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The Truth About Retail Trading: Why I Lost $18,000 Before I Learned Better

Updated: Oct 7


Email to Jonathon from Forex Capital Trading states eligible refund of $18,014.33 due to misleading conduct. Approved by Federal Court of Australia.

When I was 18, I thought trading online was the way to get rich.

Fast.


I wanted money. Status. Success.


Brokers made it sound easy.

They told me I was ready.

That I could do it.


What they didn’t tell me?


Their business model depends on me trading as much as possible.

Win or lose — they make money.


And I lost. A lot.


Over $18,000 with a CFD firm that was later sued for malpractice. 



The Illusion of Leverage


They offered leverage of 1:400.

That means $500 let me control $200,000 worth of trades.

Sounds powerful, right?


Here’s the catch:


Person in hoodie at desk with two monitors showing stock charts, surrounded by cash stacks, in red smoke-filled room, intense mood.

If the market moved just 0.25% against me… Everything was gone.


And at 18?


I had no discipline.

No risk management.

No emotional control.


The result was predictable.


I blew up.




What I Wish I Knew


If you want to be a trader, opening an online account is not the answer.


The right path is:

  • Education.

  • Discipline.

  • Working in the industry, where you learn from real professionals.


Not from sales reps who profit when you fail.



Before We Get Into the Data


Don’t just take my word for it. Do your own research.


Since 2018, regulators have forced brokers to disclose the ugly truth. The ESMA (European Securities and Markets Authority) requires brokers to show what percentage of their clients lose money.


Not buried in fine print. Not hidden. Right there in their advertisements.


And it’s brutal.


Across 25 leading brokers, between *53% and 85% of clients lose money.


Here’s the proof:


*Note: analysis completed June 2025. Numbers will change periodically, please go investigate the websites using the links below.



And many others in between.


This requirement started in 2018 with the MiFID II directive.

The goal was simple: protect retail investors from themselves.


But some brokers found loopholes. They divert potential clients to their U.S. entities or offshore websites — places outside European regulation.


Why? Because then the big “65%–80% of retail traders lose money” banner doesn’t pop up and scare people away. Click the links and check for yourself.



The Evidence is Everywhere


And it doesn’t stop with broker disclosures.

  • ESMA Report: Between 74%–89% of retail traders lose money. Average losses range from €1,600 to €29,000. Read it here.

  • US CFTC Data: It’s not random. Retail traders consistently lose more than they win. See the data.

  • Options Trading During COVID: Retail investors lost $1 billion. Most of it came from excessive trading and wide bid ask spreads.  Read the paper here.

  • Anton Kreil (ex-Goldman Sachs): Explains how brokers exploit clients. Watch the video.


But maybe you see this evidence, and this still isn't enough! Take a look at the references section of the bottom of this article for more research papers and reports showing retail losses.


The takeaway?


The odds are not in your favor.


Why Most People Fail


It comes down to five things:


  1. Leverage. Amplifies wins — and wipes you out fast.

  2. Conflict of Interest. Some brokers literally profit when you lose.

  3. Psychology. Overconfidence, fear, greed. Retail traders can’t escape it.

  4. Lack of Education. YouTube gurus sell dreams. Professionals do the opposite.

  5. Fees. Spreads, commissions, swap charges. Death by a thousand cuts.


Anton Kreil put it perfectly:“The assets fake gurus tell you to trade, and how they tell you to trade them, is the reverse of what professionals actually do.”


My Takeaway


I don’t regret learning.

But I regret the cost.


I was just another statistic.

Part of the system.


Here’s what I wish someone told me at 18:


  • Don’t gamble your future on retail trading.

  • If you really want to trade, go to university and then get a job in the industry.

  • Learn the right skills. Build discipline. Train and learn from the professionals who do this for a living.


Finance is a marathon.

Not a get-rich-quick sprint.


I lost $18,000 learning that lesson.

Hopefully, you don’t have to.




  References


Research Papers:

Maybe options trading is better – I will make money?

Here is a research paper showing 1.14 billion dollars was lost during the covid period. Primarily due to excessive trading and paying the bid ask spread, the cost of transacting.

 

  • Retail Trading in Options and the Rise of the Big Three Wholesalers

Bryzgalova, Svetlana and Pavlova, Anna and Sikorskaya, Taisiya, Retail Trading in Options and the Rise of the Big Three Wholesalers (September 3, 2023). Journal of Finance forthcoming.  Read the paper here.


No I’m smarter than those guys, that won’t happen to me.

 

I am an event-based options trader. I trade around events and make money before or after key announcements.

 

Guess what > It’s already (likely) priced in, and you’re losing money!

 

  • Losing is Optional: Retail Option Trading and Expected Announcement Volatility

de Silva, Tim and Smith, Kevin and So, Eric C., Losing is Optional: Retail Option Trading and Expected Announcement Volatility (January 14, 2025). Read it here.

 

Ok, ok, I’m just going to day trade good old fashion stocks. What could possibly go wrong.

 

In October 2020 Barber, Hung, Odean, and Schwarz published a study that looked at the performance and behavior of Robin Hood’s investors between May 2018 and August 2020. The study, named Attention Induced Trading and Returns: Evidence from Robinhood Users, concludes the following:

 

Average 20-day abnormal returns are -4.7% for the top stocks purchased each day…..Large increases in Robinhood users are often accompanied by large price spikes and are followed by reliably negative returns.

 

Most Robin Hood traders are inexperienced and they tend to chase performance that later regresses to the mean. Moreover, the Robin Hood app has no commissions and draws attention to the most traded stocks and those that are in play. The report concludes that it’s a sucker’s game.

 

  • Attention Induced Trading and Returns: Evidence from Robinhood Users

Barber, Brad M. and Huang, Xing and Odean, Terrance and Schwarz, Christopher, Attention Induced Trading and Returns: Evidence from Robinhood Users (October 12, 2021). Journal of Finance, Forthcoming. Read it here.

 

  • Resolving a Paradox: Retail Trades Positively Predict Returns but Are Not Profitable

Barber BM, Lin S, Odean T. Resolving a Paradox: Retail Trades Positively Predict Returns but Are Not Profitable. Journal of Financial and Quantitative Analysis. 2024;59(6):2547-2581. doi:10.1017/S0022109023000601

 

News Reports

  • Bloomberg Research: 1 billion lost in pandemic. Podcast.

  • Bloomberg: Mom and Pop Investors Took a Billion-Dollar Bath Trading Options During the Pandemic. Read it here.

  •  Retail Traders: It’s Discipline That Slays Markets. Read it here.


 


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