American forex traders lose $20 million in September
Every month CFTC publishes Futures commission merchants (FCMs) and retail foreign exchange dealers (RFEDs) financial data. Amongst other things CFTC
Update: Many readers contacted me asking why I think this is losses and not something else like withdrawals. The answer is I can’t know for sure but this is an unusually big drop in client deposits. I’ve compiled a study of client deposit changes since beginning of 2011 and there was only one drop in deposits bigger than September’s – in July 2011. That drop may be attributable to OANDA’s acquisition of a Japanese broker and perhaps moving many Japanese based accounts there. We cannot know this for sure and I’m in touch with them to find out. The chart of month on month deposit changes is below.
Every month CFTC publishes Futures commission merchants (FCMs) and retail foreign exchange dealers (RFEDs) financial data. Amongst other things CFTC also discloses Total Amount of Retail Forex Obligations – which is basically the total equity of retail forex traders that broker holds.
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September 2011 report shows that US retail forex traders have lost about $20 million. This figure however is to be viewed cautiously as this report just shows changes in total capital and doesn’t specify reasons for changes. We can assume that the $20 million decrease in total retail forex obligations mostly came from losses due to high volatility experienced in September – but we cannot be 100% sure about all of it. Some brokers like ILQ, Tradestation and FXClub have even shown an increase in clients equity while brokers like Oanda have experienced a decrease of over $13 million.
What’s even more interesting is that while September 2011 retail forex obligations report indicates that many traders lost money in September, the Q3 2011 US forex brokers profitability report shows the opposite – clients’ profitability is actually up.
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| 8.2011 | 9.2011 | change | |
|---|---|---|---|
| ADVANCED MARKETS | 1,527,782 | 1,392,951 | (134,831) |
| ALPARI | 10,829,320 | 10,595,935 | (233,385) |
| FXCM | 145,264,186 | 145,254,197 | (9,989) |
| FXCLUB | 3,097,749 | 4,488,081 | 1,390,332 |
| FXSOL | 17,325,490 | 17,083,483 | (242,007) |
| FXDD | 33,756,982 | 31,758,420 | (1,998,562) |
| GAIN | 97,819,890 | 98,486,559 | 666,669 |
| GFT | 91,754,561 | 83,813,305 | (7,941,256) |
| ILQ | 5,207,838 | 7,819,830 | 2,611,992 |
| IBFX | 31,623,759 | 30,232,166 | (1,391,593) |
| MB | 32,828,208 | 32,593,827 | (234,381) |
| OANDA | 161,477,887 | 148,089,093 | (13,388,794) |
| PFG | 33,991,858 | 33,213,234 | (778,624) |
| TRADESTATION | 37,336,604 | 38,537,987 | 1,201,383 |
| XPRESSTRADE | 578,289 | 936,685 | 358,396 |
| Totals | 711,381,458 | 689,675,561 | (20,124,650) |
Month on Month change in client deposits in 2011
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These people has been remain the most gainer in the forex trade, what went wrong with them to lose such a huge amount of money?
It seems to me that taking the number of client funds (deposit) is not right.
Simply because the client can make withdrawals.
The example is evident because the most important differencial is with OANDA,
which is normal because it is the only broker to offer tranfer fund (fxGlobalTransfert).
Therefore logical to see a big difference one month to another on the client funds.
how can you tell it’s not just people taking money outof their accounts?
You could could compute if high historical volatility actually correlates with a decrease of the retail fx obligation number on a historical basis and if there is a meaningful connection. You could use the VIX index as quick & dirty overall volatility measure.
It would be my best guess to suggest that nearly every retail forex trader that traded in September lost money. The market was awful… period. I’m a full-time trader, and for example, if you took a long position and stopped out, that means you were wrong and should have taken a short position instead. Well, both sides stopped out. Regardless if long or short, you stopped out due to ugly whipsaw price action. Our last good trading month was June 2011. July 2011 was terrible also and its interesting that the article mentions July as the 2nd worse month for… Read more »