Retail traders in Poland's Forex (FX) and contracts for difference (CFD) market reached record-breaking volumes for the number of active clients, profits and losses in 2022 in another consecutive year. Generated profits exceeded PLN 500 million ($117 million), while losses reached almost PLN 2 billion ($467 million).

Record Earnings and Losses on the Polish FX/CFD Market

According to a report published by the Polish Financial Supervision Authority, PFSA or KNF, clients' profit in 2022 reached a record value of PLN 519,476,766, which is PLN 100 million higher than the year before and twice as high as in 2020. Compared to the period before the pandemic, when retail investor activity was considerably lower, this is a jump of PLN 400 million.

However, the value of incurred losses grew even more sharply. Five years ago, it totaled PLN 576 million, and in 2022 it stood at PLN 1,974,923,634, increasing by PLN 800 million compared to the previous two years and an increase of five times compared to 2019 when the total loss came in at PLN 398 million.

Average earnings per customer increased compared to previous years, but the jump was insignificant in percentage terms. In 2022, the average earnings per client in the Polish FX/CFD market was PLN 17,444, compared to PLN 13,127 a year earlier and PLN 15,486 in 2020.

"The analysis shows that the majority of active customers (79%) lose on transactions on FX/CFDs instruments. In 2022, the percentage of clients who made a loss increased. Both the average profit and the average loss per client increased," KNF commented.

The KNF's summary of the data shows that nearly 80% of retail traders lost on FX/CFDs in 2022, compared to the relatively low result of less than 72% losses reported in 2021. Over the past few years, the percentage of losing clients was the highest last year. As a result, the average client realized an average loss of more than PLN 10,000. The average loss per client does not deviate strongly from the results of previous periods when it ranged between PLN 6,300 and PLN 11,400.

“It is worth emphasizing that CFDs are financial instruments created for investors looking for short-term dynamic movements with high-profit potential and high risk. The high percentage of losing clients is due to the specifics of the instruments. It is hard to expect that in a very challenging and risky market, most clients will come out ahead,” Łukasz Klufczyński, the Market Analyst at InstaForex Poland, commented for Finance Magnates.

In Poland, retail clients conducted 99.7% of the FX/CFD market trades through domestic brokerage firms and offices, representing 88% of the total nominal value of all transactions. According to Klufczyński, most of them lack proper trading experience, knowledge and risk management .

“This is a very demanding market, where it is difficult to trade even for very experienced traders and, unfortunately, it is most often encountered by beginners,” the InstaForex Poland Analyst added.

Largest Number of Retail Traders in Poland Ever

According to KNF data considering Polish clients and non-residents who used Polish retail brokers, the number of active traders in the FX/CFD market totaled more than 143,000, of which 112,000 realized losses and less than 30,000 realized profits.

A year earlier, the number of clients was 31,000 lower at 112,000. The number reached 80,000 in 2020, more than 44,000 in 2019 and almost 50,000 in 2018. However, when only Polish customers alone are taken into account, then it turns out that the values are considerably smaller.

"The average profit per client was a loss (higher than in the previous year). In 2022, the total value of losses incurred by customers was almost four times the total value of profits of customers who made a profit," KNF added.

The KNF report shows that in 2022 71,620 Poles actively traded FX/CFD, of which more than 56% made a loss, and only 15,000 realized a profit. A year earlier, 53,000 active retail traders were in this segment, and less than 40,000 in 2020. On average, Polish clients in 2022 lost PLN 11,118 on FX/CFD, compared to PLN 8,229 in 2021 and PLN 12,639 in 2020.

"KNF stresses that OTC market derivatives are characterized by a high level of risk and should only be purchased by investors with adequate knowledge and experience and who accept the risk of losing all of their invested funds," the supervisor summarized its report.

Poland is a well-developed retail FX/CFD market from which one of the largest publicly listed brokers, XTB, originates. Last month, OANDA decided to relocate its European operations and base to Poland, leaving Malta, its previous hub in the region.