The Central Bank has warned consumers that they need to be fully aware of the high-risk nature of so-called contracts for difference before making investment decisions.
A study by the Central Bank concluded that three quarters of clients who invested in CFDs lost money.
A Contract for Difference is essentially an arrangement that an investor enters into with an investment bank or spread-betting firm.
At the end of the contract, the parties exchange the difference between the opening and closing prices of a specified financial instrument, such as shares or commodities.
The Central Bank inspection covered retail clients who invested in CFDs over a two year period to the end of 2014.
Over 39,000 retail clients, of which almost 5,000 were Irish Resident, invested in CFDs with Irish-based investment and stockbroking firms during this period.
Of the 75% who lost money, the average loss was €6,900.
"It is our view that CFDs are unsuitable for investors with a low-risk appetite," Bernard Sheridan, Director of Consumer Protection with the Central Bank said.
"This is due to the volatile nature of the CFD market, coupled with the potential for a consumer to lose more than the initial investment. Consumers need to be made fully aware of the high-risk and complex nature of CFDs before making investment decisions," he added.
