KNF Survey on Forex Traders Profitability Shows ‘Roulette Table’ Concept, 80% Lose Money

Ultimately, 80% of traders make losses over the long run.

Most retail forex traders lose money most of the time, according to a survey conducted by Poland’s financial regulatory body, the Polish Financial Supervision Authority (KNF).

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Reports provided to the KNF by the nation’s brokerage houses offering clients the opportunity to invest in the forex market through online platforms revealed that, on average, 79.3 percent of investors had a net loss from trading in each of the 2016 four quarters. On the positive side, the percentage of investors making money from trading in the over-the-counter market averaged 20.7 percent in the period from 1 January 2016 to 31 December 2016. But ultimately, 80% of the profitable traders make losses in the long run.

But that shouldn’t be a huge surprise, the KNF noted. After all, research conducted by other European watchdogs also show that most traders lose money each year, and these ratios generally hold true across the retail forex industry.

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The Polish regulator explained that these results, like in previous years, are based on the methodology of measuring the changes in the customers’ accounts balance at the end of the year. But when weighed on a quarterly basis, the winners portion improved slightly.

Roulette Table

The KNF noted in several occasions that retail forex investors enter into a market that is lightly regulated while they are allowed to supercharge their bets with a high leverage. This mix can lead to wins, but more often it leads to big losses where some traders can have their entire investment wiped out in a matter of days.

Last week, we reported on the Polish Financial Supervision Authority (KNF) after the regulator announced another tranche of regulation reforms pertaining to investment firms, this time setting specific requirements leading to a ban on the advertising of risky financial products, including forex. The modified provisions will slap fines of up to $1.25 million on unauthorised forex marketing.

The regulatory update is a reaction to the observed rapid expansion of investment firms offering brokerage services in the forex market. According to the watchdog’s circular, the only legitimate entities to operate brokerage activities will be the KNF-authorised investment firms or an agent of such regulated entities which is often a broker acting for and on behalf of the investment firm.

Investment services and activities in Poland may only be provided by companies licensed by the Polish Financial Supervision Authority (KNF) under the terms of the Act on Financial Market Supervision.

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