Forex brokers in the US have shown a rise of 2% in their clients’ profitability rate in the fourth quarter of 2010. Since the new regulations came into effect, brokers are obliged to report their number of clients and their profitability rate. Are the brokers treating clients in a fair way? Regulators launch an investigation
Michael Greenberg collected the data and has an excellent analysis of it. Read it here.
It’s interesting to see that while Oanda still has the highest profitability rate, it now fell below 50%. In Q3, they shined with a positive rate. Greenberg points out the fact that Oanda pays interest to its clients, and therefore has more positive accounts. Their currently profitability rate is 46.7%.
In the second place, two brokers stand: FXDD and GFT, with 32%. The last place belongs to FX Club, with only 19%. Where is your broker?
NFA Launches Investigation on Slippage
The new regulations are a big leap forward in terms of transparency. Hopefully it will also push brokers to act more decently regarding slippage. The NFA is about to launch an investigation on its 16 members, forex brokers, that aims to analyze if the systems are programmed to take advantage of slippage.
This is one of the most sensitive issues in the industry, especially with market makers, that occasionally take a position against their clients and don’t necessarily pass the order to the market.
The forex industry still has a long way to go, but it’s making significant progress. I’m optimistic that in 2011 less forex traders will suffer from scams. This profitability rate report is another important tool in assessing forex brokers.
Further reading – How to chose a forex broker in 2011.