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I've heard that 90% of retail investors in FX lose money. I want to analyze this in more detail.

Question: Is there some literature that describes the statistics of profit/loss for retail traders in FX?

  1. I would be interested to see the distribution function - i.e. how many clients gaining how much money.

  2. How stable it is - with respect to time and other things e.g. country, currency pairs?

chrisaycock
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Alexander Chervov
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    What is the reason for downvote ? – Alexander Chervov May 12 '13 at 12:19
  • Here's a related post: http://quant.stackexchange.com/questions/1383/reading-recommendation-on-using-statistical-analysis-in-online-fraud-prevention/1395#1395 – bill_080 May 12 '13 at 14:46
  • That "90% of retail investors" lose money in FX markets seems a bit anecdotal to me. I haven't seen any literature on this and I don't think you would easily be able to find it because it would either have to come from the investors which would introduce a multitude of biases in the data or their brokers which I would imagine is illegal in some way or another. – user2183336 May 15 '13 at 18:05
  • @user2183336 I believe that "statistic" relates to "bucket shops" and investors under 100k – pyCthon May 17 '13 at 03:09
  • +1, but unlikely such statistics exist due to the reasons mentioned by @user2183336. What I've seen is mostly purely empirical estimates in introductions of books on technical analysis, together with reasons why so many people fail. In such a case, perhaps Taleb's book is worth reading. – SBF May 21 '13 at 11:41
  • forexmagnates puts together profitability reports filed by US brokers and you can find one of their most recent posts at http://forexmagnates.com/q1-us-broker-profitability-report-showing-signs-of-optimism/ The numbers aren't incredibly relevant for a bunch of obvious reasons but it's the only thing I've been able to find on this topic. –  Jun 29 '13 at 10:27

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The NFA member brokers report retail account profitability figures quarterly. There is a site that aggregates this data to facilitate comparisons. You can look back at the last several reports. You'll see that the correct figure is closer to 65% and that it's quite stable through time.

MichaelJ
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