Findings of AMF study reveal significant losses for FX traders

The French financial markets watchdog, the AMF has made public the findings of a study it had commissioned over the period 2009-2013, pertaining to the results of trading of French individual investors in the Forex and CFD markets. The French financial products and services market is considered very lucrative and has attracted the attention of many brokers, who target French nationals and residents. As a result, the AMF has often found itself compelled to issue numerous warnings and build its own blacklists of unauthorized forex as well as binary options brokers in order to attempt to protect investors from unscrupulous firms.

Commissioning a large scale quantitative study and publicizing its results, also comes under the framework of the watchdog’s efforts to increase the awareness amongst traders about the realities of online retail trading. In a nutshell, the results announced once again highlight the underlying risks of FX trading, as well as the need for properly educated traders, who will stand more chances of avoiding losses.

The most striking conclusion drawn from the study is that the vast majority of traders across an entire spectrum of experience have lost substantial amounts of money over the five years that the study reviewed. In fact, the study revealed a very pessimistic and dismal cumulative rate of loss-making traders standing at 89% for the five-year period, with the average loss per trader being substantial at EUR 10,887, although that sum varied widely across brokers.

Moreover, a total of 13,224 customers experienced aggregate losses of nearly $220 million (€175 million), with the remaining 1,575 customers earning a combined $17.51 million (€13.8 million), while the cumulative loss for the period under review amounted to EUR 161,115,493, based on a total of 16,181,843 transactions carried out by the 14,799 active customers of FX and CFD brokers offering their services in France, who participated in the survey.

The AMF commissioned study also made an attempt to determine the likely factors that had contributed to the losses suffered by the traders, with the first conclusion drawn being that traders who traded more often, lost more often, while it could be also inferred that the rate of loss-making traders was approximately the same amid the experienced and the novice traders alike.

 

What is encouraging for FX and CFD brokers is that according to the results of study commissions, spreads and other transaction costs accounted for only 14.2% of the losses incurred by traders.

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