Brokers With the Fewest Losing Traders
Traders want to maximize their chances of success. So knowing which platforms have a track record of profitable customers is an excellent starting point. Fortunately, the European Securities and Markets Authority (ESMA) has mandated that online brokers must display a risk warning on their website showing the percentage of losing traders. This article lists the brokers with the fewest losing traders in 2024. We also explain how the mandated risk warning works and where to find information on the number of losing traders.
How Many Losing Traders is Acceptable?
Trading is a zero-sum game. This means that for someone to win, there must also be someone that loses. Furthermore, when you account for commissions, spreads and other fees, it is generally a negative game with far more losers than winners. So when examining the brokers with the fewest losing traders, investors must view figures in this context.
It is highly unlikely that a trader will find a broker where 70% of its customers consistently make profitable trades. In fact, the norm is that 70-80% of clients lose money overall. Importantly, traders should steer clear of brokers where the losing percentage is over 80%.
Among the top brokers with the fewest losing traders in 2024 are:
Regulatory Requirements
On 1 August 2018, ESMA introduced regulations that said CFD providers must display a standardized risk warning on their website with the percentage of losses on retail investor accounts. This can usually be found in a banner at the top or bottom of a broker’s website. The regulations only apply to brokers operating in an EU jurisdiction, however, some global brands have also chosen to adopt the policy for transparency.
Charges, fees and commissions are included in the calculation. So if a trader makes a profit of $5 on a CFD but the commission is $10, this would count as a loss for the purposes of the risk warning.
Another point to note is that although calculations are made every 3 months, the calculation period is 12 months. This provides a more reliable percentage that is not distorted by short-term market fluctuations. For example, a short-term fall in key stock markets may lead to many traders losing money. However, when averaged out over 12 months, this becomes less significant.
CFDs
Contracts for difference (CFDs) are a financial instrument that allow traders to speculate on price movement without owning the underlying asset, such as gold. CFDs are usually traded with leverage, which means investors only need to put down a small amount of the total trade value, with the remaining funds borrowed from the broker.
Importantly, the requirement to display a losing trading percentage only applies to CFD providers. The figure will not include losses made on other financial instruments. The risk warning also does not tell you how much traders are losing – they simply give the percentage of those that have lost money. This means that there is no distinction between traders that have lost $5 and those that have lost $5,000. So when looking at brokers with the fewest losing traders, remember that the percentage figure does not always give you the full picture.
Comparing Brokers With the Fewest Losing Traders
Why is it that some brokers have fewer losing traders than others? Do they offer lower mark-ups, faster trader executions, or better analysis tools? Let’s find out…
Fees
As we outlined earlier, commissions, spreads and other fees are included in the losing trader calculation. Therefore, the higher the costs, the more likely it is that the trader will make a loss. That’s why many of the top brokers with the fewest losing traders have low spreads and/or commissions. With this in mind, look for brokers with raw spreads, often found on ECN accounts – the market will not have to move as far in your direction to turn a profit.
Markets
Trading less volatile markets such as major currency pairs, as well as large-cap stocks like Apple, can reduce the chances of investors losing significant sums of money. Diversification is also important as traders with different types of assets in their portfolios will typically be better protected against shocks to a particular market.
Brokers with the fewest losing traders are often those that offer a range of assets, including stocks, indices, forex and commodities.
Educational Material
Educated traders are more likely to make money. And while many brokers offer training materials on their websites now, the offering at some is better than others.
Brokers with the fewest losing traders typically run webinars, publish tutorials and provide explanation sheets to help customers make informed investment decisions. The top brokerages even have dedicated training academies and provide free trading signals.
Trading Tools
Making profitable investing decisions and limiting your losses will be facilitated by your trading platform. Among the most popular solutions are MetaTrader 4, MetaTrader 5, cTrader and TradingView.
One way traders can limit their losses is by implementing advanced market orders, such as a stop-loss. Let’s say a trader buys one share in Tesla for $750. But due to short-term volatility in the stock market caused by the result of a political election, the price suddenly drops to $700. This could represent a significant loss – however, if the trader had a stop-loss order set at $740, the position would be automatically closed at this price.
There is also a correlation between platforms that offer copy trading and brokers with the fewest losing traders. Copy trading is where investors follow the positions and strategies of established traders. It is essentially a way for traders to draw on the expertise of more experienced players, increasing their chances of making profitable trades.
Regulation
Which watchdog regulates a broker matters and should be looked at by potential traders. Reputable agencies such as the Cyprus Securities & Exchange Commission (CySEC) and the UK Financial Conduct Authority (FCA) impose restrictions on misleading promotions that are designed to attract traders to complex speculative products. These rules help protect traders from unfair or dishonest deals and providers.
Unsurprisingly, choosing a reliable and legitimate broker will increase your chances of success in the long run.
Customer Support
Having experienced customer support advisors available through live chat, email, telephone or social media can help to deal with any issues before they impact your trading strategy. For maximum reassurance, choose a responsive broker with multiple customer support options.
Bottom Line on Brokers With the Fewest Losing Traders
Finding brokers with the fewest losing traders is possible thanks to ESMA regulations that ensure CFD providers publish the percentage of losses on retail accounts. This number is often influenced by the markets available, the trading platform offered, as well as fees and commissions charged. Also remember that a broker with fewer losing traders overall does not guarantee success – the majority of traders make a loss regardless of the brokerage.
FAQ
Should I Avoid Brokers With A High Losing Trader Percentage?
Not necessarily – it may simply be that a trading strategy already incorporates a higher level of risk. With that said, anything above 80% is a red flag. Also check the fees and commissions charged by a broker, as this could reduce your chances of generating a profit.
Why Do Some Brokers Have More Losing Traders?
Key factors include the quality of trade executions, the markets available and the fees charged. For example, if a broker specializes in riskier markets like crypto, the percentage of losing traders is likely to be higher.
What Can Reduce The Percentage Of Losing Traders?
Studies have shown that features such as copy trading can reduce the percentage of losing traders at online brokers. This is because customers can leverage the expertise of more experienced investors to make informed trading decisions.
Where Can I Find The Brokers With The Fewest Losing Traders?
Are Fees Included In The Percentage Of Losing Trader Calculations?
Yes – trading charges, fees and commissions are included in the percentage of losing trader calculations. This means that if fees are higher than the profit made on a trade, it will be counted as a loss.