The company accounts say that in the CFD business Trading 212 operates “on a matched principal basis, fully hedging all client positions and profiting from a tighter spread offered by its counterparties than it offers to its clients.”
That is why I feel it is a misapprehension to think of Trading 212’s income as generated by client losses. Because they operate the business with full hedging, Trading 212’s profit depends on volume of activity, including both client gains and losses. It is not as if every loss to a client is a gain to Trading 212 and every gain by a client is a loss to Trading 212. The incentive will be for Trading 212 to increase volume and remain competitive by offering a service that compares favourably with other CFD providers. Subject to earning a margin after covering their costs of infrastructure, administration, hedging with their counterparties and overnight interest, Trading 212 will actually have the incentive to see its customers profitable and happy with the service so that their platform is preferred to alternatives. It is the same with any business that provides a service.