Top Picks

Many traders turn their eyes to CFD trading when looking for new online trading opportunities. And it’s not a coincidence, as trading CFDs can prove extremely profitable. However, they are also one of the trickiest and riskiest assets one can trade.

Furthermore, since they aren’t traded in the US, finding a reputable CFD broker can be a daunting task. And while many believe it doesn’t matter where you trade, they couldn’t be more wrong. Various online CFD brokers offer different experiences, perks, and CFD assets.

Indeed, whether you like it or not, you must first spend time researching different CFD brokers before you find the perfect trading platform to suit your needs. We can help you with that.

We researched and tested the ten best CFD brokers in 2023, ensuring you only trade at reputable and reliable trading platforms. The two first things we looked at were regulation and the traders’ trust in the broker.

Along with these factors, we also considered:

  • The minimum commissions charged on CFDs
  • The amount of tradable CFD markets
  • The general quality of service
  • The maximum leverage available
Table of Content

Round-up

BROKER SPREADS FROM NUMBER OF CFD ASSETS
eToro 1 pip 1000+
Trading 212 0.8 pips 1800+
Pepperstone 0 pips 3000+
Plus500 Variable 2000+
IG Markets 0.6 pips 17000+
AvaTrade 0.9 pips 200+
IC Markets 0 pips 1000+
Forex.com 0.5 pips 4500+
Oanda 0.6 pips 100+
XM 0 pips 1250+

Warning

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.

Review

  • Via eToro’s social trading platform, you can engage and share CFDs trading strategies with millions of traders.
  • eToro provides a total number of over 1,000 CFD assets on different markets, including forex, commodities, cryptos, stocks and indices.
  • Spreads on eToro are slightly higher than the other CFD brokers starting from 1 pip on forex.
  • To avoid CFD overnight fees, eToro offers an Islamic account with a minimum deposit of $1000.
  • The maximum leverage available on eToro is 1:30 across all jurisdictions and countries. This can increase up to 1:400 for professional traders.
visit eToro
77% of retail investor accounts lose money
  • Trading 212 offers a user-friendly CFD platform.
  • The broker offers a specific CFD account with a $10 minimum deposit.
  • A wide range of over 1800+ CFD assets is offered, with competitive spreads starting from 0.8 pips on CFD forex pairs.
  • They provide high leverage up to 1:500, however, European and UK traders can open positions up to 1:30 leverage only.
visit Trading 212
83% of retail investor accounts lose money
  • More than 3,000 CFD assets available in total.
  • Pepperstone is known for its extremely low forex CFD spreads, with an average of 0.09 pips on the EUR/USD pair.
  • Professional traders can earn rebates when trading forex.
  • Islamic traders can access a rollover-free account to avoid interests.
  • International clients can access high leverage up to 1:500. For EU, UK and Australian traders, the maximum leverage available is 1:30.
visit Pepperstone
74-89% of retail investor accounts lose money when trading CFDs
  • Plus500 is known for its CFD platform, where over 2,000 derivatives are offered as CFDs.
  • A rollover-free account is available.
  • The CFD leverage with Plus500 depends on the country of residence of the trader. Under MAS, the maximum leverage is 1:20, while it’s 1:30 under CySEC, FCA, and ASIC and goes up to 1:300 under their FSA-regulated branch.
visit Plus500
77% of retail investor accounts lose money
  • IG Markets has a wide range of over 17,000 tradable CFDs.
  • These assets are tradable on the same account, where spreads start from 0.6 pips.
  • IG has multiple branches all around the world. The maximum leverage available is 1:200, but the CFD leverage may be lower depending on the region of the trader.
visit IG Markets
75% of retail CFD accounts lose money
  • AvaTrade is well-known for offering fixed spreads on its CFD assets.
  • Even though fixed spreads are generally higher than variable spreads, AvaTrade manages to keep them low, starting at 0.9 pips (0.6 pips for professional traders).
  • Over 200 assets in multiple markets are made available.
  • Islamic traders can request to AvaTrade a swap-free account.
  • The maximum leverage available on CFDs can be as high as 1:400, depending on the region of the trader.
visit AvaTrade
79% of retail investor accounts lose money
  • IC Markets is the CFD broker of choice for scalpers and algo-traders.
  • More than 1,000+ financial CFD assets are available in a number of markets.
  • Spreads are kept very low, starting from 0 pips, and they also provide fast order execution.
  • Islamic traders are exempt from paying overnight fees.
  • Leverage on CFDs is up to 1:30 under ASIC and ESMA branches, while it’s up to 1:500 under the global entity.
visit IC Markets
74-89% of retail CFD accounts lose money
  • com offers a wide range of more than 4,500 CFD assets to trade.
  • CFD spreads start from 0.5 pips on forex.
  • The maximum leverage available is slightly lower than other brokers being at 1:200 for international traders.
  • The broker makes an Active Trader Program available depending on your location, which can reduce your trading costs by up to 15% depending on the volumes traded.
visit Forex.com
73% of retail investor accounts lose money
  • Oanda has only 100 tradable CFDs, but it’s renowned for its solid service.
  • Spreads on CFDs start from 0.6 pips across the world, with the exception of Australia, where these start from 0 pips.
  • The maximum leverage available with Oanda is 1:100 for international clients.
  • High-volume CFD traders can join the Oanda advanced trader program, where they can have access to a range of benefits depending on the tier. These include reduced spreads up to 0.3 pips and lower commissions in general.
visit Oanda
CFDs are not available to residents in the United States
  • With XM, you can trade over 1,250 instruments as CFDs.
  • Spreads with XM start from 0 pips, however, these may be higher depending on the account type chosen.
  • XM provides very high leverage up to 1:888, but not for everyone. 1:30 leverage applies to European and Australian traders, while under DFSA, this limit is slightly higher at 1:50.
  • XM provides a good rollover-free account for all Islamic traders.
visit XM
78.17% of retail investor accounts lose money

What Are CFDs?

A contract of differences (CFD) is an agreement (contract) between the buyer and seller, where the buyer pays the difference between the asset’s current and contract time value. CFDs offer traders and investors the chance to profit from price movements without owning an asset.

An important thing to note here is that a CFD contract doesn’t consider the underlying asset’s value but the price change between the time a contract opens and closes. Based on that, CFDs are nothing else than a form of price speculation, where one can profit from price changes and not from buying or selling an actual asset.

Regarding asset classes available for CFD trading, their exact range will depend on the broker. Usually, top CFD brokers offer traders the following CFD products:

  • stocks
  • forex
  • indices
  • futures
  • commodities
  • cryptocurrencies
  • ETFs
  • options

How Does CFD Trading Work?

Although many beginning traders find CFDs complicated, their concept is actually pretty straightforward to understand. As covered, it doesn’t involve purchasing underlying assets but the price movements between the moment any CFD contract opens and closes.

A typical CFD includes two trades, where the first CFD trade creates the open position, and the second, analogically, is a reverse trade that closes the contract at a different price. If that first trade is a long position (buy), the second one is a sell. If the situation is reversed and the first trade is a short position (sell), the second trade is a buy.

Once the CFD closes, the net profit (or loss) is the price difference between the opening and closing trade minus the applied trading costs, such as commission or interest.

CFD Trading vs. Stock Trading

The primary difference between trading CFDs and trading stocks is the matter of ownership.

In a classic stock trade, a buyer purchases a stock via the broker who holds these shares on the buyer’s behalf. However, it’s the buyer that becomes the actual shareholder, meaning they can even take votes or participate in proxy meetings. In some instances, the buyer might even become eligible for a dividend. The buyer can also later sell their shares, but it’s them who picks the moment for that.

On the contrary, trading stock CFDs doesn’t give the buyer ownership rights. As covered, when you purchase a stock CFD, you don’t own the underlying asset but open a trade that speculates on its price change within the contract’s period. CFD trades don’t include any ownership exchanges.

Another difference is the trading risk. Stocks are usually long-term investments that carry lower risk. CFDs, on the other hand, are much riskier. That risk grows even further when using leverage, which, in simple terms, can be explained as a debt an investor takes to increase their buying power.

CFD Trading vs. Forex Trading

The key difference between CFD and forex trading is that CFDs are trading instruments, whereas forex is an asset class, namely, currency. That difference means CFD traders can often take advantage of thousands of CFD trading instruments, including currencies. On the other hand, Forex traders can typically trade between 30-80 currency pairs, although their exact number can vary between Forex brokers.

Another difference is the cost of trading CFDs and forex. While both involve spreads, CFD traders often encounter additional fees. For instance, many CFD brokers charge holding fees when you decide to hold your CFD contracts overnight. CFD trading also often involves commission from the transaction costs.

Finally, there’s the difference between contract sizes. A standard lot for forex currency pairs is 100,000 units, with forex brokers also offering traders leverage to trade smaller forex lots – mini (10,000), micro (1,000), and nano (100). A CFD contract size, though, will depend on the market.

However, despite these differences, forex and CFDs share numerous similarities. For instance, they both have an almost identical trade execution process. They also don’t require traders to own underlying assets, allowing them to speculate on price movements. These are some of the many reasons why the best forex brokers allow their users to trade CFDs.

Benefits and Risks of Trading CFDs

Like any type of trading instrument, CFDs offer a distinct set of advantages and disadvantages for online traders. Therefore, before deciding on whether trading CFDs is the right choice, it’s worth considering them in more detail. Let’s start with CFD trading advantages and then head over to the most significant risks.

CFD Trading Advantages

Diverse range of markets: One of the most significant advantages of CFD trading is that CFD traders can access a massive range of markets, including stocks, indices, forex, commodities, cryptocurrencies, and more. That allows traders to diversify their portfolios by taking advantage of various market conditions.

High leverage: CFD trading allows traders to leverage their capital, allowing them to trade with larger positions than their account balance would allow. This enables traders to amplify their profits if the trade goes as planned. However, it also comes with an increased risk.

Lower transaction costs: Compared to traditional trading, CFD trading has lower transaction costs due to lower commissions, tighter spreads, and no exchange fees. Of course, the exact trading costs will depend on the broker, but you can expect CFD trading to include lower fees than stock trading.

Ability to short sell: CFD traders can profit from falling prices by selling the asset without actually owning it. This is known as short selling, is not possible in traditional trading, and can be very profitable when executed correctly.

Flexibility: Finally, CFD trading enables online traders to open and close positions quickly, which provides greater flexibility in managing their trades.

CFD Trading Risks

High risk: First and foremost, CFD trading is a high-risk activity involving the possibility of losing more than the initial investment. This is because of the high leverage offered, which amplifies both profits and losses.

No ownership of underlying asset: When trading CFDs, you do not actually own the underlying asset but rather speculate on its price movement. This means that CFD traders do not have any rights or benefits associated with owning the asset, such as dividends or voting rights.

Complexity: CFDs are complex financial instruments, which can be difficult for new traders to understand. That being said, it’s essential to understand the market and the instruments traded before entering into CFD trading, which is why they are mostly recommended for experienced traders.

Limited regulation: CFD trading is not regulated in all countries (in the US, for instance), meaning traders may have less protection. That is why choosing a trustworthy online CFD broker regulated by reputable authorities is vital.

Overnight financing costs: Although CFD trades typically don’t involve any trading fees, since they are traded on a margin basis, it means CFD traders may be forced to pay overnight financing costs when holding their positions overnight. These costs can significantly affect your profits, so be sure to factor them into your trading decisions.

What Is a CFD Broker?

CFD brokers are online trading platforms that grant online traders access to CFD trading instruments. Their exact number and variety usually depend on the broker, although the best CFD trading platforms offer thousands of tradable CFDs, including forex currency pairs, stocks, commodities, indices, etc.

How do CFD brokers work? In simple terms, they facilitate trading processes through the online trading platform. To use such a platform, you will first need to create a trading account and make your initial required minimum deposit. There are, however, various types of CFD brokers and trading accounts. Various brokers might also offer different trading platforms.

Types of CFD Brokers

Online CFD brokers usually divide into two categories – market makers and NDD brokers.

Market makers are brokers who purchase positions from liquidity providers, which they later sell to individual traders. Such brokers match selling assets to traders with buy or sell orders, often accepting lower minimum deposits due to their ability to cover liquidity deficits.

No Dealing Desk (NDD) brokers, on the other hand, connect online traders with liquidity providers. The broker doesn’t intervene, working as an intermediary between its users and liquidity providers. Such platforms usually require higher deposits as they don’t cover liquidity gaps, and they can either be ECN, STP, or DMA brokers, which are:

  • ECN brokers use electronic communication network methods to connect traders with liquidity providers;
  • STP brokers offer the straight-through-processing (STP) execution of trades;
  • DMA brokers provide traders with direct market access (DMA), allowing them to execute their trades by interacting with an electronic order book directly.

CFD Trading Accounts

Most online brokers offer their users several CFD account types they can create depending on their level of expertise and available funds. Typically, you can expect a CFD broker to offer the following accounts:

  • Micro accounts: These are best for CFD beginners, with minimum deposits often as low as 50-100 dollars;
  • ECN accounts: Such accounts might require deposits of $500 upwards, perfect for more CFD traders who already have some experience trading CFDs;
  • Standard accounts: Perfect for experienced CFD traders, standard accounts typically require a minimum deposit of $1,000 and offer higher leverage options;
  • Professional accounts: These are designed for professional investors. They require high deposits (often of up to several thousand dollars), as well as previous trading portfolios.
  • Islamic accounts: Since CFD trading is haram (forbidden) for Muslims, some brokers offer interest-free accounts for Muslims. Therefore, if you’re a Muslim and want to trade CFDs, finding an online broker that offers such accounts is a good idea.

Of course, the exact account types will depend on the broker. Many also offer new traders a demo account, where a user can trade CFDs for free. Of course, it’s impossible to make or lose real money when using a demo account, but it offers a nice learning tool for new traders to see how the trading platform performs.

CFD Trading Platforms

When trading through a reputable broker, you should expect it to offer you the best CFD trading platform that’s easy to use and performs well. Best CFD brokers typically provide their users with several trading platforms, with the two most popular being MetaTrader 4 (MT4) and MetaTrader 5 (MT5). Another popular option is cTrader.

If you see a broker offering any of these three, you can, in most cases, expect an exceptional trading experience. That’s because these are industry-leading platforms, especially MT4 and MT5, with most brokers optimizing their platforms to be compatible with the MetaTrader system.

How to Find the Best CFD Broker?

With so many CFD brokers available, finding the perfect trading platform for your CFD trading needs can be daunting. Essentially, any of the brokers we listed in our guide should provide you with an exceptional trading experience. These are some of the most reputable CFD brokers in the industry, and, from our experience, they’re great options for trading CFDs.

However, these are only our proposals. Also, since there are ten of them, it means you’ll still need to do some research yourself before making the final call. Therefore, the question is, what should you consider to choose the best CFD broker? There are several factors to look for, the most significant being:

  • Regulation: As a rule, you should always consider only trustworthy CFD brokers. In other words, only trade at licensed and regulated platforms. Look for licenses from the most reputable governing bodies, such as the Financial Conduct Authority (FCA)and the Australian Securities and Investments Commission (ASIC). The broker should also be ESMA-compliant (European Securities and Markets Authority).
  • Trading costs: Most CFD brokers charge CFD costs, such as spreads, holding fees, and commissions. They might also charge other trading costs or non-trading fees (e.g., withdrawal or deposit fees). If there are too many trading fees involved, trading on such a platform might not be profitable.
  • Range of tradable CFD assets: Typically, the more assets there are available for CFD trading, the better. Search for brokers that offer a wide range of CFD trading instruments to have more flexibility and trading opportunities to diversify your portfolio.
  • User experience: Finally, be sure to consider user experience. It might not look important to some, but choosing a platform that’s easy to use and provides you with numerous research and trading tools can significantly boost your trading experience. The same goes for device compatibility. For instance, if you want to trade CFDs on the go, be sure to choose a broker that supports mobile trading.

Key Takeaways

Summing up our guide to the best CFD brokers, it’s clear to see why CFD trading has become such a popular activity among online traders, who aren’t discouraged by the increased risk involved in trading CFDs. However, before you perform your first CFD trade, you must first choose a reputable broker. As covered, it does require some consideration and research.

We hope that the above guide will help you find the perfect CFD broker to suit your trading needs. Having tested all the platforms above, we can only guarantee each one will provide you with an exceptional experience. The final choice, however, is yours, so be sure to analyze each broker before you make your decision. To help yourself with that, be sure to visit our review page, where you will find in-depth broker reviews, including the platforms listed here.


filippo ucchino

About The Author

Filippo Ucchino
Co-Founder - CEO - Broker Expert
Filippo is the co-founder and CEO of InvestinGoal.com. He has 15 years of experience in the financial sector and forex in particular. He started his career as a forex trader in 2005 and then became interested in the whole fintech and crypto sector.
Over this time, he has developed an almost scientific approach to the analysis of brokers, their services, and offerings. In addition, he is an expert in Compliance and Security Policies for consumers protection in this sector.
With InvestinGoal, Filippo’s goal is to bring as much clarity as possible to help users navigate the world of online trading, forex, and cryptocurrencies.

Leave a Reply

Your email address will not be published. Required fields are marked *

Better Informed
Find and Compare The Best
Online Broker For You
Trading CFDs, FX, and cryptocurrencies involves a high degree of risk. All providers have a percentage of retail investor accounts that lose money when trading CFDs with their company. You should consider whether you can afford to take the high risk of losing your money and whether you understand how CFDs, FX, and cryptocurrencies work. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. Your capital is at risk. The present page is intended for teaching purposes only. It shall not be intended as operational advice for investments, nor as an invitation to public savings raising. Any real or simulated result shall represent no warranty as to possible future performances. The speculative activity in forex market, as well as in other markets, implies considerable economic risks; anyone who carries out speculative activity does it on its own responsibility.
ADVERTISER DISCLOSURE: InvestinGoal is completely free to use for all. Though we may receive a commission from brokers we feature, this does not impact the results of our reviews or rankings which are conducted with complete independence and objectivity, following our own impartial methodology. Help us continue to provide the best free broker reviews by opening your account with our links. Please read our Advertiser Disclosure to learn more.
Copyright © 2023 InvestinGoal.com – All rights reserved. / Privacy and Cookie Policy / Basic Terms of Use / Risk Warning / Sitemap