Key takeaways
- European regulators found that 74–89% of retail CFD accounts lose money, with average losses per client of €1,600 to €29,000.
- Random EUR/USD trades won 49.6–50.0% of the time, as you'd expect, and lost almost exactly the spread on every trade: about 1 pip a trade.
- With a 5-pip stop and target you need to win 60% of trades just to break even. With 40 pips, 51.2%.
- The traders who survive trade less, risk less per trade and choose setups where costs are a small share of the move.
Every UK and EU broker has to show you a number before you open an account: the percentage of its retail clients who lose money. It is almost always well over half. When the European Securities and Markets Authority pooled national regulators’ studies in 2018, it found that 74–89% of retail CFD accounts typically lose money, with average losses per client of between €1,600 and €29,000.
The usual explanations are psychological: greed, fear, revenge trading. They’re real, but they come second. The first reason is arithmetic, and you can see it without any psychology at all.
The experiment: trading with no edge
We wanted to isolate what the market itself charges. So we placed trades with no skill whatsoever.
Every 15 minutes through the London session (08:00 to 16:00), on every trading day for a year, we opened both a buy and a sell on EUR/USD, each with an equal stop and target. Direction can’t help when you take both sides. We then followed each trade on 5-minute prices until it hit its stop or its target, and repeated this for stops of 5, 10, 20 and 40 pips. That’s about 16,500 trades at each distance.
The results:
| Stop and target | Trades | Win rate | Win rate needed to break even | Average result after a 1-pip spread |
|---|---|---|---|---|
| 5 pips | 16,574 | 49.7% | 60.0% | −1.03 pips |
| 10 pips | 16,574 | 49.6% | 55.0% | −1.08 pips |
| 20 pips | 16,574 | 50.0% | 52.5% | −1.00 pips |
| 40 pips | 16,352 | 50.0% | 51.2% | −1.00 pips |
The market behaved like a coin. Random trades won half the time at every distance. And on every trade, the account lost almost exactly one thing: the spread.
That’s the baseline every trader starts from. Before any skill or any mistake, the expected result of a trade is minus your cost. To make money you need an edge big enough to overcome it, every time.
Why small stops make it worse
The spread is a fixed cost, but the reward isn’t fixed. With a 40-pip target, a 1-pip spread is 2.5% of what you’re trying to make. With a 5-pip target, it’s 20%.
Show the data
| 5 pips | 60.0% |
| 10 pips | 55.0% |
| 20 pips | 52.5% |
| 40 pips | 51.2% |
This is why scalping, which looks like the easiest way to trade (small moves, quick results), is in fact the hardest. A scalper with a 5-pip target must be right 60% of the time just to stand still. Very few strategies, and very few people, can do that consistently. Our scalping vs day trading study measures the cost on each timeframe.
The second reason: position size
Costs make most strategies slightly negative. Position size is what turns slightly negative into an empty account.
Losing runs are normal. With a 50% win rate, a run of ten losses in a row has roughly a two-in-five chance of turning up somewhere in a thousand trades. What that run does to you depends entirely on what you risked:
| Risk per trade | After 10 straight losses | Gain needed to recover |
|---|---|---|
| 1% | −9.6% | +10.6% |
| 2% | −18.3% | +22.4% |
| 5% | −40.1% | +67.0% |
| 10% | −65.1% | +186.8% |
Losses compound against you. A 50% drawdown needs a 100% gain to recover. Traders who risk 5–10% per trade, which is easy to do by accident with leverage, don’t need a bad strategy to blow up. They just need an ordinary losing streak.
Leverage makes this effortless. At the 30:1 limit that UK and EU retail accounts allow on major pairs, a 1% move in EUR/USD against a fully leveraged position is 30% of the money in the account.
The third reason: behaviour
Then the psychology. The patterns are consistent enough to plan against:
- Cutting winners, holding losers. Taking a profit feels good; taking a loss feels like admitting a mistake. So winners get closed early and losers get room to grow, which flips a 1:1 risk-to-reward into something much worse.
- Overtrading. Every extra trade pays the spread. A trader who takes ten trades a day pays ten times the cost of one who takes one, often for no extra edge.
- Revenge trading. The trade straight after a loss is taken to win money back, not because the setup is there. It’s usually bigger and worse.
- Moving stops. Widening a stop to avoid being taken out turns a planned 1R loss into a 2R or 3R loss.
What the surviving minority do differently
None of this means trading can’t work. It means the margin for error is smaller than it looks, and the traders who last tend to do the same few things:
- They know their cost per trade in R and only take setups where it’s a small fraction of the target. That usually means longer timeframes and fewer trades.
- They risk 0.5–1% per trade, sized from the stop, so a losing run is survivable. The position size calculator does the sum.
- They have an edge they’ve tested, on honest data with costs charged. See how to backtest properly.
- They write the rules down and follow them, so the decisions that cost most are made before the market opens. Our one-page trading plan is a template.
- They trade when their pairs move. Ranges are largest when London and New York overlap; see the most volatile hours in forex.
The market doesn’t have to beat you. On every trade it takes its cost and waits. The question is whether your edge is larger than that cost, and whether your position size lets you stay around long enough to find out.
Method: EUR/USD, 12 months to 16 October 2026, Dukascopy 5-minute bid candles. Entries at the open of every 15-minute mark from 08:00 to 16:00 London time on weekdays, one buy and one sell each, followed for up to five days. A candle touching both stop and target counted as a loss (under 1% of trades). A 1-pip spread was charged on every trade.
Frequently asked questions
What percentage of forex traders lose money?
When the European Securities and Markets Authority reviewed national regulators' data in 2018, 74–89% of retail CFD accounts typically lost money. Brokers in the UK and EU must now publish their own figure, which you'll see on their websites.
Why do most forex traders lose?
Mainly costs, position size and behaviour. Every trade pays the spread, so a strategy with no edge loses steadily; oversized positions turn normal losing runs into account-ending drawdowns; and traders tend to cut winners early and hold losers.
Sources
This article is for education and information, not investment advice. Trading forex and CFDs on margin is high risk and most retail accounts lose money. Read our risk warning.