Why most retail CFD traders lose money: what the data says

Most retail CFD traders lose money because they pay costs on every trade, use enough leverage that normal price swings cause large losses, and trade without any tested advantage over the market. Regulators who have examined broker data in the EU, UK, France and Australia have found the same thing again and again: somewhere between about two-thirds and nine in ten retail accounts end up negative. The causes are mostly mechanical and behavioural, which is why the figure is so stable across countries and years.

This guide sets out what the published data actually shows, how to read the percentage on your broker's website, and the specific mechanisms that produce losses. It ends with what the evidence suggests you can change, and what you cannot.

The numbers regulators have published

ESMA, 2018

When the European Securities and Markets Authority restricted CFDs in 2018, it pulled together analysis from national regulators across the EU. Its press release of 27 March 2018 stated that 74% to 89% of retail accounts typically lose money on CFDs, with average losses per client ranging from €1,600 to €29,000. Those findings were the basis for the leverage caps and other measures explained in our guide to ESMA leverage limits and negative balance protection.

FCA, 2016

The UK's Financial Conduct Authority published proposals for stricter CFD rules in December 2016. Its analysis of a representative sample of client accounts found that 82% of clients lost money on CFD products.

AMF (France), 2014

France's Autorité des marchés financiers studied the accounts of retail clients of forex and CFD providers over several years up to 2013. According to reporting of the study at the time, it found that 89% of clients had made a net loss, that losses grew with trading activity, and that there was no evidence clients improved with experience.

ASIC (Australia), 2017–2026

Australia's regulator has published the most detailed series. Its 2017 review found that 72% of CFD clients lost money, and 63% of clients trading CFDs over currency pairs. In its 2019 proposals, ASIC reported that licensed CFD issuers received A$1.5 billion of gross trading revenue from CFDs in 2018, largely from client losses plus fees, that 9.3 million client positions were closed out on margin calls, and that more than 41,000 client accounts went into negative balance, owing a total of A$33 million.

After ASIC's product intervention order took effect in 2021, its October 2026 consultation reported that aggregate net losses on retail accounts fell 91% within six months, and margin close-outs fell 87%. Even so, retail losses over its most recent 12-month data period exceeded A$458 million, including A$73 million in fees. Lower leverage reduced the damage; it did not change the direction.

Beyond CFDs: Brazil's day traders

Similar results appear in other leveraged retail trading. A study by Fernando Chague, Rodrigo De-Losso and Bruno Giovannetti, Day Trading for a Living?, used regulator data on nearly 20,000 individuals who day traded Brazilian equity index futures for at least 300 days. It found that 97% lost money, and only 0.4% earned more than the equivalent of a bank teller's daily pay. The authors found no evidence that people learned to do better by persisting.

The products, countries and periods differ. The direction does not.

How to read the percentage on your broker's website

Every CFD provider regulated in the EU or UK must display a risk warning stating what percentage of its retail accounts lose money. Brokers' figures generally range from the low 60s to the high 80s. A few points help you interpret them.

• It counts accounts, not money. A broker reporting 70% losing accounts tells you nothing about how large the losses were relative to the gains of the other 30%.
• It is backward-looking. It covers a recent period, broadly the last 12 months, updated quarterly in the EU. A strong trending year for one asset class can move it.
• Product mix matters. A broker whose clients mostly trade shares CFDs with low leverage may report a lower figure than one whose clients trade forex and indices at maximum leverage. It is not a measure of how fair the broker is.
• It includes costs. Accounts that broke even on price but paid spread, commission and swap count as losing.
• A lower figure is not a reason to choose a broker. It reflects the client base as much as the firm. When comparing firms, focus on regulation, costs and execution, as covered in how to choose a forex broker.

Cause 1: costs on every trade

Every trade starts with a loss equal to the spread, plus commission if your account charges one. Hold overnight and you pay or receive swap. None of these is large on a single trade. All of them add up across hundreds of trades.

Worked example: the cost hurdle

Illustrative numbers. A trader has a £5,000 account and trades EUR/USD, mostly intraday, at about one standard lot per trade. Their all-in cost is about $8 per round turn (a raw spread of 0.1 pips plus $7 commission; see spreads and commissions). They take five trades a day, about 20 trading days a month.

• Trades per month: 5 × 20 = 100
• Monthly cost: 100 × $8 = $800
• As a share of the account: roughly $800 / $6,300 (about £5,000) ≈ 13% a month

Before the trader has made a single right or wrong call, they need to earn 13% a month on the account just to stand still. On a spread-only account at 1.2 pips, the cost would be $12 per lot and the hurdle would be higher still. Add swap charges on any positions held past the daily rollover, explained in swap and overnight financing, and slippage around news (see slippage explained).

The faster you trade, the more of the expected price move the cost eats. A scalper aiming for 5 pips who pays 0.8 pips all-in is giving up 16% of every winner and adding 16% to every loser. That alone can turn a break-even approach into a reliably losing one.

Cause 2: leverage turns noise into damage

Leverage does not change whether a trade is right or wrong. It changes how much each pip is worth relative to your account. At high effective leverage, normal day-to-day fluctuations cause large swings in equity, and traders get stopped out of positions, or margin-closed, before their idea has time to play out.

Example, illustrative numbers: EUR/USD moving 60 to 80 pips in a day is ordinary. On a £2,000 account holding one standard lot, 70 pips is about $700, or roughly 26% of the account, in one unremarkable day. The leverage and margin guide and the margin call and stop-out guide show how quickly close-out levels approach.

This is the cause regulators targeted first, and the ASIC data suggests it is the one that most changes the size of losses. It does not, by itself, explain why most people lose; even at modest leverage, costs and the lack of an edge remain.

Cause 3: no measurable edge

Short-term currency movements are close to random for most practical purposes. To make money over time you need some repeatable advantage: a pattern that holds up after costs over a large sample. Most retail traders never establish whether they have one. They adopt a strategy from a video, trade it for a few weeks, abandon it after a losing run and pick up another.

Without a tested edge, the expected outcome of each trade is roughly zero before costs, and therefore negative after them. Over enough trades, the costs are the only thing left. This is why the most consistent finding across studies, including the AMF's and the Brazilian one, is that more active traders lose more, not less.

Establishing whether a strategy has an edge takes work: defined rules, a backtest on historical data, then forward testing at small size, all with honest costs included. Our guide to risk-reward ratio shows how to calculate expectancy, the number that tells you whether an approach makes money per trade on average.

Cause 4: behaviour

Even a sound approach loses if it is not followed. The well-documented tendency to close winning trades early and hold losing trades too long, called the disposition effect, shrinks the average win and stretches the average loss. Revenge trading after a loss adds larger, worse trades at exactly the wrong time. Overconfidence after a winning run increases size just before the inevitable losing run. Our guide to trading psychology covers these in detail with a worked example showing how a positive-expectancy plan becomes a losing one.

Cause 5: the shape of most retail strategies

Many popular approaches produce a high win rate and occasional very large losses: averaging down into losing trades, grid systems, martingale position sizing, or wide stops with tight targets. They feel successful for weeks or months, because most trades win. Then one sustained move against the position takes back everything and more.

These strategies are psychologically attractive and statistically dangerous. If a strategy's results are many small wins and a few catastrophic losses, the question is not whether the big loss comes, but when. Fixed stop-losses based on market structure (where to put a stop-loss) and fixed percentage risk per trade (position sizing) are the antidote.

Cause 6: small accounts and the pressure to make them count

Many retail accounts are small, a few hundred to a few thousand pounds or euros. Small accounts create pressure to aim for returns that are unrealistic, which means larger positions, which means larger losses. A 2% monthly return on £1,000 is £20, which does not feel worth the effort, so the trader sizes up to target £200 and takes ten times the risk.

There is no shortcut here. If an account is too small to produce meaningful income at sensible risk, it is a learning account, and the goal is to build a track record of following rules, not to replace a salary.

The broker's side of the trade

It is worth understanding the conflict of interest in parts of the industry. Many CFD brokers act as market makers for some or all retail flow, meaning they take the other side of client trades rather than passing them to the market. When the broker holds the other side, client losses are broker revenue. ASIC's observation that issuers earned A$1.5 billion in 2018 largely from client losses and fees describes this directly.

Regulated firms must manage that conflict, provide best execution and treat clients fairly, and market making is not in itself improper; it is how many brokers provide continuous prices in small sizes. But it explains why some firms push leverage, frequent trading and complex products. Our guides to how forex brokers make money and ECN, STP and market maker execution explain the models, and our how we rank page explains how we assess brokers.

What the data does not say

A few misreadings are common.

• It does not say nobody makes money. Some accounts are profitable in any given period. What the data shows is that a minority are, that persistence in profitability is rare, and that the minority is not easy to join by trying harder.
• It does not say the market is rigged. Most of the mechanisms above would produce losses even with a perfectly fair counterparty.
• It does not prove any strategy works. Survivorship bias is strong: the profitable traders you hear about are visible because they won. Those who lost with the same approach are not posting screenshots.
• It does not mean losses are unavoidable for every individual. It means the base rate is poor, and anyone starting out should assume they are in the majority until their own records show otherwise.

What you can change

You cannot change the base rate, but you can work on the specific drivers.

1. Trade less. Fewer, better-considered trades reduce the cost hurdle directly.
2. Cut costs. Compare all-in costs per lot, avoid holding positions with negative swap for long periods without reason, and watch for hidden broker fees.
3. Lower your effective leverage. Size from a fixed small percentage risk per trade, so that normal volatility cannot wipe out a meaningful part of the account.
4. Use a stop-loss on every trade and never move it further away.
5. Test before you risk money. Write rules, backtest, forward test at minimum size, and measure expectancy after costs.
6. Keep a journal and review it, as described in keeping a trading journal.
7. Only trade money you can afford to lose entirely. This is not a formality. The data says it is the likely outcome.

Common mistakes

• Assuming the statistics apply to other people. Almost everyone who opens an account believes they will be in the minority.
• Treating a profitable first month as evidence. A handful of trades is dominated by luck in both directions.
• Choosing a broker by its loss percentage. It mostly reflects the client base, not the quality of the firm.
• Moving to an offshore broker for more leverage. That increases the main driver of loss size and removes protections.
• Buying courses or signals to close the gap. Products that promise to put you in the profitable minority are, at best, unproven. See forex scam red flags.

Frequently asked questions

What percentage of forex traders lose money?

Regulator studies and broker disclosures put the share of retail CFD and forex accounts that lose money at roughly 60% to 90%, depending on the firm, the period and the products. ESMA's 2018 analysis found 74% to 89%, and the UK FCA's 2016 sample found 82%.

Why do brokers have to publish loss percentages?

Since 2018 EU rules, and equivalent UK rules, require every CFD provider to show a standardised risk warning that includes the percentage of its own retail accounts that lost money over a recent period. The aim is to give prospective clients a firm-specific, honest picture before they open an account.

Is a broker with a lower loss percentage better?

Not necessarily. The figure depends heavily on what clients trade and how much leverage they use. A broker focused on low-leverage share CFDs will usually show a lower number than one focused on forex. Compare regulation, costs and execution instead.

Did the ESMA leverage limits reduce losses?

Evidence from Australia, which introduced near-identical rules in 2021, suggests they reduced the size of losses substantially. ASIC reported a 91% fall in aggregate net retail losses within six months. Most retail accounts still lose money, because costs, lack of an edge and behaviour remain.

Can you become consistently profitable trading CFDs?

Some traders are profitable over long periods, but they are a small minority, and studies of day traders find that persistence in profitability is rare and learning effects are weak. Anyone starting out should assume losses are the likely outcome and risk only money they can afford to lose.

Does using a demo account first help?

A demo helps you learn a platform and test whether you can follow rules. It does not include real emotions or, sometimes, realistic execution. It is a useful step, but a profitable demo record over a few weeks is not evidence of a durable edge.