InvestinGoal Top Picks
  • 1.
    Rated: High
    90
    Visit IG Markets
    69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
  • 2.
    Rated: High
    90
    Visit Pepperstone
    74-89% of retail investor accounts lose money when trading CFDs
  • 3.
    Rated: High
    78
    Visit eToro
    61% of retail CFD accounts lose money
  • 4.
    Rated: High
    92
    Visit AvaTrade
    76% of retail investor accounts lose money
  • 5.
    Rated: High
    80
    Visit Trading 212
    83% of retail investor accounts lose money
  • 6.
    Rated: High
    74
    Visit Plus500
    82% of retail investor accounts lose money
  • 7.
    Rated: High
    91
    Visit IC Markets
    74-89% of retail CFD accounts lose money
  • 8.
    Rated: High
    82
    Visit Forex.com
    73%-77% of retail investor accounts lose money when trading CFDs with this provider
  • 9.
    Rated: High
    81
    Visit Oanda
    CFDs are not available to residents in the United States
  • 10.
    Rated: High
    80
    Visit XM
    72,82% of retail investor accounts lose money

The best CFD (Contract For Difference) brokers are IG Markets, Pepperstone, eToro, and AvaTrade.

To choose the best CFD broker to trade, access to a wide range of CFDs instruments, trading costs (spread and commissions), platform and tools, execution speed, and customer support are the most important criteria.

IG Markets is the best CFD broker overall, it offers a wide range of over 17,000 tradable CFDs, with spreads (0.7 pips on EUR/USD), fast execution (average 13ms), comprehensive platform (Proprietary Platform), and active customer support (24/5 availability).

Pepperstone, eToro, and Avatrade follow IG Markets as the best CFD brokers with access of tradable CFDs, platform and tools (MT4, MT5, cTrader, TradingView and Proprietary Platform), and customer support (24/5 availability via phone, email, and chat). Pepperstone offers more than 3,000 CFD assets and trading costs with fixed spreads of 0.1 pips on EUR/USD with an execution speed of 60 ms approximately. eToro provides a total number of over 1,000 CFD assets and offers trading costs with spreads of 1 pips on EUR/USD with a high execution speed. AvaTrade offers more than 200 CFD assets and trading costs with fixed spreads of 0.9 pips on EUR/USD with an execution speed of 145 ms approximately.

What are the best CFD trading brokers?

Below our curated list and review of the best CFD trading platforms offered by the major brokerage firms, with detailed insights into their standout attributes.

1. IG Markets

IG Markets offers over 17,000 tradable CFDs with competitive spreads starting at 0.6 pips. IG Markets operates globally and provides leverage up to 1:200.

90
InvestinGoal Rating
  • Regulations:
    FSA, MAS, FINMA, FCA, CFTC, MIFID-ESMA, ASIC, FMA, FSCA, DFSA, BMA (Bermuda)
  • Avg. EUR/USD Spread:
    0.7 pips
  • Platforms:
    Proprietary Platform, MAC Platforms
Minimum Deposit: $300
Unlimited demo account available
Visit IG Markets
69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
About IG Markets

IG Markets is a global online trading provider founded in 1974, offering access to over 17,000 financial markets including forex, stocks, indices, commodities, and cryptocurrencies. IG Markets provides proprietary trading platforms alongside MetaTrader 4 and ProRealTime. IG Markets is regulated by multiple top-tier authorities worldwide, including the FCA and ASIC. IG Markets is known for competitive spreads, extensive educational resources, and innovative features like weekend trading. The IG Markets’ parent company “IG Group” CEO is Breon Corcoran.

IG Markets Features

The features of IG Markets are listed below.

  • 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.
IG Markets Pros and Cons

Advantages of IG Markets

The advantages of IG Markets are listed below.

  • Low spreads from 0.6 pips on Forex
  • Wide range of financial instruments
  • 40 years of experience in the Forex industry

Disadvantages of IG Markets

The disadvantages of IG Markets are listed below.

  • No copy trading features
  • No social trading features

2. Pepperstone

Pepperstone provides more than 3,000 CFD assets with extremely low forex spreads averaging 0.1 pips. Pepperstone offers leverage up to 1:500 for international clients.

90
InvestinGoal Rating
  • Regulations:
    FCA, MIFID-ESMA, ASIC, DFSA, CYSEC, SCB (Bahamas)
  • Avg. EUR/USD Spread:
    0.10 pips
  • Platforms:
    cTrader, ZuluTrade, MT4, MT5, MAC Platforms
Minimum Deposit: $0
Demo account available
Visit Pepperstone
74-89% of retail investor accounts lose money when trading CFDs
About Pepperstone

Pepperstone is a global forex and CFD broker founded in 2010 in Melbourne, Australia. Pepperstone offers trading on currencies, commodities, indices, stocks, and cryptocurrencies through MetaTrader and cTrader platforms. Pepperstone is regulated by multiple authorities including ASIC, FCA, and CySEC. Pepperstone is known for competitive spreads, fast execution, and extensive educational resources. Pepperstone serves clients in over 160 countries worldwide. The Pepperstone CEO is Tamas Szabo.

Pepperstone Features

The features of Pepperstone are listed below.

  • More than 3,000 CFD assets available in total.
  • Pepperstone is known for its extremely low forex CFD spreads, with an average of 0.1 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.
Pepperstone Pros and Cons

Advantages of Pepperstone

The advantages of Pepperstone are listed below.

  • Stable raw spreads (0,10 pips on EUR/USD on average)
  • Caters for algorithmic trading
  • Has won over 30 Forex industry awards

Disadvantages of Pepperstone

The disadvantages of Pepperstone are listed below.

  • The demo account is not unlimited

3. eToro

eToro delivers over 1,000 CFD assets, focusing on social trading features. eToro provides leverage up to 1:30, increasing to 1:400 for professionals.

78
InvestinGoal Rating
  • Regulations:
    FCA, MIFID-ESMA, ASIC, SEC, CYSEC, Offshore, FSA (Seychelles)
  • Avg. EUR/USD Spread:
    1 pips
  • Platforms:
    Proprietary Platform
Minimum Deposit: $50
Unlimited demo account available
Visit eToro
61% of retail CFD accounts lose money
About eToro

eToro is a global multi-asset investment platform founded in 2007, offering trading on stocks, ETFs, Crypto CFDs, commodities, and forex. eToro provides a proprietary web and mobile platform with social trading features. eToro is regulated by multiple authorities including FCA, ASIC, and CySEC. eToro is known for its user-friendly interface, copy trading functionality, and commission-free stock trading. eToro serves over 30 million users worldwide. The eToro CEO and co-founder is Yoni Assia.

eToro Features

The features of eToro are listed below.

  • 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.
eToro Pros and Cons

Advantages of eToro

The advantages of eToro are listed below.

  • Great copy trading and social trading features
  • Wide range of asset classes
  • It allows to buy fractional stocks from $10

Disadvantages of eToro

The disadvantages of eToro are listed below.

  • The eToro spreads can be high
  • Offers only USD accounts
  • Transferring cryptocurrencies to other platforms can be hard

4. AvaTrade

AvaTrade offers fixed spreads on CFD assets, starting at 0.9 pips. AvaTrade provides over 200 assets and leverage up to 1:400, depending on the region.

92
InvestinGoal Rating
  • Regulations:
    FSA, MIFID-ESMA, ASIC, CIRO, FSCA, BVI (British Virgin Islands)
  • Avg. EUR/USD Spread:
    0.9 pips
  • Platforms:
    Mirror Trader, ZuluTrade, MT4, MT5, Proprietary Platform, MAC Platforms
Minimum Deposit: $100
Demo account available
Visit AvaTrade
76% of retail investor accounts lose money
About AvaTrade

AvaTrade is a global forex and CFD broker founded in 2006 and headquartered in Dublin, Ireland. AvaTrade offers trading on currencies, commodities, indices, stocks, bonds, ETFs, and cryptocurrencies. AvaTrade provides proprietary platforms alongside MetaTrader 4 and 5. AvaTrade is regulated by multiple authorities including CySEC, ASIC, and FSA. AvaTrade serves over 300,000 clients worldwide. AvaTrade is known for competitive spreads and extensive educational resources. The AvaTrade CEO is David Dryzin since 2016.

AvaTrade Features

The features of AvaTrade are listed below.

  • 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.
AvaTrade Pros and Cons

Advantages of AvaTrade

The advantages of AvaTrade are listed below.

  • Tight fixed spreads from 0.6 pips (0.9 pips for retail traders)
  • The mobile apps are well designed
  • Can be connected to ZuluTrade and Duplitrade

Disadvantages of AvaTrade

The disadvantages of AvaTrade are listed below.

  • High inactivity fees
  • The demo account is limited to 30 days

5. Trading 212

Trading 212 provides a platform with over 1,800 CFD assets. Trading 212 offers competitive spreads starting at 0.8 pips and leverage up to 1:500.

80
InvestinGoal Rating
  • Regulations:
    FCA, MIFID-ESMA, CYSEC, VFSC (Vanuatu)
  • Avg. EUR/USD Spread:
    0.8 pips
  • Platforms:
    Proprietary Platform, MAC Platforms
Minimum Deposit: $1
Unlimited demo account available
Visit Trading 212
83% of retail investor accounts lose money
About Trading 212

Trading 212 is a global online broker founded in 2004, offering commission-free trading on stocks, ETFs, forex, and CFDs. Trading 212 provides proprietary web and mobile platforms. Trading 212 is regulated by multiple authorities including FCA, CySEC, and FSC. Trading 212 is known for its user-friendly interface, educational resources, and fractional share investing. Trading 212 serves over 2 million clients worldwide. The Trading 212 CEO is Mukid Chowdhury since 2024.

Trading 212 Features

The features of Trading 212 are listed below.

  • 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.
Trading 212 Pros and Cons

Advantages of Trading 212

The advantages of Trading 212 are listed below.

  • User-Friendly Interface
  • No Commission Trading
  • Wide Range of Assets

Disadvantages of Trading 212

The disadvantages of Trading 212 are listed below.

  • Limited Research Tools
  • High Forex Spreads
  • Lack of Advanced Features

6. Plus500

Plus500 offers over 2,000 derivatives as CFDs with variable leverage depending on the trader’s country. Plus500 provides rollover-free accounts.

74
InvestinGoal Rating
  • Regulations:
    MAS, FCA, MIFID-ESMA, ASIC, FMA, CYSEC, ISA, FSA (Seychelles)
  • Avg. EUR/USD Spread:
    0.6 pips
  • Platforms:
    Proprietary Platform
Minimum Deposit: $100
Unlimited demo account available
Visit Plus500
82% of retail investor accounts lose money
About Plus500

Plus500 is a global fintech company founded in 2008, offering online Futures trading services in different markets such as Agriculture, Cryptocurrencies, Metals, Commodities, Forex, Interest Rates, Energy and Equity Indices. Plus500 provides proprietary web and mobile trading platforms. Plus500 is regulated by multiple top-tier authorities including FCA, ASIC, and CySEC. Plus500 is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. The Plus500 CEO is David Zruia since April 2020.

Plus500 Features

The features of Plus500 are listed below.

  • 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.
Plus500 Pros and Cons

Advantages of Plus500

The advantages of Plus500 are listed below.

  • Well-regulated CFD provider
  • Over 2000 tradable CFDs
  • Unlimited demo account offered

Disadvantages of Plus500

The disadvantages of Plus500 are listed below.

  • Limited Regulatory Protections for Professionals
  • Inactivity fees
  • Limited deposit methods

7. IC Markets

IC Markets offers over 1,000 financial CFD assets with spreads starting at 0 pips. IC Markets provides leverage up to 1:500 under its global entity.

91
InvestinGoal Rating
  • Regulations:
    ASIC, CYSEC, FSA (Seychelles), SCB (Bahamas)
  • Avg. EUR/USD Spread:
    0.1 pips
  • Platforms:
    cTrader, Mirror Trader, ZuluTrade, MT4, MT5
Minimum Deposit: $0
Unlimited demo account available
Visit IC Markets
74-89% of retail CFD accounts lose money
About IC Markets

IC Markets is a global forex and CFD broker founded in 2007 and based in Sydney, Australia. IC Markets offers trading on over 2,250 instruments including currencies, commodities, indices, stocks, and cryptocurrencies. IC Markets provides MetaTrader 4, MetaTrader 5, and cTrader platforms. IC Markets is regulated by multiple authorities including ASIC and CySEC. IC Markets is known for its ECN execution model and low spreads. The IC Markets CEO is Andrew Budzinski.

IC Markets Features

The features of IC Markets are listed below.

  • 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.
IC Markets Pros and Cons

Advantages of IC Markets

The advantages of IC Markets are listed below.

  • Low-latency trading environment
  • Institutional level liquidity
  • MT4, MT5, cTrader platforms are all available

Disadvantages of IC Markets

The disadvantages of IC Markets are listed below.

  • Small amount of educational tools for new traders
  • Small range of tradable assets compared to other CFD/Forex brokers

8. Forex.com

Forex.com offers over 4,500 CFD assets with spreads starting from 0.5 pips. Forex.com provides leverage up to 1:200 for international traders.

82
InvestinGoal Rating
  • Regulations:
    FSA, FCA, CFTC, MIFID-ESMA, CIRO, SFC, CYSEC, CIMA (Cayman Islands)
  • Avg. EUR/USD Spread:
    1.3 pips
  • Platforms:
    MT4, Proprietary Platform
Minimum Deposit: $100
Demo account available
Visit Forex.com
73%-77% of retail investor accounts lose money when trading CFDs with this provider
About Forex.com

FOREX.com is a global forex and CFD broker founded in 2001, offering trading on currencies, commodities, indices, stocks, and cryptocurrencies. FOREX.com provides proprietary platforms alongside MetaTrader 4 and 5. FOREX.com is regulated by multiple top-tier authorities including FCA, ASIC, and CFTC. FOREX.com is known for competitive spreads, fast execution, and extensive educational resources. FOREX.com serves over 450,000 clients worldwide. The FOREX.com’s parent company “StoneX Group Inc.” CEO is Sean O’Connor.

Forex.com Features

The features of Forex.com are listed below.

  • 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.
Forex.com Pros and Cons

Advantages of Forex.com

The advantages of Forex.com are listed below.

  • Regulatory Assurance
  • Low Forex Fees
  • Comprehensive Educational Resources

Disadvantages of Forex.com

The disadvantages of Forex.com are listed below.

  • Limited Product Portfolio
  • Higher Spreads on Standard Accounts
  • No Guaranteed Stop-Loss Orders for U.S. Clients

9. Oanda

Oanda offers 100 tradable CFDs with spreads starting from 0.6 pips globally, except in Australia. Oanda provides leverage up to 1:100 for international clients.

81
InvestinGoal Rating
  • Regulations:
    FSA, MAS, FCA, CFTC, MIFID-ESMA, ASIC, CIRO
  • Avg. EUR/USD Spread:
    0.1 pips
  • Platforms:
    MT4, MT5, Proprietary Platform, MAC Platforms
Minimum Deposit: $0
Unlimited demo account available
Visit Oanda
CFDs are not available to residents in the United States
About Oanda

OANDA is a global multi-asset broker founded in 1996, offering trading on forex, CFDs, commodities, indices, and cryptocurrencies. OANDA provides proprietary platforms and API solutions. OANDA is regulated by multiple authorities including FCA, ASIC, and MAS. OANDA is known for competitive spreads, fast execution, and currency data services. OANDA serves both retail and institutional clients worldwide. The Oanda Chief Executive Officer is Gavin Bambury since August 2019.

Oanda Features

The features of Oanda are listed below.

  • 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.
Oanda Pros and Cons

Advantages of Oanda

The advantages of Oanda are listed below.

  • Comprehensive Platforms
  • Robust Education
  • Highly Regulatory Trust

Disadvantages of Oanda

The disadvantages of Oanda are listed below.

  • Higher Spreads
  • Proprietary Platform Limitations
  • Inactivity Fees

10. XM

XM provides over 1,250 CFD instruments with spreads starting from 0 pips. XM offers a rollover-free account option for Islamic traders.

80
InvestinGoal Rating
  • Regulations:
    MIFID-ESMA, ASIC, CYSEC, Offshore
  • Avg. EUR/USD Spread:
    0.1 pips
  • Platforms:
    MT4, MT5, MAC Platforms
Minimum Deposit: $5
Demo account available
Visit XM
72,82% of retail investor accounts lose money
About XM

XM is a global forex and CFD broker founded in 2009, offering trading on currencies, commodities, indices, stocks, and cryptocurrencies. XM provides MetaTrader 4, MetaTrader 5, and proprietary platforms. XM is regulated by multiple authorities including CySEC, ASIC, and IFSC. XM is known for competitive spreads, extensive educational resources, and multilingual customer support. XM serves over 5 million clients from 196 countries. XM offers various account types and a no-requote policy.

XM Features

The features of XM are listed below.

  • 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 a good rollover-free account for all Islamic traders.
XM Pros and Cons

Advantages of XM

The advantages of XM are listed below.

  • There’s a wide range of account types
  • The demo account at XM is unlimited
  • Wide range of educational resources

Disadvantages of XM

The disadvantages of XM are listed below.

  • No social trading features available
  • The account availability changes depending on the location of the trader
  • High minimum deposit to invest in securities ($10000 for the XM Shares account)

Comparison of the best CFD trading brokers

BROKER SPREADS FROM NUMBER OF CFD ASSETS
IG Markets 0.6 pips 17000+
Pepperstone 0 pips 3000+
eToro 1 pip 1000+
AvaTrade 0.9 pips 200+
Trading 212 0.8 pips 1800+
Plus500 Variable 2000+
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.

What is the best CFD broker for Forex trading?

The best CFD broker for Forex trading is IC Markets.

IC Markets offers over 2250 CFDs to trade including more than 61 Forex pairs. The spread on Forex starts from 0 pips with the IC Markets Raw Spread accounts and a trading volume commission of $3.50 per lot per side ($7 per lot per round turn) on MetaTrader platforms. On the cTrader platform the commission is $3 per lot per side ($6 per lot per round turn). For more options, see best Forex brokers.

What is the best CFD broker with high leverage?

The best CFD broker with high leverage is FBS.

FBS provides high leverage up to 1:3000 on Forex under the regulation of the FSC (Financial Services Commission) of Belize. FBS trading account gives access to over 550 CFDs assets with spread starting from 0.7 pips. For more options, see best high leverage Forex brokers.

What is the best CFD broker for stock trading?

The best CFD broker for stock trading is IG Markets.

IG Markets offers more than 16.000 CFD stocks. Commissions start from $3 on US shares with a maximum leverage of up to 1:5. IG Markets provides the L2 trading platform which is designed for the purpose of stockbroking. For more options, see best stock brokers.

What is the best CFD broker for crypto trading?

The best CFD broker for crypto trading is eToro.

eToro offers more than 80 cryptocurrency on CFDs. There is a commission of 1% on CFD crypto trading. In alternative, eToro also provides the eToro wallet for storing and trading in real cryptocurrencies. For more options, see best Forex brokers for cryptocurrency trading.

What is the best CFD broker for gold trading?

The best CFD broker for gold trading is HFM.

HFM stands out as a proficient gold trading forex broker with both gold as CFDs and the gold ETF (GLD). Gold trading is versatile with lot sizes starting at 0.01 (1 ounce) and going up to 60 lots, with tighter spreads starting at 0.023 pips for USD pairings and 0.12 pips for EUR. For more options, see best gold trading Forex brokers.

What is the best CFD broker for index trading?

The best CFD broker for index trading is XTB.

XTB offers access to over 35 global indices as CFDs, including prominent US, Australian, and EU markets. Traders benefit from competitive spreads starting at just 0.3 pips on the US500. Leverage options are tailored to location, with up to 1:20 available for traders residing in the EU, UK, and Australia, and an increased leverage of up to 1:200 globally. For more options, see best indices trading brokers.

What is the best CFD broker with DMA execution?

The best CFD broker with DMA execution is IG Markets.

IG Markets is among the best DMA (Direct Market Access) Forex brokers with over 17.000 financial instruments as CFDs. IG Markets requires a minimum deposit of $300 to open a DMA trading account. For more options, see best DMA Forex brokers.

What is the best CFD broker with the MT4 platform?

The best CFD broker with the MT4 trading platform is IG Markets.

IG Markets provides more than 17.000 financial instruments as CFDs to all its clients among several markets including Forex, commodities, indices, crypto, stocks and ETF assets. For more options, see best MT4 Forex brokers.

What is the best CFD broker for low cost trading?

The best CFD broker for low cost trading is Pepperstone.

Pepperstone is a low cost trading broker on more than 1200 CFDs. Spreads on Pepperstone start from 0 pips with a trading volume commission of $3.50 per lot per side ($7 per lot per round turn) on the Razor account, which requires a first minimum deposit of $0. For more options, see best low spread Forex brokers and best Forex brokers with low minimum deposit.

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?

CFD trading doesn’t involve purchasing underlying assets but rather speculating on whether the price of the CFD asset raises or loses its value.

This is the reason why CFD trades can be executed both long and short: if you think the CFD is going to raise in value, then you can open a “buy” (long) order. Vice-versa, you can open a “sell” (short) order if you think the value is going to decrease.

CFDs are quite unique as they may charge rollover fees (which are not charged by other derivatives). This commission is an interest, and is paid if the CFD trade is carried (i.e. is kept open) to the next day trading session.

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

What CFD accounts are there?

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.