A Look at Forex Brokers’ Profitability in Q1 2013

In Q4 2012, the retail forex trading industry hit a slump. A number of brokers exited the U.S. market as the NFA enforced stricter regulations. Those who were left standing also suffered client losses.

But don’t worry just yet! Forex Magnates has released its quarterly data on broker profitability. By the looks of it, it seems like forex brokers had an amazing start to 2013!

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Source: Forex Magnates

Here are some observations from the data collected:

On account growth:

Not only was Interactive Brokers the top broker in terms of most profitable client accounts, it also acquired a hefty number of new clients. Now with 19,666 accounts, up 17.68% Q4 2012, it’s closing the gap on market leaders OANDA and FXCM.

Meanwhile, Gain Capital also saw double digit accounts growth, aided by its acquisition of FX Solutions. The company now has 12,384 accounts under its belt.

Of all the brokers listed above, only IBFX/TradeStation and MB trading posted slightly less accounts in Q1 2013 than in Q4 2012.

On client profitability:

Despite the increase in volatility (which is welcomed by most traders) during the quarter, we saw that almost all brokers reported a decline in the percentage of profitable accounts from Q4 2012. In fact, only three brokers, Alpari, ILQ, and FXDD reported higher numbers in client profitability from 2012.

Interestingly, ILQ, the broker with the second least number of accounts, posted an increase of 33.5% in the number of profitable accounts, after it came in dead last at 22.7% last Q4 2012

This isn’t to say that if you use these specific brokers you have a higher chance of being profitable. You should still do your research and see which brokers provides the services that best fit your needs!

For the most part, I think we can see this report as a bright spot for the forex trading industry as it reverses a recent trend of declining figures that started Q1 2012. Could this be a start of an explosive boom for the forex industry? Right now, it’s too early to tell, but early signs point to brokers starting 2013 off on the right foot.

For more interesting data points and insights on US forex broker profitability, check out the Forex Magnates article, “Q1 US Broker Profitability Report Showing Signs of Optimism” at forexmagnates.com!