The 2011 Q1 Profitability Report for US Brokers

The results are in! No, I’m not talking about the winners of American Idol Season 10. I’m referring to the brokers’ profitability report (e.g., number of profitable clients) for the first quarter of this year. If you’re itching to find out how your broker did, I won’t keep you waiting. Here are the numbers:

q1profit.png

*Gasp* Did GFT just overtake Oanda as the most profitable broker for the past quarter?!

GFT now holds the top spot with 39.90% account profitability, beating Oanda’s 38.10% for the first quarter of the year. You see, thanks to a new CFTC requirement, Oanda had to remove those accounts which earn only from interest from the total number of profitable accounts. They ended up excluding almost 20,000 interest-only accounts, putting a slight dent on their overall profitability.

What’s also interesting to note is that, despite the exclusion of interest-only accounts, Oanda still holds the most number of accounts among the bunch!

Another interesting piece of information from this report is that there’s a newcomer in the group, Advanced Markets, and don’t under estimate the number of accounts they hold. Although they only have 50 accounts, their clients actually have the largest pockets in the biz with an average account balance of $34,448. That’s roughly seven times the industry average of $5,270!

Also, if you compared this table to the Q4 2010 brokers’ profitability results, you probably noticed that IG Markets is no longer part of the cool crew. That’s because they’ve just announced their withdrawal from the U.S. market, after being chased by the CFTC.
I dug a little deeper into the report and I think I found a treasure hidden beneath the figures.

As you can see, almost all brokers a higher percentage of clients profitable during the first quarter. If we do the math, average overall client profitability was up 2% in January to March 2011 from where it was in the last three months of 2010. A few market junkies say that perhaps the increase is a result of brokers trying to clean up their image to comply with the CFTC’s rules. Now, Charlie Sheen can sure learn a thing or two from ’em brokers, huh?

I’m sure some of you are tingling with excitement to open an account with the top brokers in this list. But bear in mind that no matter how sexy their figures are, it won’t really guarantee your profitability. At the end of the day, it’s still a sound trading plan and proper risk management that determine one’s success in currency trading.