Thank you Clint for this link.
I don’t have time to make a full translation of the pdf file, but as a french I can help a bit:
title: Study of the results of private investors on CFD and forex trading in France.
In part one, called methodology, they specify that despite they talk about customers, the data is more about accounts, because a good part of the data given by the brokers are identified by a client ID (with names hidden). Therefore they cannot count the exact numbers of people as some may have multiple account at different brokers. They consider this error small enough to be ignored.
They estimate the traders at the brokers interrogated represent 45% of forex retail traders (for France).
They warn about the fact that all brokers did not have all the data formated in the same way and that they were often unable to distinct how much money was involved in CFD and how much in forex. They estimate that a small portion of binary option results pollute the data from a few brokers. So the results are not for forex alone, but pretty much all kind of trading offered by brokers in France.
The data is from 2009 to 2013. Many brokers had data only for the last two years and in that case the data got discarded. One broker had data only for 2010-2013, but they still say the data is for 4 years, so I suppose they averaged the yearly results to put it back on 4 years.
They consider that, during this period, financial markets were healthy and that if the traders got bad results it cannot be explained by exceptional facts.
They counted 14799 customers active at these brokers, from who the data got compiled. ‘active’ means opening at least one trade on the account during the 4 years period.
yearly results: (losing traders %)
2009 84.2%
2010 84.2%
2011 83.8%
2012 84.2%
2013 83.3%
over the 4 years: 89.4%
average result: -10 887€ per customer
median result: -1843€ (half of the customers lost more than 1843€)
total 161 115 493 € lost, over 16 181 843 transactions.
on page 4, top chart: quantity of customers (here called frequency) / win or loss in €
on page 4, bottom chart: total quantity of money won or lost / win or loss in €
from these two graphs you can see for example on the last bar that only 121 people earned more than 24000€, and that these 121 people earned more than 10 300 000€ total.
From the first bar you see that 722 customers lost more than 50 000€, and these 722 people lost more than 102 000 000 in total.
They estimate that brokers commissions and spread can only be a reason for about 14.2% of these customers loss.
Then they give data from a smaller set of 1881 customers for who they had more complete, and identical information. (table 2 on page 5). About 85% of losers again. Because these clients were followed for the full 4 years (no turn-over) and because the % of losers stays at 85% over the 4 years, they conclude they did not get better at trading with time, there is no learning.
graphs on page 6 are made from the bigger data set (14799 customers).
top chart: part of population and average result / how many orders they made.
Basically you see most people made few orders and that only 4% of the population made more than 5000 orders. You also see that the people making more orders loose more money in average.
Bottom chart: same chart with the average volume of money exchanged instead of the number of orders made. You see that most people bet a low amount of money, and that the few who bet a lot of money lost a lot of money.
chart on page 7 is the same as the preceding one except the volume is not the average volume but the total volume traded.
Translation of the conclusion:
This study shows that trading CFD and forex is the origin of significant losses for a very large majority of private [traders], with an average rate of losing customers over 4 years superior to 89%.
The expectancy of loss is big (-10 900€) but fluctuates a lot depending on the provider observed (from -4500 to -13400€).
Besides, the study also showed that the investors who deal the most (in quantity of transactions as well as in average size of transactions, or accumulated volume) loose the most. The same is true for those who persist over the long-term, illustrating the absence of learning effect.
my comments:
The world “particulier” in french is the opposite of professional. That would mean the traders here are only traders who do not make a living from forex. However when they describe how they got the data from brokers and say that a good part is anonymous, they admit they have no idea if the accounts are owned by professional or amateurs.
What is sure is that they counted only 121 traders among the 14800 (less than 1%) gaining more than 24000€. The average profit for that category can be calculated at about 21000 € per year, Considering in France almost half of your income will be taken for taxes, it is pretty safe to say that if there are people among this retail traders who trade for a living, they are probably less than 50.
Extrapolating a bit more from the 45% figure given, that means there are about 30 000 retail traders in France, about 3000 among them are NOT loosing money, and less than a hundred among them who may be profitable enough to make a living from it.
