More accounts traded = better forex trader?
I've done some work extending the research that went into my Retail forex trader success rates - some real data post from a couple weeks ago. Since the broker-reported figures that we see each quarters are based on accounts rather than individuals, I decided to look at the latter in my data set. I'm still working on fully replicating that prior study, but the first part of the results I think are interesting in and of themselves.
This table compares the quarterly figures reported to the CFTC (averaged) with my initial "By Accounts" numbers and the new "By Traders" figures.
There's a pretty obvious drop between the account and trader columns. One is led to conclude that, among other things, profitable traders are more likely to trade multiple accounts (or sub-accounts, as my data set treats them as separate accounts) than unprofitable ones. Obviously, one cannot conclude that trading multiple accounts will make one a more successful trader. Multiple accounts is merely some kind of indicator.
I'd be curious to hear what folks thing about this - why profitable traders are more likely to trade multiple accounts than non-profitable ones.
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Comment by Francesc Riverola on January 21, 2013 at 11:56am -
interesting... I always thought that multiple accounts was a product of traders sophistication... the more sophisticated the trader was, the more trading accounts had.
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Comment by Lisa on January 21, 2013 at 12:22pm -
I think diversification of markets traded & even having more than one strategy, ...
which is why I would have separate accounts, can add to a traders success.
This way if you have a position trade on and want to intraday trade, ...
you can trade in a separate account account ...
so you don’t break your rules on the position trade etc.
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Comment by Rhody Trader on January 21, 2013 at 1:26pm -
I had someone tell me he keeps a secondary account for testing - a live account, not demo, just in case things go really well. I think, though, that sort of thing probably wouldn't help the case as one is just as like (or more likely) to have weaker performance in a test account than a live one for obvious reasons.
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