand at trading currency — buying and selling dollars, euros, yen and the like, in hopes of making a profit.
The brokers, FXCM and Gain, are doing well. Their customers, not so much.
From the LA Times:
At FXCM, 75% to 77% of customers lost money each quarter last year, according to newly required disclosures to the Commodity Futures Trading Commission. At Gain, which operates through Forex.com, the number of unprofitable customers hovered between 72% and 79% every quarter last year, according to its filing.
The firms’ response:
Executives with both firms say that they simply provide a conduit for people who want to trade currency, and that customers are given full disclosure of the risk.
“The majority of people today are on a quarterly basis not doing well,” Drew Niv, FXCM’s chief executive, acknowledged in an interview. “There’s lots of education showing, ‘Here’s how to do it right.’ … Do most people heed the advice? No, of course not.”
Per NPR. I can’t post links because this is my first post but I’m sure you can find it using google or something.
I don’t think that it is news that a majority of new account holders lose money, indeed I think that the figure is higher than 70-odd %. However, people failing will often stop trading, so the stats must get better the longer people stick with it. So while the article does not surprise me, it certainly does not worry me.
I agree with Simon despite having a bursting trading account to back it up. Most people will probably try lots of different systems too often. I think the best way would be to get a system, test it properly and stick with it. least if you lose all your money you won’t be left with doubt. the reality would be your system was p*ss lol.
BTW, i’m still searching. think its the search n the maybe, just maybe that keeps me trading. the dream to trade full-time is many miles off for me. still allowed to have dreams.
The brokers are doing nothing wrong. IMO, its the people that overtrade or trade for reasons other than to properly invest. A part-time trader might make several trades a week. A simple example would be shorting the USD/CHF early this year and holding on to many ~1000pip profit trades right now.
I agree with all before. I’m with forex for a 5 years, first 3 i loss my money, it was GREAT loss. It was, cose i want to earn too much fast,. Last year i find good broker and have earn for a 9 month - every month, it just about 8% per month, but it grown! So i worry about one only - if this just luck? and if i loose all in the future… Will see…
Well, may be brokers do somthing but it is quite true - most traders lose money and its only their fault.
There is lots of information in the Internet that forex trading is risky but in spite of it hundreds of people trade.
So there is nothing surprising in that article.
What do you mean by software? A signals service? No, I simply have a broker account and a charting package, I place trades based on my own analysis - I prefer the successes and the failures to be all my own work!
One more “agree” from me.
If you a postion trader (i’m not talking about scalpers) - no matter - you will be profitable if you are smart - no on can prevent you.
I couldn’t ‘agree’ more. For some reason (definitely among new traders) there is a belief that one has to have a trade going every five minutes and I’m almost SURE HOLLYWOOD is to blame for this!!! LOL!!! Unless you are REALLY experienced and VERY ‘hot sh*t’ the chances of you making money of the shortest timeframes possible are JUST ABOUT NIL (5:95 are the odds actually)!!! LOL!!! But it’s very unfortunate that no matter HOW well this concept is explained there’s ALWAYS going to be people who think they’re a ‘natural’ and that everybody else is talking nonsense (I know because I used to be like that in the beginning)!!! LOL!!! Honestly: ONLY floor traders, I believe, can make a success of that type of trading and of any traders ‘on the block’ THEY are the ones that have ‘the inside edge’ so what chance do you stand, as a new trader, trading on the 1 minute charts (I know some new traders who have even tried to trade on TICK charts for crying out aloud)!!! Admiteddely (and as I’ve noted numerous times much to the digust of most forum members here: there ARE easiser ways of making money trading ASIDE from trading spot FOREX but that being said it’s definitely ‘doable’ and ‘possible’). As far a brokers are concerned: I’d say on the long-term timeframes or charts (daily and longer or MAYBE four-hour) you’re pretty insulated from most ‘broker moves’ i.e. it’s no problem for a broker to widen the spread on a five-minute chart JUST enough to catch your stop or have you whipsawed by stopping and reversing and, particularly at a variable spread broker, you have NO chance of ‘calling them’ on what you may perceive as there being a ‘mistake made’ because you won’t even see the spread widening on the chart so you have to take their word for it and you can be sure if it’s going to cost the broker money they’re NOT going to admit to this). Of course: I’m talking mainly about ‘bucketshop’ brokers here. So on the longer-term charts or timeframes: you’re ‘margin of safety’ is increased ‘in leaps and bounds’. And I agree that a good or a bad broker is not going to make the difference between a good or a bad trader on the longer-term charts or timeframes but on the shorter charts or timeframes having a ‘broker of ill repute’ is most CERTAINLY not going to help matters EITHER way.
I might be one of the few that disagrees with that (let’s agree to disagree, lol) but I find it really doable to trade on the smaller timeframes (5 minutes that is), of course having a perspective of the longer timeframes, but many times my analisys goes from the shorter to the larger timeframes, and not the other way round as adviced by many traders.
The thing is I find the story written by 5 minutes charts really clear and with a nice perspective of what’s going on on an intraday basis.
Not that you can or have to make tons of trades out of them, in fact I only place a trade per day, not everyday, but if you are with a legit broker you should be fine.
The problem here, I think, lies with people trying to trade them just because they’re faster and they think they can trade them right away with a positive result, when we obviously know that’s not the case.
Intraday or long term trading requires patience, pratice, and expertise to actually learn to ‘see’ what’s going on, but I’m of the ones that like and feel comfortable trading the shorter timeframes.
I think that everybody hace a chance to win and to lose his money, i think that if you will win a lot of money broker will do something to stop it, but if you win 50$ in a month you are not a big problem for big broker, win by small parts and everthing will be ok!
I’d like to explain smth, my previous post - it was answering to post:
trader loses money if he is a bad trader.
any broker can not make profitable traders make losses
i mean, that if trader has really large experience, and have not-scalpers strategy (i say it because any broker can stir such trading, if broker want to do it) - this trader will be profitable, and it not depend of time (no matter will you be Part-Time Currency Trader or Full-Time Currency Trader). I hope i will not been misunderstood.
I agree, the broker is just providing a channel for buyers and sellers to join and they take commission for their trouble. For every winner there is a looser it’s just a case of the traders with the best strategy and discipline continue to make a profit and stay in the business longer.
Most people are rogue traders. They either don’t take it seriously, or listen to financial analysts and brash predictions about where the ________ is going. It’s a beatable game for those who have taken the time to learn it and dedicate time to it.
