Broker Risk Warning Loss Percentages Ranked

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All brokers regulated by the FCA that offer derivatives products like CFD trading and financial spread betting must now show what percentage of their clients lose money. In this guide, we compare which trading platforms have the most and least successful clients.

Trading Platform Client Win/Loss Percentages Compared

In our latest update, there has been a staggering change in CFD trader profitability on eToro, which has gone from one of the highest loss percentages at 76% (in November 2023) to quite an impressive 51%.

eToro Risk Warning 18-3-24

It’s no surprise to see the more sophisticated brokers, Saxo, Spreadex & Interactive Brokers maintaining their 60-70% range. Whilst Plus500 continues to have one of the least successful client bases at 81% of their customers losing money trading CFDs (for the quarter ending April 2024).

Plus500 Risk Warning 18-3-24

There has never been any doubt that online trading is a high-risk form of speculation, but it wasn’t until the FCA and ESMA insisted that derivatives brokers published what percentages of their clients lost money that people could see exactly how hard.

The percentage stated in risk warnings applies to retail clients only and does not take into account traders who are classified as a professional customer.

Are online CFD traders getting better?

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

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.

Data sourced from provider websites

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.

Should you choose a broker based on what percentage of their clients lose money?

It’s no secret that most traders lose money. It’s also no secret that sports cars are bad investments. Or that cryptocurrencies may not have been all they were cracked up to be. Or that… No wait, some people do make money buying sports cars (not boats though – boats should definitely come with depreciation risk warnings painted on)…

Or, you may not have noticed because risk warnings, much like the banner adverts they are featured on are largely ignored. In fact, I would say that risk warnings nowadays are fairly pointless.

Ten years ago when you could open an account online and start trading on 500:1 in five minutes, they served a purpose to pre-warn customers of the dangers of trading.

But now, you actually have to demonstrate you understand the risks of derivatives via interactive quizzes during the account opening process. If you don’t you can’t get any leverage, unless you go offshore. Which a lot of traders are. Which has been counterproductive because it means they will probably get more leverage some bucket shop broker regulated by a little island in the middle of the Pacific.

Looking through the list of brokers where clients have a higher win percentage it’s pretty obvious that the rankings are pointless as a form of choosing a broker. There are some good brokers up there and also some terrible ones who have a good win ratio.

Also, the static is flawed in so many ways.

For instance, the majority of brokers work off a 80/20 basis, which means that 20% of a broker’s client base will generate around 80% of the revenue. The other 20% don’t really do much business so skew the stats. It would be interesting to see what percentage of a brokers top 20% of clients make or lose money.

What is also quite interesting is that even though such a high percentage of customers lose money, a high proportion of trades are (or were) actually profitable. This suggests that it’s not so much picking the winners for traders which is the problem, but actually managing effective trading strategies.

So, what will be interesting (if this marketing rule remains) will be to see which brokers educate their clients more to help them improve their trading strategies.

But, CFD or spread betting brokers can provide neither advice nor implied advice to their client base, so really it’s completely out of their hands.

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