Are online CFD traders getting better?

Are CFD traders getting better?

A while ago when EMSA introduced extended risk warnings to show what percentage of retail clients lose money when trading online we did a little feature on whether or not you should choose a broker based on what percentage of their traders lose money?

It was a little tongue in cheek, but then again so are some of the risk warnings (cough cough ayondo).

But as a responsible site, we are obliged to highlight the percentages of retail clients that lose money when trading CFDs.

As we’ve just been updating our risk warnings on broker review pages here are the results for the last calculated period of 2019. It’s interesting to see that the percentage of clients losing money trading CFDs has generally decreased.

What percentage of retail CFD traders lost money towards the end of 2019 compared to 2018?

CFD BrokerPeriod Ending 2019August 2018
IG68%79%
XTB75%82%
ETX Capital75.60%76%
CMC Markets70.50%78%
Saxo Capital Markets62%71%
Pepperstone73.60%79%
Spreadex67%n/a
City Index72%76%
Core Spreads66.60%n/a
eToro75%65%
Plus 50076.40%80.60%

Data from provider websites and Finance Magnates

There you have it. Things are generally moving in the right direction.

Are traders actually getting better? Or, could it be that brokers are being stricter about which clients they onboard? Probably the later. As the figures are only from FCA regulated CFD brokers.

One also has to ask the question: Have the traders who lose money improved or have they simply switched to offshore unregulated brokers that offer higher leverage for smaller accounts that only exist to make money when their clients don’t?

There has been a significant decline in rouge affiliates introducing clients to regulated brokers. In those cases, scallywags on social media would advertise forex trading dream lifestyles on Instagram. But these scams haven’t gone away.

But, I suspect, the toughened regulation may have had the unexpected negative effect of pushing the most vulnerable, naive and inexperienced traders offshore because they can’t open an account with a decent broker.

We talk a little about this in our piece: Risk Warning. A #FXlifestyle may not be for you.

The figures are as a whole improving and it’s always good to see transparency in high-risk investment products.

What’s also incredible is that of the brokers included in the table above the only broker that has seen an increase in their client loss percentage is eToro. Which bills itself as a social trading platform where other traders can set their account to follow other traders portfolios. Essentially when one trader traders, you copy.

Bit of a shame really as when we interviewed to Yoni Assai a while ago, the focus was on whether or not social trading could replace other forms of fund management.

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Trading Risk Warning

ALL INVESTING INVOLVES RISK. Investing, Derivatives, Spread betting and CFD trading carry a high level of risk to your capital and can result in losses that exceed your initial deposit. They may not be suitable for everyone, so please ensure that you fully understand the risks involved.
ESMA & FCA Risk Warning – “CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 68-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Capital at risk”