US Forex brokers account profitability comparison

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1. Michael Greenberg said:
   “The definition of active traders changes from broker to broker.” CFTC wanted to avoid exactly that so the criteria as far as i know is pretty straightforward. Interbank FX explained it here: http://forexmagnates.com/ibfx-account-profitability-report-explained/

   October 18th, 2010 at 6:41 am
2. Yohay said:
   Very interesting figures. Thanks for the report!
   Did the brokers publish the criteria for which accounts are reported? The definition of active traders changes from broker to broker.

   October 18th, 2010 at 6:29 am
3. Peter M said:
   Why are oanda clients so profitable???

   October 18th, 2010 at 6:42 am
4. Michael Greenberg said:
   you’ll have to find out and let us know

   October 18th, 2010 at 6:50 am
5. iezzzwan said:
   Oanda clients are typically traders with good money management.. Oanda dont offer 200:1 or even 100:1

   October 18th, 2010 at 7:02 am
6. Peter M said:
   Must be education – couldn’t think of anything else

   October 18th, 2010 at 7:15 am
7. Mikael said:
   Has the CFTC release clear calculation methods for these numbers? If so, can you provide a link?

   Example, are accounts that have been opened and burned within the quarter included in the numbers?

   October 18th, 2010 at 7:25 am
8. Michael Greenberg said:
   i don’t think they released it to the bank but read here from interbank fx explained regarding methodology: http://site13.miydim.com/ibfx-account-profitability-report-explained/ i’d expect all brokers to stick to it

   October 18th, 2010 at 7:44 am
9. Inka said:
   Some excellent PR for Oanda right there. Better than any banner campaign. Hope they didnt doctor the numbers – i can see the NFA checking up on those, since they stand out so much.

   October 18th, 2010 at 8:01 am
10. Michael Greenberg said:
    i doubt they doctored the numbers, however i’m keen to know whether all brokers used EXACTLY same methodology to measure profitability.

    October 18th, 2010 at 8:07 am
11. Inka said:
    Michael: whats your source on the Oanda numbers? I cant see a statement on their website and didnt get any mail from them either..

    October 18th, 2010 at 8:12 am
12. Michael Greenberg said:
    this info is available only for new registrations – it’s part of the live account opening process

    October 18th, 2010 at 8:21 am
13. TradeProfits said:
    Oanda also has really good spreads compared to many other brokers.

    October 18th, 2010 at 8:34 am
14. Ed said:
    Michael,

    A great report.

    A quick question – do you believe that FXCMs numbers are excluding all non US registered entities? The number looks very low.

    Best
    Ed

    October 18th, 2010 at 9:25 am
15. Asaf said:
    Few reasons why OANDA traders are more profitable.

    1) They are a very good broker, with very low spreads and their market making technology is years better than what everyone else uses.

    2) They pay people interest on the money in the account which means that is you deposit $100K and you don’t touch the money you’ll end up with more money in your account because they pay you interest which is going to make you profitable. – This means that all the dormant accounts can be shown as profitable.

    – Asaf.

    October 18th, 2010 at 9:38 am
16. Michael Greenberg said:
    i’m almost sure it excludes all group companies except fxcm US. the reason is that they transferred most of account to the UK company and will now repatriate them back so i’m sure we’ll see a major increase in number of accounts in coming quarters.

    October 18th, 2010 at 9:42 am
17. Michael Greenberg said:
    “because they pay you interest which is going to make you profitable. – This means that all the dormant accounts can be shown as profitable.”
    excellent notation.

    October 18th, 2010 at 9:43 am
18. Mikael said:
    If that is true, Oanda is seriously messing with the intention of the CFTC requirements…

    October 18th, 2010 at 9:51 am
19. Michael Greenberg said:
    Asaf: now that i think of it your explanation is probably incorrect as dormant accounts aren’t supposed to be calculated in these statistics unless oanda actually did calculate these accounts as well… if so, i’m sure we’ll hear from cftc about it.

    October 18th, 2010 at 9:53 am
20. TradeProfits said:
    Yeah Mikael, that does indeed make things a bit ambiguous. There are probably a bunch of people who have an account with Oanda but never touched the trading platform. Maybe that´s part of the reason for the number…

    October 18th, 2010 at 10:22 am
21. Michael Greenberg said:
    just cleared this with oanda, they counted active accounts only.

    October 18th, 2010 at 10:23 am
22. Asaf said:
    I am not sure what the definition of “active account” is – do they count the managed account or the self directed only?

    In any case, I can attest that they [OANDA] are technologically years ahead of the other brokers and they do treat their customers fairly – so I guess it really shows.

    I wish they would show profitability on native platforms vs. MT4 – can guarantee that you’d see a big difference there.

    – Asaf.

    October 18th, 2010 at 10:50 am
23. Arthur said:
    Statistically, there’s zero chance that Oanda is counting their accounts the same way. When you have all of those brokers at roughly the same number, they can’t be that different.

    October 18th, 2010 at 12:00 pm
24. Michael Greenberg said:
    non-discretionary accounts only, they don’t count managed accounts to the best of my understanding

    October 18th, 2010 at 12:08 pm
25. Simon said:
    Oanda at 50% profitability?

    Something smells and it begins with bull.

    October 18th, 2010 at 3:40 pm
26. John said:
    @simon, so it smells like bull…. because you are not profitable? Well, ask CFTC for checking up those numbers.

    October 18th, 2010 at 7:13 pm
27. TradeProfits said:
    Asaf: “Technologically years ahead” – at some points yes, but the platform could really need an upgrade – Seems years behind to me

    October 19th, 2010 at 12:54 am
28. Jim Hunt said:
    Hi Ed,

    The FXCM numbers include active traders with FXCM LLC only. I expect their numbers to increase significantly next quarter:

    http://trading-gurus.com/fxcm-release-extra-forex-trader-profitability-statistics/

    Jim

    October 19th, 2010 at 4:36 am
29. Simon said:
    John, you got the wrong end of the stick.

    I am profitable. But 50% of users profitable on OandA? If you understand trading, then why on earth would you believe there is such a big discrepancy between the brokers listed in this survey?

    When it comes down to it, slippage, requotes, speed of execution, spreads, etc., can hinder a trader a bit, but they do not cause a difference of 28% between the lowest and highest ranking brokers.

    October 19th, 2010 at 4:43 am
30. Michael Greenberg said:
    Jim, these numbers don’t make sense if FXCM’s overall average is about 23% so how do these numbers add up?
    Equity Range % Profitable
    $0 – $999 27.89%
    $1,000 – $4,999 40.52%
    $5,000 – $9,999 42.36%
    $10,000+ 47.74%

    October 19th, 2010 at 6:15 am
31. Jim Hunt said:
    Hi Michael,

    They’re monthly averages, not quarterly like the “official numbers”.

    Jim

    October 19th, 2010 at 6:45 am
32. Adil Siddiqui said:
    do you think we will ever see audited reports in fine detail direct form the regulator as opposed to the brokers themselves? not saying that we dont trust them!

    October 19th, 2010 at 7:12 am
33. Michael Greenberg said:
    still doesn’t make any sense

    October 19th, 2010 at 7:38 am
34. Michael Greenberg said:
    doubt

    October 19th, 2010 at 7:38 am
35. Jim Hunt said:
    Makes perfect sense to me Michael!

    Read my FXCM post again, and my IBFX one. If it’s still not clear what I’m prattling on about maybe we can discuss it over there?

    Jim

    October 19th, 2010 at 9:41 am
36. John said:
    @Simon, as you can see in Michaels post the FXCM numbers if true are similar on monthly average. I think the guy from FXCM said they were from the year 2009. So they have nothing to do with the quarterly numbers of 2010.

    October 19th, 2010 at 10:41 am
37. John said:
    There are probably more traders with account sizes from $0 – $999

    October 19th, 2010 at 10:44 am
38. Asaf said:
    @Jim – this is mathematically impossible – you can’t average a group of numbers and get a number which is less than all the numbers in the group.

    Where did you get these numbers?

    – Asaf.

    October 19th, 2010 at 2:50 pm
39. Michael Greenberg said:
    yep, looks like doctored numbers

    October 20th, 2010 at 2:58 am
40. Topfx Forex Trading said:
    So what does “SEC broker mean” any ways?

    October 20th, 2010 at 7:24 am
41. Michael Greenberg said:
    they answer to SEC rather than to CFTC

    October 20th, 2010 at 7:38 am
42. Top FX said:
    on another note, it just cant be that ibfx is bigger then fxcm by number of accounts. just cant be truth. maybe they used different calculation methods??

    October 20th, 2010 at 7:41 am
43. Michael Greenberg said:
    makes sense to me, remember how the were moving all accounts overseas to uk and australia? ibfx didn’t have subsidiaries there until a few months ago so i guess most of us accounts of fxcm moved overseas.

    October 20th, 2010 at 8:21 am
44. Jim Hunt said:
    Hi Asaf,

    It’s not mathematically impossible. It’s mathematically almost inevitable.

    I got those numbers from Jason Rogers of FXCM.

    Read my IBFX post carefully, then my FXCM post, and then the comments on that post.

    If you still can’t get your head round it please feel free to add comments of your own.

    Jim

    October 20th, 2010 at 9:05 am
45. Jim Hunt said:
    Hi Top,

    IBFX UK had rather fewer accounts in Q3 2010 than FXCM UK. QED.

    Jim

    October 20th, 2010 at 9:07 am
46. Michael Greenberg said:
    this only proves that traders need more than one month to lose more money, we already knew that.

    October 20th, 2010 at 9:22 am
47. Asaf said:
    @Jim I must have missed the fact that now FXCM are releasing monthly figures and expect us to compare it to quarterly figures. Hiding the number of active accounts per month is only making things worse for people who actually know what they are looking at.

    At the end of the day I have to say that the CFTC did a great service to the trading community by forcing the brokers to expose these numbers now if they can just enforce proper execution and account segregation we’re going to have a great market.

    – Asaf.

    October 20th, 2010 at 9:36 am
48. Jim Hunt said:
    Hi Asaf,

    As I pointed out, like for like data over different timeframes would be much more useful. However let’s not forget where we were just a few short days ago. No data of this sort at all!

    Surely brokers voluntarily revealing any information beyond the minimum legal requirement is to be welcomed, as long as it’s not deliberately misleading?

    Unfortunately the CFTC didn’t take their recent opportunity to insist on segregated accounts in the US. I wonder why not?

    Jim

    October 20th, 2010 at 1:32 pm
49. Asaf said:
    Jim,

    You can’t seriously believe that volunteering partial stats on a different time-frame is done for any reason other than to mislead.

    I would personally like to see the CFTC attack the execution quality first as the high capital requirements and low leverage basically reduce the probability of bankruptcy which the account segregation is suppose to protect.

    – Asaf.

    October 20th, 2010 at 3:44 pm
50. Jay said:
    Where is the number of IKON GM? are they still in business?

    October 21st, 2010 at 12:56 am
51. Michael Greenberg said:
    still in business, will provide their number next quarter

    October 21st, 2010 at 3:26 am
52. Jason Rogers said:
    @Asaf

    It’s entirely possible for the monthly average to be higher than the quarterly average. Just because an account is unprofitable for the quarter, does not mean that it was unprofitable for all 3 months during that quarter. If the account is profitable for even 1 month (during the specified quarter) but was unprofitable overall for the entire quarter, then of course the monthly average over the year can be higher than the quarterly average over the year.

    I think you’re missing the point behind the additional statistics which shows a general correlation between account equity and profitability. In the coming weeks, I believe we will have additional information on profitability by currency pair and possibly more to give even more insight for traders.

    Jason

    October 21st, 2010 at 4:30 pm
53. Asaf said:
    @Jason,

    I didn’t miss that point and in fact when we run statistics in Currensee it’s clear than large accounts have a much higher probability to be successful in trading.

    The point I was trying to make is that you can’t change two parameters (the duration and the statistics and the removal of the total traded accounts) and expect anyone with half a brain to think you are doing this for any reason other than to mislead people.

    So please either give us the distribution of profitability on a quarterly basis and account size or give the number of active accounts per category. And I am going to have a serious laugh if you claim that you don’t have the data.

    – Asaf.

    October 21st, 2010 at 5:24 pm
54. alex said:
    What about ECN brokers – HotSpot, IB etc? Have they published their data?

    October 22nd, 2010 at 3:13 am
55. Michael Greenberg said:
    only US brokers who are registered with the CFTC are required to disclose this

    October 22nd, 2010 at 3:28 am
56. Jim Hunt said:
    Morning Asaf,

    You did miss that point. Maybe you didn’t bother reading my blog posts explaining it. You certainly didn’t take me up on my offer of a more detailed explanation.

    As luck would have it I have one or two large accounts of my own. I was even contacted by Steve recently about “an exclusive preview of a new way to invest”.

    Here’s another point for you to consider. How many high net worth individuals from the UK do you think will ultimately take Steve up on his generous offer, if they’ve watched your performance in here?

    How many will put any faith whatsoever in any of Currensee’s “statistics”, come to that?

    Jim

    October 22nd, 2010 at 3:57 am
57. Jason Rogers said:
    @Asaf,

    We don’t mind at all releasing the quarterly average over the past year in addition to the already released monthly average over the past year. In fact, I received the data this morning and you can find it posted to Forex Factory: http://www.forexfactory.com/showthread.php?p=4116326&posted=1#post4116326 . It’s the average quarterly figure over the past year.

    If you find anything confusing about the number, please let me know.

    -Jason

    October 22nd, 2010 at 12:29 pm
58. Michael Greenberg said:
    Jason, why not put number of account next to each category? This way we can actually calculate the average.

    October 22nd, 2010 at 12:51 pm
59. Jason Rogers said:
    Hi Michael,

    There’s a limit to how much detail we can give for two reasons. 1) Getting down into specific details is sensitive from a business competition viewpoint especially when our competition probably has no intention of divulging the same detail, and 2) we’re in pre-IPO quiet period in terms of how much specific information we can share. So while I understand for trader gossip it would be nice to know the number of accounts per category, it’s not something I’m able to post.

    Our goal with releasing the information is to give traders more insight into the characteristics of profitable traders.

    -Jason

    October 22nd, 2010 at 2:02 pm
60. Asaf said:
    @Jason, From these numbers I can see that you have more than 88% of the trades with accounts below $999 which is pretty pathetic.

    If you as me, you are digging a hole by providing these partial numbers and you would probably be better off with disclosing everything that is going on including foreign accounts.

    – Asaf.

    October 22nd, 2010 at 2:32 pm
61. Asaf said:
    @Jim,

    Not sure how I offended you or what Steve told you. I did read your message and I did respond to you here.

    We don’t eat the BS brokers are trying to feed everyone and I am sorry for calling you out on this.

    – Asaf.

    October 22nd, 2010 at 2:37 pm
62. Jim Hunt said:
    Morning Asaf,

    Here’s an extract from one of Currensee Limited’s websites:

    “The Currensee Trade Leaders™ Investment Program puts you, the investor, in control of your personal automated trading portfolio. You decide which Trade Leaders you want to add to your portfolio based on a variety of metrics including our proprietary Trader Authority Index, average risk and annualized return.”

    Source: http://www.currenseetradeleaders.co.uk/about_program.php

    As our self appointed arbiter of BS, how do you rate that on a scale from one to ten? Can you by any chance let us all know exactly how Currensee calculate their “proprietary Trader Authority Index”?

    Thanks in anticipation,

    Jim

    October 23rd, 2010 at 2:19 am
63. Jay said:
    Oanda is the only market maker type broker on this list.

    Wouldn’t it stand to reason that they WANT a 50/50 ratio?

    Since they are on the other side of every trade, I’m sure that plays a part…

    October 23rd, 2010 at 12:23 pm
64. Michael Greenberg said:
    every broker in this list is a market maker, including oanda.

    October 23rd, 2010 at 1:33 pm
65. Pete said:
    All Market Makers? what about MB Trading, they claim to be ECN all the time.

    Thanks Michael

    October 25th, 2010 at 1:10 am
66. Asaf said:
    @Jim

    There is no intention to hide what we do and we have complete context help in the site once you register.

    These are some of the definitions and we’re working to provide a more robust help.

    The following are what we have on the context help today, the are not 100% accurate but like I said they close enough to give you a sense of what we do.

    Performance Score – A trader’s Performance Score (Perf score) is a propriety metric based on a 0-100 scale. We use an internal algorithm weighting the trader’s Annualized Return and History. Higher returns and longer history result in a higher Performance Score.

    Risk Score – A trader’s Risk Score is a propriety metric based on a 0-100 scale. We use a proprietary algorithm weighting the trader’s Daily Volatility, percent Days Losing, and Maximum Drawdown percentage. Greater volatility, percentage of days with a negative return, and maximum drawdowns contribute to a higher Risk Score. A Risk Score less than 30 means that historically the trader manages their risk quite closely.

    TAI – The Trader Authority Index (TAI) is a proprietary trader skill metric based on a 0 – 100 scale. It consists of the Performance Score (50% weight) and Risk Score (50% weight). A TAI greater then 60 means that historically the trader has proven to be consistent with positive returns and reasonable risk.

    – Asaf.

    October 25th, 2010 at 10:01 am
67. Asaf said:
    @Pete,

    Claiming to be an ECN does not mean you are not a market maker. Or any other words – everyone is a market maker in this market.

    – Asaf.

    October 25th, 2010 at 10:04 am
68. Jim Hunt said:
    Hi Asaf,

    Thanks for that information, but you still haven’t answered my first question. You also seem to have completely missed the irony implied by my link. Click it. See that FXCM banner at the top?

    Do you remember FXCM? You know, the forex broker you alleged “volunteer partial stats on a different time-frame… to mislead”.

    Jim

    October 26th, 2010 at 12:56 pm
69. Kushmir Intuchis said:
    I notice that IB (Interactive Brokers) is not listed there. They also allow only 50:1 as far as I am aware.

    October 26th, 2010 at 4:10 pm
70. Michael Greenberg said:
    IB aren’t required to publish these stats, they are primarily SEC registered

    October 27th, 2010 at 1:34 am
71. Asaf said:
    @Jim,

    We do a lot of business with FXCM for few years now and I don’t have any complains against them from the business or trade execution side.

    Still I think that releasing partial information was not a transparent thing to do and it’s very misleading.

    If you choose to give them a stage you need to ask yourself if you are true to yourself or eat what they give you.

    – ASaf.

    October 27th, 2010 at 4:34 pm
72. Jim Hunt said:
    Hi Asaf,

    We don’t do any business with FXCM (currently at least!).

    If any broker feeds me information I am more than happy to regurgitate it together with an explanation if I think it will be of benefit to my readers. I have even been known to ask brokers to provide additional information beyond that provided in their press releases and their banner ads.

    Cheers,

    Jim

    October 29th, 2010 at 4:48 am
73. Vijay said:
    What about One Financial, are they registered with CFTC and do you have their account profitability numbers as well..

    If you do kindly publish those as well

    November 1st, 2010 at 1:33 am
74. Michael Greenberg said:
    nope, they are a FSA broker therefore not required to publish these numbers

    November 1st, 2010 at 1:43 am