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.
comparefx.co · Michalvi Empire LTD (HE 493986) · Updated: July 2026 · Independent editorial
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.
That warning appears on every page of this site and on every regulated broker's site in the EU.
It is easy to scroll past. This page explains what is actually behind it, because the single most
expensive mistake a new trader makes is treating the warning as paperwork.
Most retail accounts lose money
EU-regulated brokers are required to publish the percentage of their retail client accounts that
lost money over the preceding twelve months. Across brokers that figure has consistently sat in
the region of 74–89%. It is a per-broker, per-period disclosure, so the exact number differs
from firm to firm and changes each year — the current figure for any broker is on that broker's
own site.
Two things worth sitting with. First, the majority outcome is a loss, so losing is the normal
result, not evidence that something unusual went wrong. Second, the statistic counts accounts,
not amounts: it says nothing about how much the losing accounts lost, and the tail can be severe.
Why leverage makes losses fast
Leverage lets you control a position much larger than your deposit. It scales gains and losses by
exactly the same factor, and because the loss side is bounded by your capital rather than by the
market, the downside arrives first.
Under ESMA rules, retail leverage in the EU is capped by asset class — commonly 30:1 on major
currency pairs, and lower on minors, gold, indices, commodities, shares and crypto. At 30:1 a
position is 30 times your margin, so a 3.3% move against you is enough to wipe out the margin
backing it.
| Leverage | Your margin | Position size | Adverse move that erases your margin |
|---|
| 1:1 (no leverage) | €1,000 | €1,000 | 100% |
| 5:1 | €1,000 | €5,000 | 20% |
| 10:1 | €1,000 | €10,000 | 10% |
| 30:1 (EU retail cap, major FX) | €1,000 | €30,000 | 3.3% |
Illustration of arithmetic only. It ignores spread, commission and overnight swap charges, all of
which make the real outcome worse. It is not a projection of any result.
The risks that are not about direction
- Gapping. Markets jump. Price can move from one level to another with nothing traded in between — over a weekend, on a central bank decision, on a geopolitical shock. A stop-loss is an instruction to exit, not a promise of the exit price.
- Slippage. Even in normal conditions your fill can be worse than the price you clicked, and the gap widens when volatility rises or liquidity thins.
- Overnight financing. Holding a leveraged position past the daily rollover incurs a swap charge. On a position held for weeks, financing can quietly exceed the price move you were hoping for. Some swaps are positive; most retail ones are not.
- Spread widening. The "typical" spread advertised is an average. Around major data releases, the market open and the close, spreads widen — sometimes far enough to trigger stops that the underlying price never reached.
- Margin close-out. If your margin level falls below the required threshold the broker closes positions automatically, at whatever price is available. You do not get to wait for a recovery.
- Currency risk. If your account currency differs from the instrument's, exchange-rate moves change your result independently of the trade itself.
- Platform and execution risk. Outages, connectivity failures and rejected orders happen, and they tend to happen when markets are most volatile — precisely when you most need to act.
- Counterparty risk. A CFD is a contract with your broker, not an exchange-traded instrument. If the broker fails, you are a creditor. Regulation and client-money segregation reduce this risk; they do not remove it.
- Psychological risk. The most common path to a large loss is behavioural — increasing size after a loss to win it back, moving a stop rather than accepting it, or trading more frequently after a run of wins.
Protections you have in the EU — and their limits
- Negative balance protection. Retail clients of EU-regulated brokers cannot lose more than the balance in their trading account. You can lose all of it. You cannot be pursued for more.
- Leverage caps. The ESMA limits described above apply to retail clients and reduce, but do not remove, the speed at which capital can be lost.
- Margin close-out rule. Positions are closed when account equity falls to 50% of required margin, which limits how far a losing position can run.
- Investor compensation. Schemes such as the Cyprus ICF cover losses arising from a firm's failure, up to a per-client cap. They do not cover trading losses — no scheme anywhere compensates you for a bad trade.
- Ban on bonuses. Monetary and non-monetary inducements to trade are prohibited for retail clients in the EU. Any offer of a deposit bonus is a signal to check the firm's licence carefully.
"Professional client" status removes most of this. Opting up to professional
gives you higher leverage and, with it, the loss of negative balance protection, the leverage
caps, the margin close-out rule and in most cases access to the ombudsman and compensation
schemes. It is not an upgrade. Do not opt up to get more leverage.
Before you deposit anything
- Verify the broker's licence yourself on the regulator's public register — not on the broker's own "regulated by" badge.
- Confirm which legal entity will hold your account. The entity depends on your residence and determines your leverage, protections and recourse.
- Read the cost sheet in full: spread, commission, overnight swap, inactivity fee, withdrawal fee, currency conversion.
- Decide, in advance and in writing, the maximum you are prepared to lose in total — and treat that money as already spent.
- Practise on a demo account long enough to see a losing streak, not just a winning day.
- Never deposit money you need for rent, bills, debt repayment or an emergency fund, and never trade with borrowed money.
If trading stops feeling like a decision
Leveraged trading shares mechanics with gambling: rapid feedback, variable reward and the
constant option to double down. If you are chasing losses, hiding activity from people close to
you, borrowing to fund a deposit, or trading to change how you feel, that is worth taking
seriously and it is common. Support is free and confidential in every EU member state —
national gambling and debt helplines will talk about trading. Speaking to someone early is a
great deal cheaper than the alternative.
Scope of this warning
comparefx.co is an independent comparison site operated by Michalvi Empire LTD (HE 493986). We are not a
broker, we do not hold client money, and we are not authorised to give investment advice.
Everything we publish is general information — see our disclaimer.
We earn affiliate commission from some listed brokers; see our
affiliate disclosure. Neither changes the fact that most retail
accounts lose money.
Published by: Michalvi Empire LTD — HE 493986
Registered office: Ellados 4, Agios Amvrosios, 4710 Limassol, Cyprus
Questions: editorial@comparefx.co
Last reviewed: 26 July 2026
Related pages