Did you know the members of the Currensee social network are significantly better performers than the general population of forex traders?
It’s true. I’ll run you through the numbers.
As a basis for comparison I’m using the quarterly figures the Commodity Futures Trading Commission (CFTC) requires US forex brokers to report. They show the percentage of active accounts which are profitable in each period. Active here means an account which has done at least one trade over the three months in question. Forex Magnates aggregates this information each quarter. You can see the figures for Q1 of 2013 here.
The broker-reported figures started for Q4 of 2009. In order to do the comparison, I went back in the Currensee trading records to that same starting point and calculated the percentage of profitable accounts for each quarter for members of the social network using the same methodology.
Here is the comparison of results quarter-by-quarter:
You will immediately notice that the Currensee members beat the CFTC required figures not just on average, but in each quarter as well. In fact, it’s only close on a couple of occasions. And in case there is any question as to whether these differences are meaningful, I ran a test of significance. For the statistically oriented, the T-Test of the comparison of means came through with a value of 4.94, making the difference quite significant.
One interesting thing to observe in the broker-reported figures is the increase in the percentage of profitable account in the last couple of years. They are clearly higher than the ones from the first half of the period. At least part of that can be attributed to a survivorship effect whereby profitable traders keep trading and losers drop out. The general expectation would be for an influx of new accounts to offset those where trading stops, but that seemed to stop happening in Q4 of 2011. Since then the bias in the number of active accounts has been negative (though there was a big tick up in Q1 of this year) while the number of profitable accounts has held steady. And yes, there does appear to be some impact of survivorship in the Currensee figures as well, as we’d expect.
It should be noted that in looking at the Currensee figures I only used trades which were not done as part of the Trade Leaders Investment Program – in other words, non-social/copy/auto/following trades. I wanted to do that to judge the performance of members in their own right, not performance directly driven by the trading of others. The CFTC figures have so such filter, so likely do reflect the influence of social trading. If we judge social trading as likely having a generally positive impact on performance, then the CFTC figures could be expected to overstate the performance of individual traders in the general populace, making the performance of Currensee social network members even more impressive.