The Harsh Reality of Forex Trading: Insights from AMF's Study

Those who embark on a career as a trader do so with only one goal in mind: to earn money. Of course, the element of fun is present, but there's no doubt that there's an economic interest behind it. It must be said, however, that making money with Forex is not at all simple. It's a truth that needs to be realized right from the start, perhaps even before starting to invest. The risk is realizing it the hard way, literally at your own expense. To fully understand the difficulties a trader may encounter along the way, it might be enough to sift through some official data about the number of those who actually make money with Forex. Data that, to be honest, is very discouraging but if brought back to its natural dimension, and if subject to the proper clarifications, allows you to develop a realistic - and not pessimistic - understanding of the trading phenomenon. The most important study on this topic is the one conducted by AMF, the equivalent of our Consob. From the research, obviously carried out on a sample and not on the totality of traders, it emerges that 80% conclude the 12 months in the red. If we look at a broader horizon, for example 4 years, the percentage rises to 90%. It must be said that the study concerns exclusively retail traders, i.e. individuals who, privately - and therefore without referring to any investment company - frequent Forex. This clarification is useful to bring the data back to its natural dimension: in fact, even inexperienced traders, those who have just started, are included. The study, however, does not exclude an important phenomenon, which more or less unofficially is known by long-time traders: results come late. The trader can be compared to an athlete who wins over distance, a sort of marathon runner. In a nutshell, many years are needed to admire the results. If this is the case, how can we explain the 90% figure referring to 4 years of activity? Simply, with two considerations (supported by logic but not by studies).

• Trivially, it takes more than 4 years, if we look at the aggregate data, to be able to earn seriously.
• In the last 4 years, the market has been literally invaded by the classic "Sunday traders", i.e. ordinary people who, with a very small baggage of knowledge and perhaps spurred on by some effective advertising campaign, entered the market and came out with broken bones. It goes without saying that these do not count, although they are able, from a statistical point of view, to affect the percentage of losing traders.