A new study reveals a startling range in the percentage of customers losing money trading with Contracts for Difference (CFDs) across different popular UK brokers.
TradersBest.com analysed the disclaimers on the websites of 40 regulated UK brokers and found that the percentage of losing customers varies greatly, from as low as 54% to a staggering 82%.
If you’re interested in trading but still feel a bit cautious, ease into it by exploring the ropes with UK Brokers, particularly in Contracts for Difference (CFDs). It’s a way to gradually boost your confidence and get the hang of trading.
Each broker, as regulated by the Financial Conduct Authority (FCA), provides a disclaimer on the percentage of losing customers. These numbers were collected and compiled into a list, showcasing brokers from those with the highest percentage of customer losses to those with the lowest.
The broker with the lowest loss percentage was Value Trades at 54%, while Skilling had the highest loss percentage, with 82% of customers losing money trading with them – a two-fold difference.
This was the complete list as per disclaimer numbers collected in November 2023.
Contracts for Difference (CFDs) are complex financial instruments that allow investors to speculate on price movements of an underlying asset, without owning the asset itself. Despite their potential for high returns, they pose considerable risks, largely due to their leveraged nature and links to unpredictable asset markets.
The situation in the United States, where CFDs are categorically banned, reflects these significant risks. In the UK and elsewhere, where CFDs are permissible, they are subject to rigorous regulation to protect retail investors from these inherent hazards.
The combination of high potential rewards and substantial risks makes CFDs a frequently debated trading instrument within financial circles in the UK and worldwide.
A spokesperson for TradersBest commented on the findings: “Our study sheds light on the significant risks inherent to trading CFDs, as well as the big discrepancies in customer losses among UK regulated brokers.
The fact that some brokers are reporting that over 80% of their clients are losing money, also underscores the controversial nature of CFDs as a trading instrument and why tightened regulation is a constant hot topic of debate”.
Trading financial products carries a high risk to your capital, especially trading leverage products such as CFDs. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% 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.
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