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Forex Brokers in Europe released their unprofitability rates.

Per ESMA restrictions that go into effect TODAY, Forex Brokers in the European Union are required to provide a percentage of traders that are unprofitable in a warning notice on their websites.  These warning notices are published in the footers of the websites, but they are also in the form of bottom pop-ups that can be closed out with ease.  Any broker with a presence in the European Union has published this information, almost all of the Cypriot firms (CySEC regulated firms) have now released this information, but those with FCA licensing have done so.

What are the results?

Unprofitability Rates per European Broker

Forex BrokerPercentage of Unprofitable Traders
Tickmill79.27%
Pepperstone79%
IG Forex79%
Forex.com80%
XTB80%
FXCM79.79%
GKFX82%
Saxo Bank71%
City Index76%
CMC Markets78%
FXOpen UK78%
FxPro79%
Plus50080.6%
ETX76%
Darwinex69%
ThinkMarkets74.7%
AxiTrader75%
Purple Trading69.5%
Trading 21280%
Admiral Markets85%
Exness80%
Swissquote77%
HotForex71.05%
XM74%
FXDD75%
eToro65%

 

The 90-95-98-99% of traders fail myth is dead.

On average based on the updated data, 76.65% of traders (based on an arithmetic mean) are unprofitable with the most profitable traders being found in the brokerages that promote automated trading most, which is not surprising in the least.  The good news is that prospective traders and traders from all over do not have to parrot the same lies.  The truth is that a lot of traders are losing money, but not at the ludicrous figure that is being cited on forums claiming that the industry is conspiring against them and by "educators" who think that they have all the solutions.

This is a very healthy thing for the marketplace to consider and it is a goal for brokers to strive to lower.  This is the only positive element of ESMA's restrictions as client profitability becomes a priority and a competitive feature.

This being said...

Several points need to be made about the Forex Broker Unprofitability Rates

  1. Forex Brokers are adjusting to the new regulations by creating server and company bifurcations.  For instance, a broker in the European Union would have to offer the leverage levels under the restrictions, but that is if they are operating as the regulated entity in the European Union.  Some have created offshore entities under the same name and operational teams (with different servers) in Mauritius, Belize, Seychelles, and Saint Vincent and the Grenadines to allow traders the ability to use higher leverage like they did in the past.  There was a slow creep toward this direction, but now entities that have a regulated arm are now managing offshore brokerages with the same standards (this is the claim).
  2. Forex Brokers are going to likely push smaller depositors toward the offshore entities because those with $1,000 or less to deposit will not have the power to make meaningful trades under the new regulations.  This will result in the artificial drop in Forex Broker Unprofitability Rates when the figures update.  Many losing traders are undercapitalized and overleveraged gamblers.  The unprofitability rates are actually exaggerated in its current form as it includes all traders, but once the small depositors are chased off the EU servers, the rates will drop and then remain at those levels.
  3. There are still people holding onto the myths claiming that 90-99% of all traders are unprofitable in the Forex Market.  They point to the long term (beyond a year), but this simply is without merit (and unfounded) and the hoops that these individuals go through to hold onto their narratives are quite silly.
  4. The Forex Broker Unprofitability Rates in the European Union do not tell the full story, but it does enough to quiet a false narrative and move traders forward in a positive direction and relationship with their broker.
    • Are 76.65% of traders losing their entire deposits?
    • Are the majority these traders trading just below breakeven?
    • What about the profitable traders?  Are they making large rates of return on average?  There's no clear breakdown.

ESMA's regulations are a major gamechanger and they provide a starting point for rehabilitating the accounts of retail Forex clients.