Module 1: Start Here · Lesson 4 of 6 · Back to course
In Lesson 1.1 we showed you the figures UK providers publish: most retail spread betting and CFD accounts lose money. This lesson goes a step further. We’ll look at what regulators and academic researchers have found, the most common reasons traders lose, and the habits that give you a fairer chance of at least keeping your losses small while you learn.
We’re not telling you this to put you off. We’re telling you because nobody selling you a course, a signal group or a challenge has much reason to.
What the evidence says
Regulators’ figures
- UK: When the FCA reviewed the CFD market in 2016, a sample of client accounts showed 82% of clients lost money, with an average loss of £2,200 per client over a year (FCA CP16/40).
- Europe: In 2018, the European Securities and Markets Authority reported that national regulators’ studies showed 74–89% of retail CFD accounts typically lose money, with average losses per client ranging from €1,600 to €29,000 (ESMA).
- Today: UK providers must publish their own figure. The ones we checked in October 2026 ranged from 61% to 73.6% (see Lesson 1.1). These figures are lower than before the 2018–19 leverage limits came in, but it’s still most accounts.
Academic research on day traders
- Brazil: Researchers followed everyone who started day trading Brazilian index futures between 2013 and 2015. Of those who kept going for more than 300 days, 97% lost money after fees, and only 1.1% earned more than the Brazilian minimum wage (Chague, De-Losso & Giovannetti, “Day Trading for a Living?”).
- Taiwan: A study of day traders from 1992 to 2006 found that less than 1% of the day-trader population could predictably and reliably earn positive returns after fees (Barber, Lee, Liu & Odean, Journal of Financial Markets).
Different countries, different decades, different products – but the same message. Losing is the norm, and “sticking at it” doesn’t automatically fix it. The Brazilian study is especially sobering: it looked at people who persisted for more than a year and found that most of them still lost.
Why do most traders lose? Eight common causes
Researchers and regulators point to some of these directly. Others are patterns any experienced trader will recognise. Most losing traders have several at once.
1. Costs quietly eat the account
Every trade costs the spread, and often commission or overnight financing too (see Lesson 1.3). Someone who trades a lot pays a lot. Italy’s regulator, CONSOB, found a positive correlation between the number of trades retail clients carried out and the size of their losses (ESMA decision 2018/796, citing CONSOB). In other words, more trading tended to mean bigger losses.
2. Too much leverage
A position that’s too big turns an ordinary market move into a big loss. Beginners often size trades by how much margin they have, not by how much they can afford to lose. One bad day can wipe out weeks of progress – or the whole account.
3. No stop-loss, or moving it
“It’ll come back” is one of the most expensive phrases in trading. Removing or widening a stop turns a small, planned loss into a large, unplanned one. Sometimes the market does come back, which reinforces the habit, until the time it doesn’t.
4. Cutting winners short and letting losers run
It feels good to bank a profit and painful to accept a loss, so many people grab small wins quickly and hold losing trades in hope. Do that for long enough and you can be right more often than you’re wrong and still lose money, because the average loss is bigger than the average win. We cover this maths in Module 8.
5. No tested plan
Many beginners trade on gut feeling, a YouTube video they watched last night, or a tip in a chat group. Without written rules that have been tested, there’s no way to know whether losses are bad luck or a bad method.
6. Emotional trading: revenge, FOMO and tilt
After a loss, the urge to “win it back” is strong. After a big move you missed, the fear of missing out pushes you into a late entry. These emotional trades are usually bigger, faster and less thought-through than planned ones. Module 9 is all about this.
7. Unrealistic expectations
Social media is full of screenshots of big wins and almost no screenshots of losses. If you expect to double your account in a month, you’ll take risks that make losing it much more likely. Realistic expectations are covered in Lesson 1.5.
8. Starting with real money too soon
Learning on a live account means paying for every beginner mistake with real money. A demo account lets you make the same mistakes for free.
What the minority who last tend to do differently
We can’t give you a formula that guarantees profit – there isn’t one, and anyone who says otherwise is selling something. What we can say is that traders who last long enough to improve tend to share these habits:
| Habit | What it looks like in practice |
|---|---|
| Small, fixed risk | Risking a small percentage of the account on each trade (often 0.5–1%), so a losing streak is survivable |
| A stop on every trade | Decided before entry, never moved further away |
| Written, tested rules | A trading plan with exact entry, exit and risk rules, backtested and practised on demo |
| Fewer, better trades | Only taking setups that meet every rule; doing nothing is often the right trade |
| Daily loss limits | Stopping for the day after a set loss, whatever happens |
| A journal | Recording every trade, including emotions and rule breaks, and reviewing it weekly |
| Patience with learning | Months on demo before risking real money; judging progress over hundreds of trades, not days |
| Humility | Assuming the market knows more than they do; treating a winning streak as possibly luck |
None of these is exciting. That’s partly why most people don’t do them.
Prop firm challenges: the same story
Prop firm challenges (covered in Module 15) concentrate several of these causes into a short window. There’s a profit target, a deadline or minimum number of days, and strict loss limits. That combination tempts people to over-leverage and overtrade, which are causes 1, 2 and 6 above.
Firms rarely publish independently audited pass rates, so be wary of any precise figure you see online. But the business model only works because most people who pay for a challenge don’t pass. Our True Cost Calculator shows how quickly fees add up if your real pass chance is low.
A healthier way to define success as a beginner
If “making money” is your only measure, you’ll judge yourself on outcomes you can’t control. Try these instead for your first six months:
- I followed my risk rules on every trade.
- I didn’t break my daily loss limit.
- I journaled every trade.
- I completed my demo practice plan.
- I can explain why I took each trade.
These are the things that make it possible to improve. Profit, if it ever comes, follows process – not the other way round.
Key takeaways
- Regulators’ data shows most retail CFD accounts lose money: 82% in the FCA’s 2016 sample, and 74–89% across EU studies in 2018.
- Academic studies of day traders found 97% of persistent Brazilian day traders lost money, and less than 1% of Taiwanese day traders were reliably profitable.
- Common causes: costs, too much leverage, no stops, cutting winners and holding losers, no tested plan, emotional trading, unrealistic expectations and going live too soon.
- The traders who last tend to risk little, follow written rules, trade less, journal everything and take learning slowly.
- Judge yourself on process, not profit.
Quick quiz
- What percentage of clients lost money in the FCA’s 2016 CFD sample? (82%.)
- What did Italy’s regulator find about the number of trades and losses? (A positive correlation – more trades tended to go with bigger losses.)
- How can you win more trades than you lose and still lose money? (If your average loss is bigger than your average win.)
- Name two habits common among traders who last. (Any two: small fixed risk, stops on every trade, tested rules, fewer trades, daily loss limits, a journal, patience, humility.)
- Why do prop firm challenges make over-leveraging tempting? (Profit targets and time pressure combined with strict loss limits.)
Try this
Look at the eight causes above and honestly tick the ones you think you’d be most at risk of. Write down one specific rule that would protect you from each – for example, “I will never move a stop-loss further away.” Keep the list; it’ll become part of your trading plan.
FAQ
What percentage of traders lose money? It depends on the product, period and study. UK CFD providers publish their own figures (61%–73.6% for those we checked in October 2026). The FCA’s 2016 sample found 82%, and EU regulators’ studies found 74–89%.
Do day traders make money? A small minority do. Large academic studies in Brazil and Taiwan found the vast majority of day traders lost money after costs, even among those who persisted.
Is it possible to be one of the few who succeed? It’s possible, but not likely, and there’s no guaranteed path. The best you can do is give yourself a fair chance: learn properly, keep risk small, practise on demo and keep honest records.
Disclaimer: This page is general education, not financial or investment advice or a personal recommendation, and it doesn’t take your circumstances into account. Examples are hypothetical, for illustration only, and not an invitation to buy or sell. Learning a strategy doesn’t guarantee profits. Past performance is not a reliable guide to future results. Futures, spread bets and CFDs are complex and carry a high risk of losing money quickly because of leverage, and most retail traders lose money. With a real futures account, losses can exceed your deposit. Only trade with money you can afford to lose, and speak to an independent FCA-authorised adviser if you’re unsure. Statistics are quoted from the sources linked and relate to the periods and markets studied – they may not reflect current conditions. Read our full risk warning.