Why Do Most Traders Lose Money? 7 Common Reasons

By the JustCharts team · Updated October 28, 2026 · 6 min read

Quick answer

Most retail traders lose money because of too much leverage, risking too much per trade, trading costs that add up, having no tested edge, overtrading, and emotional decisions such as moving stop-losses. When EU regulators studied retail CFD accounts in 2018, they found 74–89% lost money, and brokers in Europe must still publish their own loss percentages.

Key facts

ESMA 2018 finding: 74–89% of retail CFD accounts lost money
Biggest killer: oversized positions with high leverage
Hidden drag: spreads, commissions and swaps on every trade
Common mistake: cutting winners short, letting losers run
Best defence: small fixed risk per trade and a tested plan

1. Too much leverage

Leverage magnifies every move. With high leverage, an ordinary 1% move can wipe out a large share of an account, and a few such moves end it.

2. Risking too much per trade

Every strategy has losing streaks. Risking 5–10% per trade turns a normal streak into a drawdown that can’t be recovered. Most professionals risk around 1% or less.

3. Costs

Spreads, commissions and swaps are paid win or lose. A strategy that is slightly profitable before costs is often losing after them — especially for very short-term trading.

4. No tested edge

Many traders follow tips, signals or indicators without knowing whether the method has positive expectancy. Without records, there is no way to tell skill from luck.

5. Overtrading

Trading out of boredom, to “win back” a loss, or on every small move multiplies costs and mistakes.

6. Emotional decisions

Moving or removing a stop-loss to avoid taking a loss.
Closing winners early out of fear of giving profit back.
Increasing size after losses (revenge trading).

7. Trading through news unprepared

High-impact releases such as NFP cause spread spikes and slippage that blow through tight stops. Check the economic calendar every day.

How to be in the minority

Risk a small, fixed percentage per trade.
Use lower effective leverage.
Keep a trading journal and measure your results.
Trade a written plan, and practise on a demo account first.
Only trade money you can afford to lose.

Frequently asked questions

What percentage of traders lose money?

European regulators found 74–89% of retail CFD accounts lost money in their 2018 review, and brokers there publish loss rates that are commonly in the 60–80% range.

Can anyone make money trading?

Some traders are consistently profitable, but they are a minority. Doing so requires a tested edge, strict risk control and discipline over a long period.

What is the number one reason traders fail?

Poor risk management — usually risking too much per trade with high leverage, so that a normal losing streak destroys the account.

Put it into practice

Live charts, an economic calendar and trading calculators — free with a JustCharts account.

Learn position sizing

This article is for education only and is not financial advice. Trading leveraged products carries a high risk of losing money. Contract sizes, trading hours and leverage limits vary by broker and country — always check your own broker’s specifications.