A new study, conducted by TradersBest.com, reveals a startling range in the percentage of customers losing money trading with Contracts for Difference (CFDs) across different popular UK brokers. The lowest loss percentage belonged to Value Trades, with 54%, while the highest loss percentage was with the broker Skilling, where 82% of customers lost money trading with them.
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 US, 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.
A spokesperson from TradersBest said in a statement: “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.”