U.S. Brokers Q2 2011 Report: Profitability Is Down!

If you’re new around here, the broker pprofitability report basically measures the number and percentage of a broker’s client accounts that were deemed profitable during the second quarter of 2011. Let’s see which brokers’ clients did the best:

Q2 2011 Profitability

Looking at the figures, it seems like almost all brokers saw the profitability of their clients decline on average during the quarter. Only Advanced Markets reported a positive change, with an increase of 2.4%. However, having only 49 registered clients, the uptick doesn’t have that big of an impact on the forex industry. In addition, there remains the possibility that it was just one or two successful accounts that pushed up the total figure. In fact, in terms of % of accounts that are profitable. Advanced Markets accounts still lag behind everyone else by ranking dead last at 12th place.

One figure that catches my eye is the 7.1% downtick that Oanda posted for the quarter. Back in Q3 2010, the profitability of Oanda accounts stood out like a sore thumb at a whopping 51%! Take note though, that after changing the calculation to exclude interest rate rollover swaps, Oanda’s profitability ratio ticked lower over the past two quarters, causing Oanda to drop out of first place in terms of profitability rankings.

Is the drop in overall profitability the start of a new trend? Um, I wouldn’t jump to that conclusion just yet. Perhaps the slump is merely seasonal with trading volume lightening up at the start of the summer. Just take a look at the average true range of EUR/USD. During the 1st quarter, the daily ATR was hovering below 150 pips. During the 2nd quarter, however, EUR/USD’s ATR rose to about 180 pips, about a 20% increase.

On top of that, we saw market sentiment see-saw back and forth quite a bit during the 2nd quarter as the market’s focus shifted almost daily on various catalysts (e.g. changes in interest rate differential, sovereign debt issues, etc.)

Moving on to the total number of accounts, I find it intriguing that Oanda was able to add over 1,000 new accounts last quarter. By the end of June, Oanda had a total of 30,304 clients while Interbank FX and FXCM lost about 1,600 accounts each last quarter. Could it be that a few traders were swayed by the sweet profitability numbers that Oanda was posting late in 2010?

With the ongoing trend of consolidation through mergers and acquisitions amongst forex brokers, it’ll be interesting to see how long Oanda can keep its stranglehold on the industry. In my opinion, little competition between brokers would be great, as it may lead to better overall service for retail traders such as you and I.

Now, if you’re feeling bad about your Q2 performance, don’t! Every trader will experience a drawdown in their career, and the profitability report shows, most of us took took our share of hits this past quarter. Hopefully, we’ll all continue to do the little things to improve our trading and I’m sure, the third quarter’s report will look a bit brighter!


  • Aloefuna Godson

    I sincerely appreciate this update.I am in search of a creditable broker who will do Forex trading for me.I live in Nigeria.Who do you recomend?