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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Capital loss definition

When a trader sells an asset at a lower price than they initially paid for it, they have incurred a capital loss. As such, capital loss is the opposite of capital gain: the profit made when an asset is sold for more than originally paid.

Capital loss occurs when the drop in price of an asset is realised by a trader: in other words, when they sell the asset for less than they bought it. When a financial asset’s price has moved lower than the price initially paid it has not yet incurred a loss, as that only happens when the trader executes the sale.

For example, buying £400 of Tesco stock then selling after it has dropped to £300 would incur a capital loss of £100. If you held onto the stock at £300 and it returned to £400, though, no capital loss would be realised and the trade would be even.

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