Risk warning

Trading forex and CFDs is risky. Most retail investors who trade CFDs lose money. Please read this page before opening an account with a broker.

What is a CFD?

A CFD (contract for difference) is a contract between you and a broker on the price difference of an underlying asset, such as a currency pair, index, commodity or share. You don't own the underlying asset. You gain or lose the difference between the price when you open and when you close your position, minus costs.

Why the risk is so high

• Leverage. You only put up part of the position value as collateral (margin). At 1:30 leverage, a 1% price move against you means a loss of 30% of the margin on that position.
• Fast price moves. Exchange rates can move sharply within seconds, especially around interest rate decisions and economic data. A stop-loss may then be filled at a worse price (slippage), and prices can gap over the weekend.
• Costs. Spreads, commissions and overnight financing reduce your result. Frequent trading means paying a lot.
• Counterparty risk. A CFD is a contract with the broker itself. Only trade with a licensed broker.

How many retail investors lose money?

Brokers with a European licence must disclose what percentage of their retail accounts lose money when trading CFDs. For almost every broker it is more than half of all accounts, often 70% to 80%. We show this percentage for every broker on ForexPlatform, with its source and date.

Protection for retail investors in the EU

Since 2018, ESMA protection measures apply across the EU, enforced by national regulators:

Measure	What it means
Maximum leverage	1:30 on major currency pairs, 1:20 on other pairs, gold and major indices, 1:10 on other commodities and indices, 1:5 on shares, 1:2 on crypto
Margin close-out	If your account value falls below 50% of the required margin, the broker closes positions
Negative balance protection	As a retail client you cannot lose more than your account balance
No bonuses	Brokers may not offer you a bonus or gift to start trading
Mandatory warning	Every broker shows the percentage of retail accounts that lose money

If you opt to be treated as a professional client, most of these protections no longer apply.

Before you start

1. Only trade with money you can afford to lose.
2. Practise first with a free demo account.
3. Understand how leverage and margin work and what a broker costs in total.
4. Verify the broker's licence yourself. Here's how.
5. Decide in advance how much you are willing to risk per trade and use a stop-loss.

Not investment advice

ForexPlatform compares brokers and explains how forex and CFDs work. We don't give personal investment advice and make no statements about future prices or returns. Unsure whether CFDs suit you? Consult an independent financial adviser.