Weekly Roundup February 9-13

Feb 24, 2015   //   by Profitly   //   Profitly, Profitly Weekly  //  No Comments

Time for the weekly roundup. Here are Tim’s biggest winning and losing trades of the week:



Then Superman had one whopper of a trade to put him back over the $500,000 in profits for the year!

And here is a broad market overview:

Sector Performance (vs S&P 500) via FactSet:

Outperformers: Tech +4.27%, Materials +3.01%, Consumer Disc. +2.63%, Energy +2.62%

Underperformers: Utilities (3.32%), Telecom +0.07%, Consumer Spls. +0.96%, Financials +1.20%, Healthcare +1.36%, Industrials +1.58%

US equities finished higher for a second straight week with the S&P 500 ending at a record high. Why? Some of the credit went to heightened expectations for a deal between Greece and Europe. The geopolitical backdrop was also cited as supportive with the ceasefire agreement for eastern Ukraine. However, neither of these dynamics had ever really presented a headwind for stocks and there continued to be a number of issues in both cases that still needed to be sorted out. This left some of the focus on thoughts that the market has simply been working off the negative sentiment that accrued over the better part of January despite a relatively unchanged macro narrative.

This week saw a further bounce in oil, though broader market spillover seemed more muted. While the stronger January employment report out last Friday kept a mid-2015 liftoff in focus, there was also discussion about how a lower natural rate of unemployment could slow the policy normalization process. The market largely ignored disappointing retail sales and consumer confidence data this week, while there was some positive sentiment surrounding the better growth data out of Germany. Aggregate takeaways from another busy week on the earnings calendar were limited. Tech was the big gainer this week, while utilities was the only sector to finish lower for a second straight week.

Sentiment improves:

According to the latest Investors Intelligence survey, the bullish camp stood at 52.5% for the week of 10-Feb, up from 49% in the prior week. In addition, the bears slipped to 15.2% from 16.3% over the past two weeks, while just before that, they were at a six-month high.

Oil bounce continues:

The oil bounce continued this week. After rallying 9.1% last week, Brent crude gained more than 6% to settle at $61.52 a barrel. WTI ended the week 2.1% higher at $52.78 a barrel after jumping 7.2% in the prior week. While analysts remained skeptical about the read-throughs for production, rig count data and capex cuts remained the widely cited tailwinds. On Friday, Baker Hughes reported that the US oil rig count fell by 84 this week to 1,056, down 34% from the October 2014 peak and the lowest level since August 2011. A Reuters article also pointed out that OPEC’s strategy seems to be working as the three main monthly reports out this week on average raised their demand outlook for OPEC crude in 2015. However, this week also saw another batch of cautious sell-side commentary on concerns that the market is still oversupplied and inventories are likely to build further. Citi even noted that WTI could briefly trade as low as $20 a barrel.

Tech leads market higher:

Tech was the best performing sector this week. Much of the focus was on the momentum in AAPL +6.9%. There was no one specific factor for the strength, though comments from CEO Tim Cook at the Goldman Sachs Tech & Internet conference were well received, with some focus on capital returns. In addition, following presentations from a number of hardware companies, Goldman pointed out that continued stability in IT spending seemed to be a common thread, with enterprise demand described as sturdy.

Will Bulls Reign In 2015?

Feb 19, 2015   //   by Profitly   //   Market, Profitly, Risks  //  Comments Off

People will often ask our gurus what their general outlook for the market is the following year and 2015 is no different. What we want everyone to know is that for us, it doesn’t matter if the market goes up or down. We train our students to know how to trade in any market. There will always be weeks where there are more plays then others, but the general direction of the market does not have a large impact on their ability to make money. They know how to short stocks and buy stocks by just learning technical patterns and the impact of various news stories.

If you are still curious how the market s going to do in the following year though, here is a post form Business Insider that will give you some insight. Please do keep in mind that making these types of predictions is like rolling a dice. New events can quickly pop up throughout the year and turn these estimates on their heads.

Finally, A Top Wall Street Strategist Goes Contrarian And Predicts US Stocks Will Fall In 2015

Until now, we couldn’t find a single major Wall Street strategist that was predicting US stocks would fall in 2015, and neither could Barron’s:

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The lowest level on Barron’s list was 2100 by Jonathan Glionna of Barclays. Keep in mind that the S&P 500 closed on December 31, 2014, at 2,058.90, so these are all higher than that level.

Of the strategists followed by Business Insider, 2100 was also the lowest, with the most bearish coming from Goldman Sachs, Credit Suisse, and Barclays.

But Societe Generale has come out with a contrarian view: US stocks are going to slide in 2015.

“Since 1875, we have never seen the S&P rise for seven calendar years in a row, so an eighth year would seem highly unlikely,” Societe Generale’s Roland Kaloyan said in a Dec. 17 note to clients. “We assume that the S&P 500 will finish the year slightly down as the strengthening of the US dollar and the new tightening cycle offset the strong US GDP growth already priced-in at the start of the year.”

@finansakrobat tweeted this map summarizing the firms outlook for global stocks in 2015.

The red map of the US with “S&P 500: -1%” really sticks out.

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Via Societe Generale

 

However, Kaloyan is feeling positive about other countries in Asia and Europe.

The firm is expecting stocks soaring in Hong Kong, Japan, Taiwan, and several European countries including Spain.

Weekly Roundup February 2-6

Feb 17, 2015   //   by Profitly   //   Profitly, Profitly Weekly  //  Comments Off

Time for another weekly roundup!

Stocks in the U.S. posted big gains this week with the S&P 500 posting its biggest gain since December 19. The Dow Jones was up nearly 200 points on Monday alone. It wasn’t entirely clear what drove the big rally, with some traders attributing it to simply making up for last week’s losses. Stocks are once again sitting at the record levels they reached late last year. Mergers and acquisitions also helped push stocks higher, with news that Pfizer is planning to buy Hospira Inc. for about $16 billion giving health-care sector stocks a boost.

Here’s performance broken up by sectors (vs S&P 500):

Outperformers: Telecom +6.95%, Energy +5.38%, Financials +4.81%, Materials +4.68%, Consumer Disc. +4.23%

Underperformers: Utilities (3.73%), Healthcare +0.69%, Consumer Spls. +2.22%, Tech +2.49%, Industrials +3.02%

There were some mixed takeaways from the economic calendar, though payrolls surprised to the upside again and news flow surrounding the auto and housing markets was upbeat. Greece and oil continued to dominate the macro headlines. Telecom was the best performing sector this week, with Energy being another standout with the jump in oil. Oil rallied sharply this week with WTI crude gaining 7.2%–the biggest weekly increase since February 2011. Even with a nearly 9% pullback on Wednesday, it ended the week up almost 20% from the low on January 29. The big tailwind was chalked up to falling oil rig counts in the U.S. On Friday, Baker Hughes reported that the U.S. oil rig count fell 83 to 1,140, the lowest level since December 2011 and down nearly 30% since October. OPEC must be pretty happy.

There were some mixed takeaways from the economic calendar this week. On the positive side, nonfarm payrolls jumped 257K in January, ahead of consensus expectations of ~230K. In addition, the net upward revision to November and December totaled 147K, leaving the three month average at 336K. The unemployment rate rose one-tenth to 5.7%, though the participation rate was up two-tenths to 62.9% (meaning more people jumped back into the labor force).

It’s safe to say that Greece will continue to be a major focus and driver of stocks both overseas and in the U.S. There are some key votes/discussions going on next week that will focus on austerity and budget measures. Greece wants less austerity while Germany just is not having it–saying that there needs to be a focus on getting spending, etc under control. An impasse would leave Greece without funding at the end of this month.

Now for how our gurus did this past week. Let’s start out with Tim. he didn’t have too many big trades this week, but



Next up we have Super Man. Despite having a bit of a rough week, he is still up half a million dollars since the start of the year. That’s pretty good if you ask me! These losses will also serve as a learning experience going forward for both Super Man and his students/subscribers. If you limit your losses and learn from them, you will be a much better trader.







Here are a few of our previous roundups:

December 1-December 5

December 8-December 12

December 15-December 19

December 22-December 26

January 5-January 9

January 12-January 16

January 19-January 23

January 26-January 30

World News: What You Need To Know

Feb 11, 2015   //   by Profitly   //   News, Profitly  //  Comments Off

Seven Of The Most Important Things In The World Right Now

Shakeup In Media. Two of the biggest media stories of the year came within an hour of each other earlier this week. One of the most well known anchors in recent memory, Brian Williams was suspended from his role as host of Nightly News on NBC for 6 months without pay after it was found that he lied to his viewers about riding in a military helicopter hit by a rocket-propelled grenade during the Iraq war. many are speculating on whether he will actually be coming back after those 6 months come to an end as well. Secondly John Stewart, host of The Daily Show, announced that he will leave the show later this year. it’s unclear what Stewart will do after this role comes to an end. it’s safe to say that he is leaving on a high note.

There was a tense meeting in Europe yesterday–and no deals came out of it. Greece and its eurozone partners are still at odds on how to handle Athens’ finances after a bailout deal expires this month, with sources offering conflicting versions of the eventual outcome of a Eurogroup finance ministers’ meeting on Wednesday. Greece’s finance minister said point blank that the country will “absolutely not” leave the euro.

Leaders reached an agreement on Ukraine. According to Reuters, “The leaders of Germany, France, Russia, and Ukraine have agreed on a deal to end fighting in eastern Ukraine, participants at the summit talks said Thursday.” “The deal reached after all-night negotiations in the Belarussian capital Minsk included a cease-fire that would come into effect on Sunday, followed by the withdrawal of heavy weapons.”

Deflation fears are rampant around the globe. The UK’s new quarterly report on economic conditions from the Bank of England can be summed up in two words: dovish and deflation. They’re saying UK inflation is more likely than not to turn negative in a few months time, and that no interest hike is on the horizon.

Up up and away. Greece’s ASE index is up a whopping 4.6%. France’s CAC 40 is up 0.9%, Germany’s DAX is up 1.5%, And Spain’s IBEX is up 1.8%. Japan’s Nikkei climbed 1.85% and Hong Kong’s Hang Seng jumped 0.4%.

Elon Musk isn’t happy. Tesla announced a stunning net loss after the close yesterday. The electric carmaker reported an adjusted net loss of $0.13 per share in Q4. Analysts were looking for a PROFIT of $0.32 per share.

Big report today: U.S. retail sales at 8:30 a.m. ET. Economists estimated sales would fall 0.5% in January due largely to falling energy prices. Excluding autos and gas, core sales were estimated to have increased by 0.4%. However, we just got the numbers and they disappointed in kind of a big way. Retail sales were down 0.8% and core sales were down 0.9%. Expect GDP guidance to be lowered by several market analysts after this. According to Zero Hedge, that was the worst back-to-back drop since Oct 2009.

And just for a kicker, the highly anticipated House of Cards Season 3 was leaked onto Netflix for at least 25 minutes last night. Twitter is full of speculation on whether this was a brilliant marketing ploy or a complete accident.

Weekly Roundup January 26-30

Feb 5, 2015   //   by Profitly   //   Profitly  //  Comments Off

Time for another weekly roundup. Our gurus are all in the green for the year while the major stock averages are starting the year in the red. The Dow Jones Industrial average ended the month down about 3.5%, the S&P 500 down 3% and the Nasdaq down 2%. Both national and international fears have come to the forefront once again as Greece struggles with austerity, China continues to slow, and a continued slide in oil prices has caused worries about a global slowdown.

Earnings have also been disappointing. Outside the likes of Apple, several companies have disappointed. Everything from energy (low oil prices) to tech and retail (strong dollar making U.S. goods more expensive overseas) have weighed on corporate profits in their most recent quarter.

Two energy names: Chevron and Exxon Mobile, both had really bad days last week. Chevron traded down 4.39% one day, Exxon Mobil traded down 3.42% another. For tech, Microsoft was a huge laggard, trading down nearly 15% on the week. The company reported earnings on Monday that failed to meet expectations and the stock is obviously paying the price.

McDonalds also posted poor earnings (again) and a new management change–ousting their CEO. The company continues to disappoint while other more high end burger chains like Shake Shack excel. $SHAK debuted on the NYSE on Friday and rose more than 100% from their IPO price of $21. Keep in mind that it opened around the $45 mark, so only the insiders that got in before the trading debut made a lot of money.

Apple was a standout, however, as the company said that on average they sold over 34,000 iPhones every hour, 24 hours a day, every day of the quarter. I guess the iPhone 6 and 6 plus have gone over well? Apple is sitting at an all time high and is up 6% this year.

Our gurus are all aware of these developments, but it doesn’t mean they can’t continue to make profitable trades. They each know how to make money in an up or down market. So, let’s see how they have done this past week and what they have made year to date.

We’ll start with Tim, who had a bit of a slow start (I mean, the guy just got engaged so he’s been a bit on the busy side), yet he is still up close to $17,000 since the start of the year. That’s definitely a lot more than a lot of people make in a month.



Everyone on the Tim Challenge list is also doing extremely well so far this year. If you look on Profit.ly, they have posted $120,000 in profits since January 1. Not bad! One of Tim’s most “well-known” millionaire students, Tim Grittani, is already up close to $100,00 since the start of the year with a number of trades around the $10,000 mark in profits.

Next we’ll take a look at Superman’s recent trades. This guy is on FIRE! He is up more than $400,000 just since the start of the year! Wow. He didn’t make a lot of trades this past week, but here are the two that he did do:






It’s also worth noting that everyone on the Super Pro subscription list has posted a total of more than $500,000 in profits year to date.

The Depressing Reason Millennials Have No Savings

Feb 3, 2015   //   by Profitly   //   Profitly  //  Comments Off

At Profit.ly we pride ourselves on helping people become smarter, more aware of the financial world, and overall more financially stable. Millennials are one group of people that could really benefit from this knowledge. Tim’s second millionaire student is a Millennial himself, and because he had become more financially literate through Profit.ly and other educational resources, he does not fall into the group of his generation that isn’t saving money. In fact he serves as a great example of how many in his generation, which is a very entrepreneurial group, should turn their attention to their financial well-being.

There have been several posts about how that generation is having a very hard time saving money for whatever reason. Some blame it on laziness or increasing dependence on their parents, but here is a startling posts from The Atlantic and Business Insider detailing the real reason why they aren’t able to save money like other generations have.

American families are grappling with stagnant wage growth, as the costs of health care, education, and housing continue to climb. But for many of America’s younger workers, “stagnant” wages shouldn’t sound so bad. In fact, they might sound like a massive raise.

Why? Well, since the Great Recession struck in 2007, the median wage for people between the ages of 25 and 34, adjusted for inflation, has fallen in every major industry except for health care.

Young People’s Wages Have Fallen Across Industries Between 2007-2013

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These numbers come from an analysis of the Census Current Population Surveyby Konrad Mugglestone, an economist with Young Invincibles.

In retail, wholesale, leisure, and hospitality—which together employ more than one quarter of this age group—real wages have fallen more than 10 percent since 2007. To be clear, this doesn’t mean that most of this cohort are seeing their pay slashed, year after year. Instead it suggests that wage growth is failing to keep up with inflation, and that, as twentysomethings pass into their thirties, they are earning less than their older peers did before the recession.

The picture isn’t much better for the youngest group of workers between 18 and 24. Besides health care, the industries employing the vast majority of part-time students and recent graduates are also watching wages fall behind inflation. (40 percent of this group is enrolled in college.)

The Wages of the Youngest Workers (Ages 18-24) Have Fallen, Too

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There are a few reasonable follow-up questions to these stunning graphs.

First: Why are real wages falling across so many fields for young workers? The Great Recession devastated demand for hotels, amusement parks, and many restaurants, which explains the collapse in pay across those industries. As the ranks of young unemployed and underemployed Millennials pile up, companies around the country know they can attract applicants without raising starter wages.

But there’s something deeper, too. The familiar bash brothers of globalization and technology (particularly information technology) have conspired to gut middle-class jobs by sending work abroad or replacing it with automation and software. A 2013 study by David Autor, David Dorn, and Gordon Hanson found that although the computerization of certain tasks hasn’t reduced employment, it has reduced the number of decent-paying, routine-heavy jobs. Cheaper jobs have replaced them, and overall pay has declined.

Your second question might be: Why have health-care wages been the exception to the rule? One answer is that health care is, generally speaking, the exception to many rules. Demand for medical services is dominated by the government (i.e. Medicare, Medicaid, and the employer insurance tax break), which doesn’t face the same vertiginous up-and-downs as the rest of the economy.

So as the Great Recession steamrolled many industries, health care, propped up by sturdy government spending, kept adding workers. What’s more, computerization and information technology have yet to work their magical price-cutting power in health care as they have in other industries, for a variety of reasons.

Americans are spending four percent less on food away from home than in 2007; but we’re spending 42 percent more on health insurance. As prices have increased, so have wages for younger workers in the medical field. (Update: Some readers have made the smart suggestion that money which might have gone to higher salaries has instead gone to paying higher health insurance costs.)

Once you account for falling wages among young workers—if you must: “the Millennials”—many mysteries of the economic behavior of young people cease to be mysterious, such as this generation’s aversion to home-buying, auto loans, and savings. Indeed, the savings rate for Americans under 35, having briefly breached after the Great Recession, dove back underwater and now swims at negative-1.8 percent.

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Some of these young people could afford to save more, even if it’s a small share of their meager income, since small amounts of money put away several decades before retirement (or an unexpected emergency) can help later. But it’s easier to see why young Americans aren’t saving any more than we used to: Their wages are falling behind the cost of basic goods and many are going into debt to pay for a college degree.

The evaporation of real wages for young Americans is a real mystery because it’s coinciding with what is otherwise a real recovery. The economy has been growing steadily since 2009.

We’re adding 200,000 jobs a month in 2014. That’s what a recovery looks like. And yet, overall U.S. wages are barely growing, and wages for young people are growing 60 percent more slowly than overall U.S. wages. How is a generation supposed to build a future on that?

Weekly Roundup January 19-23

Jan 31, 2015   //   by Profitly   //   Profitly, Profitly Weekly  //  Comments Off

The Dow ended the week up 1%, the S&P 500 was up 1.6% and the Nasdaq was up 2.6%, so it was a decent week for the overall market, but our gurus are still beating them year to date.

Let’s start with Tim.

$1,221 profit on ADXS; Short Stock.

$670 profit on COSI; Long Stock.

Then we have Superman, who posted some late trades from the week before that will serve as learning lessons. He may not have had such a great week, but he’s still up about $450K so far this year, and let’s be honest, nobody is perfect.
$22,302 loss on CLShort Future.

$16,260 loss on JUNOLong Stock.

Weekly Roundup January 12-16

Jan 28, 2015   //   by Profitly   //   Profitly, Profitly Weekly  //  Comments Off

Another week is in the books and we’re already half way through January! Time flies when you’re making money.

First off here are some trades from Tim this week. First up is a solid trade on SMSI:

Then we have another good trade on CUBA.

Lastly, Tim had a learning experience with his next trade on VOXX.

Then we have Superman, who had one trade that will give everyone else a run for their money this year! Also, did we mention he’s already up nearly $500K since the beginning of the year!! This is an example of why: check out the $47K profit on BLCM.

He didn’t stop there, profiting a sweet $5K on CLRX.

Don’t forget to check out previous roundups here:

November 3-Novermber 7

November 10-November 14

November 17-November 21

November 24-November 28

December 1-December 5

December 15-December 19

December 22-December 26

December 29-January 2

January 5-January 9

Weekly Roundup January 5-9

Jan 22, 2015   //   by Profitly   //   Profitly, Profitly Weekly  //  Comments Off

It’s time for the roundup of the first full trading week of 2015. We’re going to start with Tim because not only did he have a great week trading, but he got engaged!!! Congrats to him and Bianca from everyone at Profit.ly!

$2,936 profit on JOB; Long Stock by Timothy Sykes.

Entry comments: Buying this Supernova on breakout over day high, big 1st day breakout after consolidation, short squeeze, goal is to make 20-40 cents/share over the weekend into next week gap up/morning spike ideally.

Exit comments: Nice 15%ish gains on the Friday short squeeze/Monday gap up pattern as outlined in my http://howtomakemillions.com DVD, probly could run more, but this hit my goals and now I have to focus on more potential VUZI which sadly is already up to 5.75 and no chance to buy it premarket.

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$2,952 profit on LOCO; Long Stock by Timothy Sykes.

Entry comments: Speculative dip buy due to closing green/analyst upgrade today.

Exit comments: Woke up to make $3,000, best case scenario, buying hard hit stock with solid potential on chart breakout/analyst upgrade catalyst…beautiful trade all around, will do video lesson…congrats to all longs.

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$4,221 loss on EFUT; Long Stock by Timothy Sykes.

Entry comments: Bought this Alibaba wannabe on a solid intraday dip off of $5.50, see conversation from recent earnings conference call http://tim.ly/1plzhar they compare their product to Alibaba and tease a potential upcoming deal with them, if that deal is signed, this can spike 30-100%, that’s my goal to sell into that since it never holds it gains.

Exit comments: Cutting losses as this stock is dropping every day now like the overall stock market, I gave it PLENTY of time to spike/issue press releases about their mobile shopping product, but China/Alibaba is cooling off now and this is heading in the wrong direction so I have to cut losses.

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Next up is Superman, who is already up a staggering $200k year-to-date!

$64,515 profit on ES; Short Future by Super Trades.

From mid-December I stated i wanted to be short /hedged going into early Jan… shorted futures #SUPER

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$69,769 profit on FGEN; Long Stock by Super Trades.

Entry comments: CHART GS IPO i believe QP expires next week, personal stop loss 4ema area and personal target 25-28 plus depending on targets given Exit comments: #SUPER TRADE FROM $24 !!! May go higher but have to take the $6 point day !!!

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$35,350 profit on ES_F; Long Future by Super Trades.

From mid-December I stated i wanted to be short /hedged going into early Jan… shorted futures #SUPER

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$15,706 profit on ES; Short Future by Super Trades.

Futures short

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$6,898 profit on KITE; Long Stock by Super Trades.

Entry comments: TRADE – personal stop loss high 69’s and personal target 72-75 plus if it works

Exit comments: #SUPER TRADE 7k in 30 minutes !!!

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$8,897 profit on DRNA; Long Stock by Super Trades.

Entry comments: SWING / CHART – cancer IPO was in 40’s …has big analysts targets out there and only 6-7mm float…seems to be forgotten…personal stop loss mid 17’s and personal target 18-20 plus if it works Exit comments: SUEPR trade will keep on watch as I love the story…will monitor chart.

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$6,273 profit on CL; Short Future by Super Trades.

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$14,531 loss on MARK; Long Stock by Super Trades.

Entry comments: SWING – DO NOT CHASE China social media app due to launch soon per this article and said collaboration with $BABA and Tencent ..personals top loss mis 4’s and personal target 6-8 plus if it works Exit comments: Taking the loss here even though it may still work in the 8k today they changed language to 90 days……and said no partner agreement yet although they could get one….

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$6,646 loss on NERV; Long Stock by Super Trades.

tried to buy on news stopped out

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$9,386  loss on MARK; Long Stock by Super Trades.

Entry comments: SWING – DO NOT CHASE China social media app due to launch soon per this article and said collaboration with $BABA and Tencent ..personals top loss mid 4’s and personal target 6-8 plus if it works Exit comments: Taking the loss here even though it may still work in the 8k today they changed language to 90 days……and said no partner agreement yet although they could get one….

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$6,842 loss on DPRX; Long Stock by Super Trades.

Entry comments: SWING – Do Not Chase — anti-biotic play , low float IPO from 2014….. personal stop loss high 12’s and personal target 14-15 plus if it works Exit comments: stopped for loss will keep watch.

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December 1-December 5

December 8-December 12

December 15-December 19

December 22-December 26

Think Twice Before Trading Currencies

Jan 20, 2015   //   by Profitly   //   Market, News, Profitly  //  Comments Off

So you want to trade currencies? A lot of people have tried to take up currency trading as a way to boost returns with interest rates so low and the stock market near record territory. A lot of these same people got absolutely crushed last week in a central bank shocker. Even financial titans like Deutsche Bank, Barclays, and others like FXCM saw massive losses. So, you may want to think twice before diving in to this volatile market.

Speaking of FXCM, the stock is getting crushed, falling more than 80%. What exactly is FXCM? It’s a currency-trading platform for mom-and-pop investors, and on Thursday they revealed that their clients had taken a massive hit when the Swiss central bank surprised the world and abandoned its efforts to create a ceiling for its currency. There are a few things to keep in mind here. First, note that they are mom and pop investors rather than sophisticated traders. Secondly, according to the Wall Street Journal, about two-third of FXCM’s U.S. clients lose money each quarter. In last year’s third quarter, the most recent available, 68% of the firm’s active U.S. accounts were unprofitable.

Does this mean that FXCM just has really dumb clients? No, it means that trading currencies is hard. The two-thirds figure holds true across much of the industry. Among six of the biggest firms that allow U.S. retail traders to play in the currency market, a weighted average of 38.3% were profitable, according to Forex Magnates. In other words, more than six in ten were unprofitable.

Here’s the third-quarter 2014 data from Forex Magnates in chart form:

Via WSJ

Via WSJ

It’s the smallest and the newest investors that are most likely to lose money. It is safe to assume that this is likely because they are the less experienced and haven’t had  a change to burn out yet. The firms with the highest percentage of profitable accounts, Interactive Brokers and CitiFX, have minimum deposit requirements of $10,000. For some of the others, the minimum is much lower–as little as $50. The average account in the U.S. has about $6,000 to $7,000 on deposit, according to industry research.

Even with just a few hundred dollars in an account, the forex firms allow their customers to employ leverage to increase the size of their bets. A $1,000 account can make a $50,000 trade. But that also creates a problem: it’s easier to wash out entirely. So the would-be traders that come in, set up an account, lose all their money and never return–all in the span of a single quarter–are only counted as “unprofitable accounts” once.

Still want to trade currencies? Then learn from these Business Insider posts below.

More than three years of stability between the euro and Swiss franc just ended suddenly, as the Swiss central bank abandoned attempts to cap the currency’s value.

The bank previously aimed to let the franc rise no higher than 1.20 to the euro (about €0.83 to each franc). As soon as the change was announced, it smashed immediately higher, breaking through the previous “ceiling”. It broke through a 1:1 exchange rate, surging above €1.10.

Here’s the euro plunging against the franc, down by nearly 28% as the news broke, an astonishing move for a currency:

swiss franc.png

Moves like these occasionally come from countries like Russia, where a drop in a commodity they produce tanks, but they’re almost unheard of in the major advanced economies. As of 1:00 p.m. GMT (8:00 a.m. ET), the euro is down by more like 14.6%, to just 1.026 Swiss francs.

Switzerland brought the currency cap in 2011, to put a halt to the constant appreciation of its currency. The franc is seen as a particularly strong and safe currency, and saw huge inflows during the worst years of the euro crisis.

This is likely to have a big impact on a lot of Europeans: For example, if you’ve got a mortgage denominated in Swiss francs, but you get paid in euros, it just got a lot more expensive. On the other hand, if you’re getting paid in Swiss francs, that holiday to Italy suddenly looks a lot cheaper.

According to the Swiss National Bank’s statement, it was just becoming too difficult to justify the currency ceiling:

The euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar.

In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified.

As the dust settled from Thursday’s surprise decision to unpeg the Swiss franc from the euro — which blasted the franc up higher — we’re beginning to see the damage that was done.

According to the Wall Street Journal, Detusche Bank lost $150 million on the move. The Journal also reported that Barclays lost tens of millions.

It was expected that smaller businesses would feel the pain of this sudden, volatile shift. Business Insider’s Mike Bird reported that UK-based FX broker Alpari just announced that is has entered insolvency.

From Alpari’s announcement:

The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency.

Casualties continued to roll in. Foreign-exchange brokers who had relied on the stability of the Swiss franc, which until Wednesday was pegged to the euro, were taken by surprise when the Swiss National Bank abolished its controls, and millions of dollars were lost at firms around the world.

The UK-based FX broker Alpari just announced it had entered insolvency. Here’s what it said:

The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency.

That follows New Zealand’s Excel Markets, which made the same statement earlier, according to the Financial Times.

Brokers can go out of business on big moves like this because they give their clients access to leverage. For example, an account holder might have $1,000 with the broker but hold positions worth $10,000 in currency markets. That doesn’t matter so long as the holder’s losses are covered by the initial amount. But Wednesday, for at least two brokers, that wasn’t the case for a lot of those clients.

The New York-based FXCM, one of the world’s biggest foreign-exchange brokers, says it may be in breach of rules on capital requirements and that it is owed $225 million by clients who are now in negative equity. FXCM shares are down by an astonishing 90% ahead of the US open.

IG Group, a publicly listed UK-based broker said Thursday that its losses would not exceed £30 million ($45.7 million).

This isn’t likely to be the last of the fallout from the colossal move, which was almost unheard of among the most widely traded currencies of advanced economies. Here’s what Thursday’s fluctuation looked like:

swiss franc 2

Just like Tim and the other gurus teach you how to trade penny stocks and follow chart patterns, reach SEC filings, etc…you need to learn the fundamentals of currency trading before even thinking about diving into that market.  If these professional Wall Street firms (we use the word professional loosely there) are losing millions on this, think about how poorly the uneducated trader is doing.

 

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