How many traders lose?

[Euler]

I own some financial broker stocks and since ESMA regulation came in, they have to declare how many of their clients lose money over a year on all advertising.

These figures don’t take any other factors into account. Just total accounts over year, regardless of experience, asset class traded, number of trades or investment objectives.

It also only applies to people who are inexperienced, defined as retail clients rather than experienced traders. You have to be classified when you are with a broker. So I'm considered a 'professional' trader because of the time in the market and resources available to me.

Losing accounts over a one year period: -

eToro – 65%
Spreadex – 67%
Saxo Capital Markets – 69%
Darwinex – 69%
InterTrader – 72%
ayondo – 72.1%
Core Spreads – 75%
ETX Capital – 76%
City Index – 76%
OANDA – 77%
CMC Markets – 78%
IG – 79%
XTB – 79%
London Capital Group – 79%
FxPro – 79%
Pepperstone – 79%
FXCM – 79.79%
Forex.com – 80%
Plus 500 – 80.60%
GKFX – 81.75%

Standard deviation of 6.2%

[weemac]

There's probably a strong correlation between losing traders and toilet roll hoarders.

[wearthefoxhat]

I own some financial broker stocks and since ESMA regulation came in, they have to declare how many of their clients lose money over a year on all advertising.

These figures don’t take any other factors into account. Just total accounts over year, regardless of experience, asset class traded, number of trades or investment objectives.

It also only applies to people who are inexperienced, defined as retail clients rather than experienced traders. You have to be classified when you are with a broker. So I'm considered a 'professional' trader because of the time in the market and resources available to me.

Losing accounts over a one year period: -

eToro – 65%
Spreadex – 67%
Saxo Capital Markets – 69%
Darwinex – 69%
InterTrader – 72%
ayondo – 72.1%
Core Spreads – 75%
ETX Capital – 76%
City Index – 76%
OANDA – 77%
CMC Markets – 78%
IG – 79%
XTB – 79%
London Capital Group – 79%
FxPro – 79%
Pepperstone – 79%
FXCM – 79.79%
Forex.com – 80%
Plus 500 – 80.60%
GKFX – 81.75%

I'm sure that CFD's are to blame for a high % of those figures.

eg: IG won't lower the leverage 1:30 to a more realistic 1:5. The result is, traders will blow their account/position when it goes against them, even with managed stop losses. IG would win either way as they get their fees any way. Yes, you could win bigger/quicker if it went your way, but % wise, the losers can be be bigger.

[Euler]

I'm sure that CFD's are to blame for a high % of those figures.

Very likely

[indigokid]

As the sports markets are down I'm starting to tinker with financial markets.

It's a bit of a jump. But very interesting none the less. As you've said above the CFDs seem to be the kiss of death. As an investment banker mate of mine says, "It's the brokers that make the money, no matter what".

So, with that in mind, and tapping into your experience as sports traders, are there any markets/platforms that lend themselves particularly well to our mindset/trading styles?

The ladder from Bet Angel would be nice too.

Cheers.

[trad1ngbull]

The ladder from Bet Angel would be nice too.

Absolutely.

[CallumPerry]

Google Level 2 trading markets. This is a view of the markets similar to Bet Angel with the order book shown (in some software) as a ladder with both the 'Best Bid' and 'Best Offer' shown.

With the whole Corona thing about, I may take a more detailed look into stocks too but I have so many questions before risking any real money!

[rik]

dont know much about stocks but id assume long term traders the percentage that have a profit on their account would be much bigger as on average stock prices been going up apart from the last few weeks obviously.
i reckon fees must be the reason most of the accounts lose, if it was more than a 1 year period you would have to think percentage of losing account even higher as sample size in trading can be much lower than say on betfair?
Do all brokers charge each transaction or is there a fee structure similar to betfair as well?

[CallumPerry]

I've wondered about these payments too. Without looking too deep into things, I've heard/read that opening and closing orders have a commission (though like Rik was asking, I too am unclear on the fee structures in place), a lot of platforms also charged a commission though some are now 0%?? annual cost to use the programme/app like Bet Angel? Apparently if you hold orders over night there's a fee? Something called a PDT rule for small accounts (which mine would be starting out). So so so many question marks??

Is there a comprehensive list of charges/things to consider for absolute beginners? Say I have back tested an idea with previous data and am at the stage I want to put some money in the markets for real?

[Euler]

You would have to pay a small fortune to use software and services similar to Bet Angel and to get direct market access.

[marksmeets302]

Forget about the speed game; there are others that invest millions per month to have the fastest feeds available. You will never be able to compete.

Interactive Brokers (ibkr.com) offers an api to its platform, and their own software is quite good and complete as well. It has a ladder interface for instance. Their software is free but can only be used if you hold an account with them.
Trading stocks, bonds and futures typically means paying a small commission; every time you open or close a position it will cost you. These costs are usually very low unless you trade very small. When holding short stock positions overnight you will have to pay a bit of interest. This varies from product to product. For very liquid products it is usually around 4 to 5% per year so not that much. Harder to borrow stocks sometimes cost up to 50% per year in interest so be careful.
Be wary of brokers that charge 0% commissions. They sell your orders to dark pools. If somebody is willing to pay for your order you know you can get a better deal by doing it yourself.

A word of caution: instead of getting easy money from half drunk punters you're going up against the best professional traders. Getting an edge in short term trading will be incredibly difficult.

[ShaunWhite]

Forget about the speed game; there are others that invest millions per month to have the fastest feeds available. You will never be able to compete.

+1 when I left work we were trying to shave off milliseconds, and I hear from a friend who's still there that they're now looking at trimming nanoseconds. They've invested about 40grand just getting a clock accurate enough to measure it.

[Euler]

I also agree. You end up in an arms race that you can't possibly win.

Somebody will always be slightly ahead of you.

For example, it's a rumoured that the first-ever Betfair millionaire was an actually an SIS engineer.

Some of the big syndicates are stuffed full of ex-Betfair guys, so you would think they know every trick in the book. That's possibly where they are making their money and possibly one of the reasons that the PC exists?

Skill is an underrated skill, people are always looking for a shortcut. As for timing in stock markets, your retail trader hasn't a chance.

[sa7med]

Forget about the speed game; there are others that invest millions per month to have the fastest feeds available. You will never be able to compete.

Interactive Brokers (ibkr.com) offers an api to its platform, and their own software is quite good and complete as well. It has a ladder interface for instance. Their software is free but can only be used if you hold an account with them.
Trading stocks, bonds and futures typically means paying a small commission; every time you open or close a position it will cost you. These costs are usually very low unless you trade very small. When holding short stock positions overnight you will have to pay a bit of interest. This varies from product to product. For very liquid products it is usually around 4 to 5% per year so not that much. Harder to borrow stocks sometimes cost up to 50% per year in interest so be careful.
Be wary of brokers that charge 0% commissions. They sell your orders to dark pools. If somebody is willing to pay for your order you know you can get a better deal by doing it yourself.

A word of caution: instead of getting easy money from half drunk punters you're going up against the best professional traders. Getting an edge in short term trading will be incredibly difficult.

Do they supply depth of market/Level 2 historical data? Can't tell from their site. Pricing? I'm on the hunt for this data at a reasonable price. Perhaps some of us should pool our resources and purchase a package together? Would be fun to backtest some strategies.

[marksmeets302]

Do they supply depth of market/Level 2 historical data? Can't tell from their site. Pricing? I'm on the hunt for this data at a reasonable price. Perhaps some of us should pool our resources and purchase a package together? Would be fun to backtest some strategies.

Have a look at https://www.ibkr.com/en/index.php?f=14193 and scan for L2. Depends on which market you select, but most aren't terribly expensive.

Note that there is more market than you will see from level 2 data. If you put an order for decent size at the price between bid and ask chances are high you will get a fill; others are monitoring the market and shooting at prices that appear over or undervalued. The reason they aren't in the market with tight quotes themselves is that it takes time to update or cancel a quote and they might get caught if the rest of the market moves all of a sudden. Also sometimes there are iceberg orders: you will only see the first 100 or so shares of an order while the total order could be for thousands. Backtesting on level 2 data looking for an edge is kind of pointless in my opinion because you miss a lot of information.