Breaking: First Half of 2020 Forex Industry Community Trading Report
The continued spread of the new coronavirus has had a profound impact on the global financial market, forex trading and the industry are shrouded in shadows. According to data released by 36 traders under the supervision of the UK Market Supervision Authority (FCA), from February to July this year, most traders are in a state of loss, the proportion of traders’ losses is between 60%-80%. However, data from the FOLLOWME trading community in the first half of 2020 shows that 42% of accounts that use follow-up trading have achieved profitability. In the context of the global financial market turmoil, this number is particularly eye-catching. At the same time, more and more traders are also interested in this ascendant trading method.
Community trading refers to a trading method in which the system automatically replicates those traders who have been trading profitably in the past period. The advantage of community trading is not only good interactivity, but also comprehensive coverage. For traders who are new to forex, community trading can help them learn to trade while allowing their investment capital to grow steadily; for experienced traders, they can share their knowledge and skills and exchange ideas with peer elites. Although community trading has many unparalleled advantages over traditional trading, but this new type of trading is still in its growth stage and is full of possibilities.
Based on the above reasons, this report hopes to present the latest overview of community transactions to readers by analyzing various data of the FOLLOWME trading community in the first half of 2020.
FOLLOWME Trading Community Introduction
FOLLOWME trading community was launched in 2015 and supports the account connections of more than 2,000 traders worldwide. Users can automatically follow the transaction through COPYTRADE. A total of 33 million orders have been generated in the community, and the trading amount has exceeded 2.2 billion (required) US dollars. 450,000 users in more than 170 countries share trading experiences, showcase trading strategies, and communicate with other traders in the community.
1.The scale of trading
In the first half of 2020, the number of orders in all months of the FOLLOWME trading community exceeded 1.2 million, a total of 8.3 million, an increase of 17.1% over the same period in 2019. It is worth noting that the gold flash crash that occurred in March caused huge fluctuations in the price of gold, the number of orders increased by 56% year-on-year in March 2019, indicating that traders have more choices in the black swan event to participate rather than avoid.
(Note: 7.9 million orders in the first half of 2019 and 8.3 million orders in the first half of 2020)
2. Average number of orders in trading account
In the first half of 2020, there were 233 active traders in the FOLLOWME trading community, nearly 20,000 connected accounts, more than 8.3 million orders were traded, the average number of trading accounts was 424, among which the top 20 traders in the average number of accounts Above 160, the highest is as many as 760.
(Note: There are 233 active Brokers, 8.3 million orders and 19,631 active accounts)
3. Traders follow-up orders efficiency
FOLLOWME trading community, traders followed nearly 900,000 orders in the first half of 2020, of which 680,000 follow-up orders were opened and closed within 1,000 milliseconds, accounting for 76.1%.
(Note: 233 active Brokers, 680,000 follow-up orders within 1,000 milliseconds, and 210,000 follow-up orders within 1,000 milliseconds)
4.Proportion of profit and loss of trading account
The data shows that in the first half of 2020, the average proportion of profitable trading accounts of active Brokers in the community is 22.5%. The following is a ranking table of the proportion of profitable accounts of active Brokers:
(Note: There are 233 active Brokers, 4412 profitable accounts, 15219 loss-making accounts. To ensure the objectivity of the data, the number of traders' bound accounts in the chart is above 100)
Trading user profile
1. Distribute by Gender, Age and Region
From the perspective of gender distribution, the community data in the first half of 2020 shows that males accounted for 69.9% of traders and females accounted for 30.1%. Although men are still the main force of traders, the proportion of women has increased significantly, indicating that more and more women are beginning to participate in forex trading. This phenomenon is not unrelated to the increase in women's disposable income and the promotion of their status in modern social and economic life.
(Note: The total number of traders is 450,000)
From the perspective of age, 25-34 years old is the main age group of traders, accounting for about 45%, followed by traders aged 18-24, accounting for 25.5%. This situation shows that forex investors are showing a younger trend. There are many reasons why there is more young investors, three of which are very important. The first is the transformation of ideas. Compared with elders, young people nowadays are more likely to accept forex investment as a financial management method, now there are many entrepreneurial heroes who have realized financial freedom early, which is what many young people yearn for. The second is the general increase in the education level of young people, there is almost a positive correlation between education level and financial investment. The third is that the income of young people has generally increased. For example, the monthly salary of ordinary employees of some large Internet companies is more than CNY10,000. After meeting basic living expenses, there is still money left to invest, so the increase in income is also the important reason of younger generation of forex investment.
(Note: The total number of traders is 450,000)
In terms of region distribution, China has the largest number of users, accounting for 71.3% of all users, followed by Vietnam and Indonesia, accounting for 6.5% and 5.6% respectively. It is worth noting that the top five Central and Southeast Asian countries occupy three seats, indicating that the forex market of Southeast Asian countries has huge development potential.
(Note: The total number of traders is 450,000)
2. Position types and trading time
From the perspective of position types, the data shows that in the first half of 2020, FOLLOWME community traders love intraday trading the most. The number of intraday trading orders accounted for 85.7% of the total orders, and the trading held for more than one week accounted for 5.7%, it shows that most trading users tend to conduct intraday trading.
(Note: The number of orders is 8.3 million)
In general, the European and U.S. markets have the most trading in the forex market, especially when the European and American time slots intersect. However, data from the FOLLOWME trading community shows that 80.7% of the community’s trading in the first half of 2020 occurred during the Asian and North American hours. From the specific data, the trading volume of global traders was the most active during the Asian session, as high as 44.2%, followed by the North American session. After that, it was 36.5%, the least in European time, accounting for only 19.3%. The reason is that nearly 90% of the users in the FOLLOWME trading community are from East Asia and Southeast Asia, and the time to do trading is concentrated in the morning and evening when there are more free hours.
(Note: The number of orders is 8.3 million)
3. Popular trading varieties TOP10
In the first half of 2020, traders in the FOLLOWME trading community have traded a total of 244 types of trading targets. Among them, XAU/USD has the largest number of trading orders, accounting for 29.7%, which is far ahead, followed by EUR/USD and GBP/USD, which account for each. At 17.9% and 10.2%, the number of trading orders of the popular trading varieties TOP10 accounted for 77.8% of the total number of orders. From the perspective of the proportion of product categories, of the 244 trading products, foreign exchange accounts for 60%, precious metals account for 30%, crude oil and indices each account for 5%.
(Note: 244 varieties of trading, 8.3 million orders)
Overview of traders and followers
In the first half of 2020, the FOLLOWME trading community generated more than 890,000 follow-up orders, more than 6,000 traders displayed their signals on FOLLOWME, and 13,000 subscribers searched for high-quality signals on FOLLOWME. Among them, the subscribers who generated follow-up transactions spread across 118 Brokers.
1.Quantity of order
In the first half of 2020, the FOLLOWME trading community generated a total of 8.3 million orders, of which about 2.17 million orders were generated by traders, accounting for 26.1%, and the number of orders generated by followers was about 6.13 million, accounting for 73.9%.
(Note: There are 2.17 million trader orders and 6.17 million follower orders. Follower transactions include independent trading and follow-up trading.)
2. Account profit and loss ratio
According to the data, among the traders who connected to the signal in the community in the first half of 2020, profitable accounts accounted for 22.8% and loss-making accounts accounted for 77.2%, which is in line with the "28th" law. In follow-up trading, follower follow-up trading profit accounts accounted for 42.7%, which performed significantly better than the “28” law. In the follower's independent trading section, autonomous trading profit accounts accounted for 22.3%. By comparing the data on the proportion of profitable accounts for follow-up trading and autonomous transactions, the proportion of follow-up trading profit is significantly better than that of autonomous trading.
(Note: The number of trader accounts is 6,135, the number of follower follow-up trading accounts is 4731, and the number of follower self-trading accounts is 8,747)
3. Analysis of single trading profit and loss
The data shows that community users lose an average of US$5.2 per trading. Compared with the profit and loss of traders and followers' independent trading, the loss of follower follow-up trading is much lower.
Analysis of traders' loss behavior
Among these 890,000 orders, we have summarized two major behavioral characteristics that led to traders' losses.
Taking gold as an example, the order results are as follows:
The average profit and loss amount per lot here is the total profit and loss amount of the order divided by the total number of trading lots.
Most of the gold traders prefer short-term trading. Among the gold orders, only 7.15% of orders are non-day orders; among all types of orders, intraday orders accounted for 85.7%, while intraday orders accounted for 92.85% of gold orders.
Gold traders prefer the short-term trading
On this data, we have reason to suspect that although non-day orders accounted for only 7.15% of long-term trading, the proportion of gold intraday trading orders would be higher if they were not included in the orders that were trapped and forced to turn into long-term trading. Because the one-hand profit and loss of non-day orders for gold is significantly worse than the one-hand profit and loss of intraday orders.
This also leads to two major problems for gold traders on FOLLOWME:
1. Risk control is not in place and forced to do long-term
The average single-lot loss of non-day orders is much higher than that of intraday orders.
There are many of these orders, they are placed in accordance with the rules of intraday orders when they are placed, but they suffer losses and become passive orders. The snowball then rolled bigger and bigger, causing the final loss to be much larger than expected.
Risk control is a topic that will not be overemphasized.
Even so, in fact, the risk control of community gold traders is relatively good, with only 7.15% of non-day orders. Even if half of them carry orders, it is only a little over 3%. Traders are improving, and the current risk control has been done quite well.
If we can go further, we will do a good job of risk control for each order and we will be forced to reduce the long-term intraday orders, and the overall trading performance can be better improved.
2. Be keen to do short-term, but there are many small troubles.
At first glance, the average single-hand profit and loss of day trading is much better than that of long-term trading, but the devil is always in the details.
For most traders, the trading cost of gold is $25 a lot. The daily order loss of gold traders in the FOLLOWME trading community is an average of $16.23. In other words, on average, gold traders can predict the gold trend of about $0.08 every time they place an order.
Although this is positive, it is not enough to cover the cost. And because most of these short-term orders are entering and exiting the market in a small amount of trouble, and traders can guess the market trend to a certain degree most of the time on the intraday orders, the traders themselves do not particularly care. The average trader only remembers those big profits and losses, and often does not care about the small profits and losses caused by frequent daily visits.
The accumulation of small amounts leads to more, accumulating day by day, and due to the huge amount of orders, a huge total loss was eventually formed here.
The core reasons behind the losses
On the one hand, there are orders from time to time, where a loss is a large amount; on the other is the cost of constantly eroding the net value of the account. Although the loss here is small, the snowball is getting bigger and bigger in the end.
The problems reflected by these two big data, in the final analysis, we believe that the core lies in one point:
Most traders do not have a formed trading system.
There is no problem if you are keen on short-term, but first you must have a stable trading system to do short-term. Just relying on feeling or market sense to do short-term, it is very likely that there will be two problems reflected in big data here: either just busy but lost on the handling fee; or the black swan order from time to time is not processed properly.
Although there are many reasons for the loss, we believe that the lack of an own trading system is the core hidden behind these data.
We said need to improve the trading performance, not just simply improve risk control or increase single-handed profitability, which will fall into one-sidedness.
Increasing one-handed profit may lead to a decrease in the winning rate of traders. Increasing risk control may also lead to early liquidation of orders that may eventually be profitable.
No matter which point is improved, the system will affect the whole body, so we need to emphasize the importance of the system again.
With a complete system, we can improve from it. We believe that regardless of whether the trader uses EA or manual trading, they should first have a rough set of their own trading system and establish their own trading system. This system should include at least entry and exit rules, position rules, and risk control rules.
The system can be flexible, but only if there has a system, trader can know where to improve. With the system, there will not be a phenomenon that after half a day of trading, you find that you have averaged and guessed the market but lost the handling fee.
FOLLOWME trading community outlook
In the first half of 2020, due to the impact of the new crown epidemic, the global economy was hit hard. The Federal Reserve introduced unlimited easing policies. The U.S. dollar index also turned down from near the historical high at the beginning of the year. Safe-haven assets ushered in a bull market, as well as bulk energy commodities such as crude oil and natural gas. Gradually, it rebounded sharply from historical lows, and the violent market fluctuations attracted the participation of many traders. However, for most traders, a highly volatile market represents more than just opportunities, but in more cases, it represents risks. A stable mindset and rich experience are more important currently. Under this situation, the advantages of community trading are further magnified, and this new type of trading will have more room for development in the post-epidemic era.
FOLLOWME trading community actively launched version 5.0 in the first half of 2020, and now has launched "Signals, Open Platform, Trader Application, Display Page, Account Management and Brand Page". In the future, we will use more open products to create a more open ecology for users. The community supports all MT4 accounts to connect, if you pass the real-name authentication, you can apply to become a trader and support full withdrawal of the subscription fee. The FOLLOWME trading community hopes to become an account management tool for more MT4 trading users, and at the same time integrate multiple roles such as traders, analysts and content creators into the community.
Disclaimer: The report data comes from the FOLLOWME trading community, and we strive to ensure the accuracy and accuracy of the data. The report predicts to share the latest data and information with practitioners in the industry, and to use technology to promote the sound development of the industry. It is stated that the report does not constitute any opinions or suggestions, and investment decisions need to be based on independent thinking.
Edited 31 Aug 2020, 18:18
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.