Retail FX Trader Survey Results – Most Lose MoneyHFA Staff
Retail FX Trader Survey Results
Nottingham Trent University
June 15, 2016
Between the 29th November 2015 and 25th April 2016, 133 Retail FX traders responded to a request to take part in an anonymous online survey, which asked 14 questions about the way they trade. The purpose of the survey was to inform research looking at effective ways to help improve the profitability and reduce the risk of the Retail FX trader.
Over fifty percent of the respondents stated they had been trading for more than four years. The survey found that more than half of the traders had experienced account-closing losses with nearly 40% have experienced this at least twice. The most common cause of these losses were the use of trades sizes that were too large, with nearly half of all traders stating this was the cause of their worst trade. Additional ‘worst trade’ factors were identified as allowing losing trades to run for too long and the lack of automated stop loss levels. Less than a quarter of traders identified their ‘system’ as being the cause of either their best or worst trades, with ‘best’ trades being attributed to significant market moves over 40% of the time closely followed by allowing winning trades to run for a long time. Only a third of traders said they regularly checked the bid-ask spread before placing a trade with only a quarter ever checking the interest swap charges, despite nearly half of all traders saying they kept trades open overnight. When asked what single area a trader would like to improve, most traders focused on physiological issues rather than system ones.
The purpose of this paper is to share these results with the Retail Trader community and to seek further input as to the best way to help address some of the identified issues.
Retail FX Trader – Survey Results
Between 29th November 2015 and 25th April 2016, 133 Retail FX traders responded to a request to take part in an anonymous online survey, which asked 14 questions about the way they trade. The survey request was placed on two FX online forums, Forex Factory (Forex Factory 2015) and MyFXbook (MyFXBook 2015). The purpose of the survey was to inform research taking place at Nottingham Trent University (NTU 2016) around helping improve the profitability and reduce the risk of Retail FX traders.
Below is a summary of the results of the survey data together with some observations on the correlation between data sets, where some is indicated. The correlation of data has been achieved by assigning proportionate numeric values to the answers given and looking for trends within that numeric data.
Many thanks to all the traders who took part.
Q1) How many years have you been trading Forex?
Just over half the respondents had been trading for more than four years, with a number indicating that they had been trading for nine or ten years. Just over a third had been trading for two years or less.
Q2) Which of the following statements best reflects your trading results over the last 6 months?
This question looked at a self-evaluation of profitability over the last 6 months, with just over a third of respondents (37.5%) saying they were either slightly or very profitable during that time. One in five (20.3%) stated they had made a large loss with a slightly smaller number (18%) reporting being very profitable. These numbers are in line with other analysis of the level of profitable traders carried out by the author (Davison 2016) which concluded that between 20% and 33% of retail FX traders are in profit at any one time, with self-selection of responders perhaps accounting for the slightly higher profitable rate?
A positive correlation is indicated between the length of time traders had been trading for (Q1) and there reported success in the last six months (Q2).
Q3) Which of the following statements best reflects the number of trades you take?
In terms of the volume of trades opened each day, just under three quarters (72%) of traders opened at least one trade every day with 11% of traders stating they opened ten or more trades each day.
There is no apparent positive or negative correlation between the volumes of trades placed (Q3) and reported profitability over the last 6 months (Q2) despite the increased spread costs incurred due to the higher volume of trading.
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