Trading
ByOddmund GroetteTrading
What percentage of CFD traders lose money? Our informal survey suggests that between 62% and 82% of all retail CFD traders lose money. The best CFD broker has “only” 62% losing traders, while the worst has 82%.
These are pretty depressing numbers! The failure rate is very high, but as you’ll understand after reading this article, the odds are stacked against you if you dream of making money on CFD trading.
In this article, we look at the broker statistics for 13 CFD brokers we picked at random. Even though we gathered just a small sample (there are many CFD brokers), we believe this is a very correct generalization of what you can expect if you surveyed all hundreds of them. First, let’s look at the statistics and then later we’ll explain why the odds are stacked against you:
Table of contents:
What percentage of CFD traders lose money?
The percentage of CFD traders that lose money varies from 62 to 82%.
Let’s look at CFD trading and profitability in more detail.
The table below summarizes 13 random brokers and what percentage of CFD traders lose money.
The table is based on the latest numbers from the broker’s website. CFD brokers are required by law to report the percentage of losing CFD traders, so this is easily accessible data.
Here’s the table:
| % losing traders | |
| FXPro | 82 |
| Capital.com | 79 |
| Plus 500 | 82 |
| XTB | 77 |
| AvaTrade | 76 |
| IC Markets | 76 |
| FX Flat | 75 |
| Pepperstone | 74 |
| CMC Markets | 71 |
| FXCM | 71 |
| IG | 71 |
| Forex.com | 68 |
| Interactive Brokers | 62 |
The worst broker has 82% losing CFD traders while the best has 62% (Interactive Brokers – IB).
We are not surprised that IB has the best statistics. We suspect IB attracts better and more sophisticated traders than the others. 62% losing traders is still a lot, but still significantly better than all the others.
IB grows mainly via word of mouth, and you are less likely to find naive and newbies there. We are using IB ourselves, and Interactive Brokers is a great broker except for the terrible support. Please also have a look at our analysis of Interactive Brokers vs. Saxo Bank (if you are serious about trading).
ed on the conclusions above, you might understand we are no fans of CFD trading. You have many obstacles to overcome if you dream of striking it rich as a CFD trader:
How many CFD traders are successful?
The percentage of successful CFD traders is quite low. Here are the key points:
- Between 62% and 82% of all retail CFD traders lose money, based on an informal survey cited in.The best CFD broker had 62% losing traders, while the worst had 82% losing traders.
- As a ballpark average, most successful CFD traders make around a 10% return on their account, according to.However, this varies depending on factors like account size and trading experience.
- The results suggest that only a small minority of CFD traders, likely between 18-38%, are successful and profitable in the long run.
The high failure rate is attributed to several factors, including:
- CFDs being a zero-sum game where gains are offset by losses
- Use of leverage amplifying losses
- Hidden fees and charges from brokers
- Lack of knowledge, experience, and proper risk management among retail traders
- Overtrading and attempting to time the market without analysis
The odds are stacked against retail CFD traders, with most failing to make consistent profits due to the inherent risks and challenges involved.
How profitable is CFD trading?
CFD trading is generally not profitable for most traders. The majority of CFD traders (around 75-80%) tend to lose money over the course of a year due to the impact of transaction costs like spreads and overnight fees.However, a minority of disciplined traders (around 20-25%) are able to make profits by minimizing transaction costs, using appropriate risk management, and sticking to a proven trading strategy.Profitability depends heavily on factors like trading skill, risk management, and the specific CFD provider and asset classes traded.
Has anyone made money with CFD?
Yes, some traders have made money trading CFDs, but it is extremely risky and the majority of retail CFD traders lose money.One Reddit user mentioned making £266 on a £300 investment by trading earnings on specific stocks after thorough research.However, the FCA estimated that around 80% of CFD traders lose money. CFD trading involves using high leverage and speculating on asset prices without owning the underlying assets, which amplifies both potential profits and losses. Proper risk management and a deep understanding of the markets are crucial to succeed with CFDs.
Why CFD traders are likely to lose money
Why would you trade CFDs? We believe it’s a terrible idea. Let’s have a look at why:
CFDs are a zero-sum game
CFD trading is a 100% zero-sum game: your gain is someone else’s loss (or vice versa). CFDs are derivatives and thus just a contract between you and someone else with the broker acting as a counterparty (and you most likely lose if the broker goes belly up).
Leverage
CFDs allow traders to magnify their positions using leverage, which means they can control a larger amount of capital with a smaller initial investment.
However, this also amplifies their losses if the market moves against them. And sooner or later the market does go against your position.
Most CFD traders trade CFDs because they are undercapitalized. If you are, you better save what little you have and invest for the long term.
Hidden fees and charges
CFD brokers normally don’t charge commission but make money on the bid and ask prices. Most traders have no clue how much this costs, but it’s significant.
Moreover, the rules might change if the markets turn nasty. Suddenly the spread widens if the volatility goes up.
Illiquidity
CFDs based on illiquid assets may experience wider spreads and price gaps, which can amplify losses.
Lack of knowledge and experience
Very few professional traders trade CFDs. Most traders are retail, and many have no clue what they are doing, which increases the likelihood of making poor decisions.
No trading plan
Because most traders are retail traders, they have no trading plan.
We believe a bad plan is better than no plan at all.
Traders lose money
In general, traders are likely to lose money. For example, only between 1-20% of day traders make money. Likewise, between 70-90% of short-term traders fail.
