Loss rate amid Polish Forex traders exceeds 79% in 2016

Achieving a profit thanks to Forex trading is not a simple task – anyone who has entered the online trading realm will probably agree with that. This is also confirmed by Forex trading results data published by the Polish Financial Supervision Authority (KNF, or PFSA) on April 25, 2017.

A survey conducted by the regulator amid Forex brokers offering their services to Poland’s residents shows that 79.3% of the active traders lost money due to FX trading in 2016. The profit rate was 20.7% last year.

The Polish financial regulator explains that the results were calculated on an annual basis – that is, the account balance was measured in annual terms. The profit reading would have been better if the results were measured on a quarterly basis.

The numbers are similar with those from previous years and with those from other EU countries, according to the KNF.

This is not a very positive piece of news for FX traders as it hints at the multitude of problems they face during their Forex trading. One of them is the lack of understanding of certain aspects of the trading process, such as execution and slippage. FinanceFeeds research shows that about 80% of retail traders globally do not understand how slow execution and slippage is applied to their accounts, and are, hence, unable to contest it or prove it, or to measure it against what would have occurred to a specific trade if it were executed in accordance with correct practice.

In addition, many introducing brokers (IBs) do not know how to monitor this, as many are focused on sales and marketing, instead of developing systems that can test the prices that are being quoted and validity of orders being filled by their broker. The single region in the world in which this is tested by IBs is China.

Going back to Europe and traders’ losses, let’s mention the worrisome numbers revealed in the Annual Report for 2016 by AMF’s Ombudsman Office. The report shows an overall drop in complaints against binary options and FX brokers but the the average sum lost by investors who filed complaints rose last year. Half of the complaints referred to losses exceeding EUR 5,000.

The majority of complaints in France – 83%, concerned companies regulated in Cyprus. A number of complaints alleged psychological manipulation, harassment and draining of investor accounts – all of them were against CySEC-regulated brokers.

Poland has been one of the European countries to introduce measures aiming to tackle the fraudulent activities of online trading companies targeting Polish residents. Under the proposed legal amendments, set to take effect on April 29, 2017, in order to operate as a brokerage, a company should either have authorization as an investment company in Poland or as an investment company agent in Poland. This rule is set to terminate the activities of entities that offer investment services on behalf of companies registered overseas and that do not have a registered branch in Poland.

Also, the KNF will operate a special register to which the domain names listed on the KNF Public Alerts List would be added. Entering a domain name into the restricted domain register would lead to the blocking of access to these pages by Internet service providers. The registry will enable ISPs to automatically obtain information about the domains added to the list.