Q1 US Broker Profitability Report Showing Signs of Optimism

US brokers have filed their profitability reports for Q1 2013. During the quarter, along with increased trading volumes, the US retail FX industry also saw account growth take place for the first time since Q 2012, as total active traders grew 3,506 to 99,207. The largest advancements of new accounts were seen at Interactive Brokers which registered 17.7% and Gain Capital where active traders grew 17.2%. Figures at Gain Capital were assisted by its recent purchases of US customers from FX Solutions which had 3726 active traders recorded at the end of Q4 2012.

On the heels of a weak 2012, and steady declines taking place in US Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term traders, the growth is a welcome relief for the industry. Although FX trading was highly active during the quarter and is being cited as a primary interest for renewed interest in the asset, US brokers also had to compete with a bullish US equity market.

Q1 2013 Data:

Although the Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term is favored by traders, profitability among customers dropped 1.7% on a weighted average. Despite a 3.3% decline in account profitability, Interactive Brokers held onto the top spot followed by CitiFX and OANDA. Among outperformers, FXDD stands out as client profitability rose to 6.0% to 36.2% along with total active accounts increasing 8.9%.

Interestingly, since the first report traders who have traded with brokers that used to offer higher leverage e.g. above 50 to 1 have had an overall increase in profitability. In Q1 of 2010 Oanda’s clients recorded 51% profitability.

US Forex Traders profitability in Q1 2013

• Total of 99,207 active traders

• 11 reporting brokers

• Interactive Brokers maintains its position as the most profitable broker for clients, in fact the top three are unchanged since the previous quarter.

• Only 2 brokers, MB trading and IBFX lost accounts.

Previous Reports: Q4 2012, Q3 2012, Q2 2012, Q1 2012

The previous quarter ended with the Cypriot debacle and volatility has somewhat increased. The benchmark VIX index touched a five and a half year low in January 2013, thus showing signs of optimism in the global equities market. The VIX is currently trading at 15.53 and in Q1 2013 it has had modest movements, compared to the intense volatility in the height of the recession e.g. October 2009, May 20 10 and August 2011.