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Screenshot of a breaking news alert e-mail from Q2 2017
France’s financial markets regulator AMF earlier today published a detailed report on the results of trading of French individual investors in the Forex and CFD markets, with the data showing that cumulative losses for a period of five years exceed EUR 161 million.
AMF has been very active in issuing warnings against unlicensed Forex and binary option brokers over the past year, with the number of such blacklisted companies reaching into the hundreds. The regulator has paid attention to the rising number of unlicensed online trading entities, as well as to the increased number of complaints by investors against such businesses. For this reason, the regulatory authority has undertaken a large-scale quantitative study which covered 14,799 active customers of FX and CFD brokers offering their services in France. The study period extends from 2009 to 2013.
The findings of the study are the least to say pessimistic, with the cumulative rate of loss-making traders standing at 89% for the five-year period, the average loss being substantial at EUR 10,887, although that sum varied widely across brokers.
The cumulative loss for the 2009-2013 period is EUR 161,115,493, based on 16,181,843 transactions.
The AMF took a deeper look at the possible factors for the losses incurred, with the bottom line being that traders who traded more often, lost more often. In a conclusion which verges on the sarcastic, the watchdog finds that traders who persisted in their trading, striving for professionalism and more experience, were not better than novice traders in their success. No positive effect from learning was demonstrated and the rate of loss-making traders was approximately the same amid the experienced and the novice traders.
On the brighter side for FX and CFD brokers, the study found that commissions, spreads and other transaction costs accounted for only a small part of the losses: 14.2%.
You can read the full report by AMF here