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 understand how CFDs work and whether you can afford to take the high risk of losing your money. Featured brokers appear first. Learn about how brokers are ranked...
|Featured CFD Broker||What can you trade via CFDs?||What are the CFD trading costs?||CEO Interview||More Info|
|IG clients can trade a range of over 17,000 CFD markets Trade CFDs on interest rates, bonds, sectors, forex, indices, global shares, commodities and cryptocurrencies||Opening an account is free, and charges are competitive. Trade spreads from 0.6 points on key FX pairs like EUR/USD, 1 point on major indices like the Germany 30 and FTSE 100, and 0.3 points on Spot Gold.|| Visit IG|
Your capital is at risk. 76% of retail CFD accounts lose money
|Trade contracts for difference (CFDs) and access over 9,500 instruments with competitive spreads. Trade CFDs on forex, indices, cryptocurrencies, commodities, shares and treasuries.||Trade CFDs on major forex pairs from 0.7 points and popular indices from 1 point. When trading UK shares a commission is charged from 0.1% or 2 cents per unit for US.|| Visit CMC|
|150+ instruments across FX, indices, equities, cryptos, energy and commodities, and more, across three, free powerful platforms||During liquid times, CFD spreads can go as low as 0 pips on the EURUSD on the Pepeprstone Razor account||Read Tamas Szabo CEO Interview|| Visit Pepperstone |
|Fineco||Trade Fineco CFDs on thousand of asset classes Equity, Indices, Commodities, bond and Interest Rates||Share CFDs have no additional spreads, indices have spread as low as 0.4pips on S&P 500 and 0.6pip on Nasdaq 100 and FTSE 100. FX spreads on 50+ pairs from 0.8pips.|| Visit Fineco |
|Access 9,000+ CFDs and trade CFDs on single stocks, indices, forex, commodities, options and bonds.||Ultra-competitive pricing for trading UK stock CFDs from GBP 8, and US 30 Wall St. from 2 points.||Read Andrew Edwards CEO Interview|| Visit Saxo |
|Trade over 1500 global CFD markets including Forex, Cryptocurrencies, Indices, Commodities, Share CFDs and ETFs.||Low forex spreads from 0.1 pips, stock CFD commission from 0.08%|| Visit XTB |
|Trade one of the widest ranges of CFD markets including shares, indices, forex, commodities, bonds and interest rates.||CFD spreads start from just 0.6 pts on EUR/USD, 1pt on UK 100 and 0.4 pts on Gold|| Visit Spreadex |
|Trade CFDs in USD on eToro on a wide range of stocks, forex, indices, commodities and copy other CFD traders||Cost are based in USD and eToro CFD trading costs are built into the spread.|| Visit eToro |
|Trade CFDs on a wide range of Indices, Forex, Commodities, Crypto, Shares, Options and ETFs||Plus 500 CFD spreads are variable, yet competitive for new traders. There is no commission. Overnight funding is charged on positions.||Coming Soon|| Visit Plus 500 |
Plus 500 Reviews
|CFD Trading with City Index gives you access to over 4000 global markets including Indices, Shares, FX, Commodities and Bonds.||Fixed and variable CFD spreads from 0.5 points with benchmark UK financing is LIBOR +/-2.5%||Coming Soon|| Visit City Index |
City Index Reviews
|Trade CFDs on ETX on over 5,000 instruments in all major asset classes including FX, Indices, Shares and Commodities..||Trade CFDs low commissions through ETX's pooled liquidity from a range of sources to deliver the best prices and narrowest spreads.||Phil Adler CEO Interview||ETX Reviews|
Watch our "What is CFD trading" video interview with CMC Markets
We speak to Ryan O'Doherty from CMC Markets about CFD (Contract for Difference) trading, what CFDs are, who they’re for, what you can trade, what are the main risks, the main benefits, and also, some top trading mistakes and how to avoid them.
So CMC Markets; you’ve been with them for many, many years now, as well as spread betting, CMC Markets is also a CFD broker. Do you want to briefly talk us through what CFDs are and how they can be used?
Yeah, well CFDs are more of a global product, so unlike sort of spread betting, where it’s isolated to the UK and Irish market, CFDs are available globally. So we have a number of clients in regional areas. Now CFDs is basically Contracts for Difference. It really is in the name. It’s a contract for the difference in price of an underlying security. Now that underlying security can be anything from indices, FX, commodities, treasuries, cryptocurrencies, etc. So it provides a way for clients, and a very popular way, to trade financial markets on a multi-asset basis, but it’s done on leverage. So clients only need to put in a small amount of their own capital to take out much larger positions. So margin starts from as little as, you know, about 3.33 for FX and moves up to five per cent for indices and ten per cent for commodities. So for clients that don’t have enough money necessarily to trade, you know, much bigger positions like a FTSE or US Stock with physical, or Futures, then you can actually trade them via a CFD product.
And obviously, CMC Markets is a London-based broker, but CFDs are a global product. So who would you say within the investment landscape CFDs are an appropriate product for, you know, of your client base? What does a sort of typical trader look like?
A typical trader. I mean with CFD trading, it’s a lot of traders that have come from, you know, other areas that they’ve traded previously, or they’ve done physical trading and then coming into CFD trading. It’s a very familiar way to get into CFD trading or trading short term, because you’re trading a number of units, so it feels familiar, unlike spread betting, where it’s pounds per point, which is a little bit alien to some people. The trading units is a much easier concept for clients to get to deal with.
Sure. So if you want exposure to 10,000 shared with Vodafone, you buy 10,000…
Buy 10,000, exactly. Where with spread betting, you doing £10 a point, which is a little bit confusing for traders that have done that in the past. And because, yeah, it’s a leverage product, it enables you to buy or profit from a rising as well as a falling market. So there’s a lot of clients that want to take advantage of that. Volatility of the markets is always there and, you know, opportunity presents itself, so being able to profit from both rising and falling markets is a very important tool, and that’s what CFD provides.
And in terms of what your customer base trade, what would you say were the most popular assets or instruments that your client base will trade on CFDs?
Yeah, CFDs very much, it’s equities to start with, but then indices and FX are probably the two major products that clients trade. The DAX and the UK100 and the US30 are very popular products. They give a diversified way for clients to get access to the market. So for a lot of people, they don’t necessarily know which individual stock is going to go up or down, but they have a general feel as to where the market’s heading. They read the newspapers or they get a general feel that the economy’s doing well or badly, and then they’ll say well, you know, this is a great way to get exposure without having to understand the complexity of the individual product.
And of course, it’s a sort of risk management tool as well, because if in fact you don’t know where the market’s going to go, you can run a long-short portfolio on equities as well, can’t you?
Absolutely. The hedging capabilities of these types of products is great as well because you can profit from a falling market as well as a rising market. You might hold equities, for example, in share portfolio and you feel that the market might have a bit of a pullback. Well you can go in and you can actually short the CFD on the market generally, and so you can sort of hedge that position and sort of wait for the market to fall, and then, you know, get rid of your short position on the CFD and then continue on with your equity position.
Yeah, it’s a good risk management tool. We always used to do that at Investors Intelligence, when we’d run our long-short portfolios, you know. If your long’s fairly weighty, FTSE100 stocks, you know, you always run the risk that those stocks will be pulled down with the general market, so you can use an index CFD…
Yeah, especially if you don’t want to sell them at that point, you don’t want to realise the profit or a loss on those particular positions, then, you know, using a tool like CFD to hedge is a great…
And it’s a quite a nice way to pick individual stocks you think may outperform the market or underperform the market, whilst being sort of fairly agnostic to the overall moves.
Shall we just quickly have a look at your CMC CFD trading platform and you can talk us through the assets that are available on it?
Yeah, certainly. I mean you know, this is a basic CFD trading screen, so it’s customisable so you can set it up the way you like, but what I’ve got there on the top left-hand area of the screen is just some quote panels, some of the major markets, so the US30, DAX and Nasdaq up there on the top, and then down the bottom, you’ve got sort of crude oil, copper, silver, and then some currency pairs like euro, dollar and cable down the bottom. So that gives me easy access to what the prices are. I simply click one of those and the order ticket will load and you can instantly place a market order quite quickly.
Sure. And that’s your bid offer spread, isn’t it? So they’re your prices, rather than the underlying market?
That’s correct, yes. And we’re very transparent regards to the cost, so you’ve got the spread actually in the bottom of that quote panel, so you can constantly see what the spread is, depending on the liquidity of the market. Some of those are fixed, so during market hours, for example, the indices spreads are fixed, but clients can actually see what those spreads are, quite visible on the platform.
And then on the right-hand side, you’ve got the charts. Obviously, for a lot of experienced traders, they like all their analysis and looking at chart performance. They’ve got the different indicators, but also for new clients, they quite like just being able to see charts, see what the general price has been doing over a period of time, and then they start using more of the tools later on as they become more experienced.
And then on the mobile side of things, because these are really important these days, you know, roughly 60 per cent of our trade volume is done on mobile. I’ve been in this industry for, you know, 14/15 years, and it’s really been the last four or five years we’ve started to see the balance tip towards mobile trading.
I’ve always found the shift to mobile trading fascinating actually, because I can’t make a decision on a mobile phone. I can close a decision on a mobile phone, but…
Yeah. Well, we do see a lot of that. So you see a lot of people monitoring their [open] positions on mobile. They’re out and about; they want to see whether or not the profit or loss is on there. But it’s having access to it wherever you are and then being able to close it out. But also, with sort of push notifications and being able to get information sent to you so quickly, you might be out and about so you don’t want to miss out on an opportunity. So you can easily go on to the mobile platform, place a trade. It’s the exact same order ticket, looks exactly the same, it feels the same, and you just execute on the go, which is quite a powerful tool. But yeah, probably about three or four years ago, it tipped, and we do more trade volume on mobile than any, yeah.
Interesting. Okay, so in terms of CFD trading, let’s just go through the pros and the cons. What’s good about CFD trading and what’s bad? You know, what do clients have to be mindful of?
Yeah, so I mean obviously when trading on margin, there’s a risk involved. There’s sort of a double-edged sword in some ways. You only have to put a small amount of your own capital in to take out a much larger position. So your exposure is on that net overall position, and so you can amplify your profits quite quickly, but you can also amplify your losses. So it’s really important that clients put risk management orders on their trades, because some of that volatility might happen while you’re away from your screen, and so you can lose money quite quickly. And with the new regulations that have come in, you can’t lose more than your initial capital in your account. So you’re protected in that.
That’s for retail customers, not for customers that upgrade to professional…
Yeah, so there are restrictions, depending on what type of client you are – retail or professional. But if you’ve got more money in your account, you can still lose more on that particular position than you put in. So it’s mindful to put the stop losses in, put some risk management on. So that’s one of the risks. One of the differences between CFD and spread bet trading as well is that CFD trading of trading in the underlying currencies. So depending on where you’re trading, so if you’re trading in the US market, for example, you’re trading in US dollars, so you have a currency conversion risk, I guess, in some ways. So once you close out that position and you return it back into pounds, then there is that transfer. And if the pound had gone down or up in value then that’s obviously going to affect your profit and loss.
And currency exposure in particular is something that people don’t understand or bury their head in the sand and refuse to…
Well I think that’s probably the way to think. I think they probably know it’s there in some ways, but if you’re trading spread bet, you don’t have that. It’s always pounds, so you don’t have to worry about that. But on CFD trading, you do, and you’ve got to be mindful of it. So it’s a bit like going on holidays. You’re always constantly looking at what the exchange rate is for holidays. You should be doing the same on…
So what happens with currency balances for CMC, for example? So for example, if I’m trading the FTSE, it’s not an issue because sterling’s a [nominated] product, but if I’m trading the DOW, for example, and you know, I have an amount of profit or loss, what happens to that? Does it sit in dollars?
No, it’ll automatically convert into pounds once you close the position at the prevailing sort of spot rate. Plus, one thing when you’re transferring across, then there’ll be the spot rate plus a small percentage on top of that.
So there’s no danger of running a deficit in one currency and incurring interest?
And say for example I’m a customer who, you know, a lot of customers have their favourite products, you know, some people like to trade the DAX, some people like to trade US equities; could I have a US nominated subaccount for trading, or am I always going to be subjected to…
There are some accounts that potentially can be set up. So if you would rather trade in US dollars, for example, there are accounts out there that allow you to do that. So you’ve got the option. So more advanced traders that want that sort of capability, then they can offer that.
Okay, super. And let’s just take a quick look; over the time you’ve been at CMC Markets, traders that don’t make money, it’s a sort of well-publicised thing. What would you say are the top three mistakes they make, and what can they do to…?
To avoid them, yeah. I mean I used to run a whole range of education courses, based on trading and trying to learn the psychology and the risk management of side of things.
This is for CMC?
Yeah, for CMC Markets. And you know, one of the areas that’s the biggest is that clients feel like it’s a great opportunity to make a big amount of money quite quickly.
Yeah, especially with Instagram…
Yeah, absolutely. You know, there’s a whole range of people trying to promote that you’ll make a million dollars within a day or something; those sorts of claims. But it’s really important that clients do their research. You know, understand the markets that they’re going to trade, because different events affect different markets. So you know, fundamental news such as non-fund payrolls or CPI figures coming out will really affect, let’s say, the FX market. Unless you know that those events do, then you won’t realise why the price has gone up or down in value. And so that can affect your trade. So it’s really important to understand what moves particular markets. So doing that research.
The second is really just about having a strategy. So making sure that you say, well, how much money am I willing to risk. Make sure that you say, okay, that’s the limit, and then put your stop losses on the trade so that when the markets move, it will automatically execute a trade to get you out of that position. And you can use multiple different types of stop losses. You can use regular stop losses, which are there at a particular level. But if there is a market gap, so the market trades at this level and then gaps below, you’ll get executed low on. So you’ve got another tool called guaranteed stop loss orders, which’ll then guarantee the price, and you pay a small premium for that.
Do you have trailing stops as well?
We do, yeah.
So if the market’s moving up in your favour…
It’s a good tool. I mean trailing stops are one of those tools that, yeah, as the market moves in your favour, the stop loss will move up in a certain point range, which you specify. And they’re great once you’re actually in profit. I prefer to place them once you’re in profit, because sometimes, the market can move up quite quickly and then back down quite quickly, and you know, you haven’t really gone through your whole strategy by that stage. So I generally would place a regular stop loss to start with. Once my position’s in profit, I will then put a trailing stop loss behind it and then…
It’s actually one of the sort of fundamental rules of trading and investing is, you know, you only have to read anything from any experience, trading or investors, and there’s a brilliant book actually called The Art of Execution. Have you read that?
Yeah. I haven’t read all of it but I’ve read some of the… It’s fascinating, yeah.
It’s brilliant. And you can literally boil trading strategy down to run your whims, cut your losses.
I mean risk to reward is one of those features where you say you’re willing to risk £50 to make £50. Doesn’t make a lot of sense to me because, you know, there’s trading costs and all those sorts of things involved. So you’re looking at a risk to reward strategy of at least 1.5 to 2, so risk 50 to make, let’s say, 100, and then over time, you only have to get, let’s say, you know, one of every three trades right to actually start breaking even. If you’re more successful than that then you’ll start making a profit.
Sure. Don’t be greedy.
Yeah. But it’s a really good point about the books. I think, you know, one of the things is there’s so much literature out there these days. You know, a lot of providers provide it on their websites to a certain degree. But there’s some great books. You know, clients should really have a look.
And I think the chap who wrote that book was one of the biggest fund managers in the UK, I think the world, so he knows what he’s talking about.
You would hope so.
He’s not just some guy off the street. So that was two, wasn’t it, and third, what’s your sort of third mistake?
The third one is just not to overtrade. You kind of get bored sometimes, especially with trading; it’s got that element of excitement, where investment, you don’t mind holding off and letting those positions run. But on trading, you’re constantly looking for opportunity. You’re looking at trades. And sometimes, you’ll get into a trade based on purely because, you know, you think oh well, I just want to be in something. So don’t overtrade. Always be mindful of getting in on a particular reason, having a strategy for getting into the trade.
Exactly, Yeah, no, sometimes best trade’s to be in cash really, isn’t it?
Absolutely. Yeah. Well right, thank you very much.
No problems. A pleasure.
Thank you very much for joining us for this episode of Good Money Guide TV. We’ll be back with something else to talk about shortly.
What is CFD trading?
If you want to be a better CFD trader, start by reading our handy bitesize guides:
- CFD trading tips
- What does CFD trading mean?
- What is the difference between spread betting and CFD trading?
- Three golden rules to sensible CFD trading
- How do I qualify as a professional client for CFD trading and spread betting?
- Compare the best brokers for indicies
How to compare CFD trading brokers?
If you're looking for a new or your first CFD (contracts for differences) trading broker there are a few key points to compare when deciding who to open an account with.
Firstly, you need to look at price. Some CFD brokers charge commission whereas others included the costs in the CFD spread.
Normally, it's only DMA (direct market access) CFD brokers that charge commission but use our CFD broker comparison tables to check. Secondly, are they regulated by the FCA (Financial Conduct Authority)? All CFD trading brokers listed in our comparison are regulated by the FCA. You can check whether a broker is regulated by the FCA in the UK by checking the FCA register.
Only fully FCA authorised and regulated brokers offer client funds protection under the FSCS. From the 1st September 2019, this protection extends to;
- limiting leverage to between 30:1 and 2:1 by collecting minimum margin as a percentage of the overall exposure that the CFD provides.
- Close out a customer's position when their funds fall to 50% of the margin needed to maintain their open positions on a CFD account.
- Provide protections that guarantee a client cannot lose more than the total funds in their CFD account.
- Stop offering monetary and non-monetary inducements to encourage trading.
- Provide a standardised risk warning, which requires firms to tell potential customers the percentage of their retail client accounts that make losses.
source; FCA website, 01/07/2019.
Thirdly, how good is there online trading platform? When comparing CFD trading brokers the best way to choose a broker that is right for you is to open a CFD trading demo account to really get a feel for a platform and to understand what you like and dislike about each broker.
You won't need to risk your own money with a demo account, but it will give you an idea of how the platform works, what kind of resources the broker offers and insights in to the data behind the platform, albeit with limited functionality. Read how to compare CFD brokers here
How do CFDs Work?
Trading CFDs is a form of high risk, high reward speculation on the financial markets. You can trade shares, Forex, commodities, fixed income and indices like the FTSE, DAX, Down and S&P. CFDs are a leveraged OTC (over the counter) product so you don't actually own the underlying asset – just receive a profit and loss based on the difference between the price at which you open and close a trade.
What does CFD trading mean?
Firstly, it means that you are not buying or selling an actual asset. You are entering into a contract for the difference between the closing and opening price of a trade based on how many contracts you buy. The amount of contracts usually mirrors the same amount in the underlying market. Read more on what CFD (Contracts for Difference) trading is and how it works here
How to compare CFD trading platforms?
Our comparison makes it quicker and easier to choose a CFD trading platform. You can compare spreads, pips and the markets offered all in one place. However, as well as using our comparison trying out each broker through a demo account is also a good way to familiarise yourselves with what each offers and find out which you prefer. Demo accounts allow you to quickly try each CFD trading platform and save you risking any real money. Read more on the best way to compare CFD trading platforms here
Why to trade CFDs
CFDs are one of the most cost-effective ways to speculate on the financial markets. They provide many advantages over traditional investing – but of course with these advantages come disadvantages. You can make big money, but you can also lose big if you don’t know what you are doing and don’t use a well respected CFD broker.
Our definitive CFD brokers list of FCA regulated broker
Trading CFDs is risky, not just because CFD's by nature are a high risk investment product. But also because CFD brokers can go into administration. To reduce the risks of your broker going bust, it's important to only use FCA regulated brokers to make your trades.
Fortunately, all of the brokers included in our comparison are companies that are regulated by the FCA in the UK and accounts from companies that we are familiar with and have had experience using.
Good Money Guide is one of the most trusted places to compare brokers side by side and read both expert and customer reviews.
Where can you find CFD brokers in the USA?
Unfortunately, you can't trade CFDs in the US. Plus to make it even worse if you are a US citizen or resident you can't trade CFDs with a UK broker. UK and US regulations prohibit US clients trading with overseas brokers. But if you are a UK or European trader you can trade US stocks on CFDs with a UK CFD broker. You can however compare US CFD stock brokers where you can usually trade on margin.
Which are the best CFD brokers in the UK?
If you're looking for the best CFD brokers in the UK then you've come to the right place. Our CFD broker comparison tables display only UK CFD brokers that are regulated by the FCA and that we consider to have good reputations. We don't include brokers on Good Money Guide that are not properly regulated or have bad reputations within the industry.
What are STP CFD brokers?
STP means (Straight Through Processing) which means when you put an order in it goes into the market the broker buys or sells on your behalf. The alternative is where a broker matches up with other traders or does not hedge your positions at all. In the grand scheme of trading, it does not matter whether your broker is STP or uses a B-Book. You make money if you call the market right. You can't blame the broker if your trades are not profitable.
Where can you trade CFDs with a stockbroker?
CFD stock brokers are really a good example of why CFDs are a useful tool. CFDs enable stockbrokers to give their clients direct market access (you can compare DMA brokers here) meaning they get better prices, can work orders inside the price and work algo orders like daily VWAP (volume weighted average price) price matching.
What's the best way to compare CFD platforms?
Simple, use our CFD broker comparison tables to check out the key features of CFD brokers in the UK. There are two ways to compare costs on a CFD platform. The first is to see how far the prices are from the actual underlying market spread. The second is to see what commission is charged. If a commission is charged the prices you will see on the CFD platform for comparison will be the actual bid-offer spread. The commission will be a percentage from the bid-offer price.
CFD trading for big money and high net worth (HNW) large traders
If you are a big CFD or spread betting trader (and by that we mean £50k upwards) you need a broker that is going to give you a bit more than just the top ten traded forex pairs and a few commodities.
Our spread betting comparison tables compare all the spread betting accounts in the UK, and a quick glance will show that they are all pretty much the same. However, if you are an experienced trader with big pockets and want to trade in a tax efficient way, there are brokers out there that go the extra mile to ensure that the more sophisticated traders get an edge.
If you are a big spread betting customer and want a broker that gives you more we’ve summarised some of the best accounts for larger traders.
What are the Best CFD brokers for high net worth individuals and large traders
- Of course, IG offers CFDs and tops this list as they offer CFD trading too.
- Saxo Capital Markets is another decent CFD broker for HNWs as you can trade DMA, buy physical shares, bonds, and trade all sorts of exotic derivative products. They also have decent brokers for phone trading if you want to work VWAP or other algo orders that may otherwise move the market if you did them yourself.
- Compare other brokers for CFD trading here
The importance of brokerage account diversification for larger traders
No matter what size your account balance you should be a responsible trader and diversify. This doesn’t just apply to your portfolio, but also to your financial service providers.
History has shown us that spread betting brokers can go bust quickly (Alpari, January, 19th 2015). It is sensible to spread your business around a few of the top spread betting brokers so that if there are rumbles or rumours you can close and reopen your positions at another broker quickly.
The last thing you want to happen is to have all your positions with a defunct broker and the auditors taking weeks to close them out (cough cough MF Global). A sensible solution to mitigating this issue is to have a secondary account on standby so that if you foresee any future problems with your broker you stop using them sharpish.
As most accounts are opened online it can take as little as 20 minutes or as much as two days to get a new account ready. Make sure you trade for the best, but are prepared for the worst and have secondary accounts that you are familiar with on stand by in case you need to make a switch.
Comparing top MT4 CFD Brokers - where and how to do it?
If you want to compare top MT4 CFD brokers you can see our MT4 CFD broker comparison table. We highlight the key aspects of trading MT4 with a CFD broker, which ones are the best, how they should be regulated and how many markets are on offer. We only include FCA regulated MT4 CFD brokers in the comparison table.
How to compare Forex CFD brokers
Forex CFD brokers tend to focus on Forex, but will also offer trading in major indices, commodities, fixed income and some top stocks in the UK, US, Europe and Asia. If you want to compare Forex CFD brokers you can view our Forex CFD brokers comparison table.
CFD trading Strategies that can help you make money
If you want to be a profitable CFD trader you need to follow some golden rules of CFD trading. It’s not difficult to make profitable trades, but what is difficult is ensuring that you make more profits on your winning trades than you make losses on your losing trades. It’s a well know fact that even the best traders in the world only get it right half the time. It’s how they manage their CFD positions that sets them apart and makes them better traders. You can find out more about the best CFD trading strategies here
Here are five quick CFD trading tips
- Don't trade with more than you can afford to lose
- Run your profitable trades
- Cut your losing trades quickly
- Use stop losses to minimise risk
- Combine technical and fundamental analysis before trading
CFD stocks brokers versus index and FX
FX and index only CFD brokers tend to be smaller and less established than CFD brokers that offer a broad range of share and stock trading. Going with an established broker that offers FD stocks trading gives you more flexibility over what you can trade.
CFDs versus Spread Betting
Spread betting and CFDs are fairly similar in some respects but totally different in others. Find out the major differences between CFD brokers and spread betting brokers and see which is right for you. Whatever product you trade though always read CFD broker reviews to ensure that any broker you choose is regulated by the FCA and have their head office based in London.
The key advantage of trading stocks on CFDs is that you don’t have to pay stamp duty to the government. Also, unlike spread betting you can still get DMA. DMA enables you to get into the order book for trading at the best possible prices. The best equity CFD brokers will offer access to the global markets, but this is generally only for the larger brokers – smaller CFD brokers tend to only offer FX, commodity, index and fixed income prices.
DMA (Direct Market Access) CFD brokers
DMA CFD brokers are really only suitable for clients trading with over £100k on account or for hedge funds. Being able to get inside the bid/offer spread is great, but in reality, it doesn’t make a difference, unless you are working really big orders on limits or a high frequency trader. If you need to trade CFDs on DMA make sure you understand that missing a price because you are trying to nick an extra 0.25p could be a costly error. If you’re a professional trader you should only be dealing with a DMA CFD broker.
Advisory CFD brokers
CFDs are a very high risk product and it’s important that clients understand the risks involved before opening an account. Over the years the FCA has clapped down on advisory CFD brokers providing advice and hard core sales tactics used by CFD brokers to get clients to trade more. This website is all about execution only CFD brokers – that means CFD brokers that do not provide advice or recommend trades. Here is how to find a CFD stock broker
Best CFD brokers for trading Forex
FX CFDs are one of the most popular asset classes in the world. The foreign exchange market trades well over $4 trillion in volume everyday and a large percentage of that is from client speculating on short term price movements by trading Forex on CFDs. Take a look at our FX CFD comparison tables to see the best CFD brokers for trading Forex.
Index trading on CFDs – where and when to get the best access
The FTSE, Down, Dax and S&P are the major indices that are traded via CFDs at the moment. They offer great liquidity, news flow and are open 24 hours a day. As the underlying stock markets open and close the indices become more volatile so there is plenty of excitement and opportunity to be had from first thing in the morning until well in to the night. Spreads are tight and the intra-day range can be well charted. The top CFD brokers for index trading offer low initial margins on indices providing good leverage for trading on margin.
Reduce your trading costs with a CFD broker rebate program
The more CFDs you trade the lower your trading costs should be. Some brokers charge a commission and others add the commission into the prices they quote. If your broker is charging commission they may offer a reduction in rates if you deal a certain amount. However, for CFD brokers that price in commission to the spread they offer high volume traders a monthly rebate once they trade above a certain amount.
Top ten CFD brokers in the UK
If you’re looking for your first CFD broker, or want to diversify your risk, by spreading your trading around a few brokers take a look at our top ten CFD brokers section. It provides all the key information on the top ten CFD brokers in the UK, spreads, bonuses, when they were founded – we also show the pros and cons of using each broker. To be in the top ten all brokers must be UK based and regulated by the FCA.
CFD broker reviews – what CFD broker is best?
Choosing a CFD broker is a matter of personal preference. It can be based on anything from colour scheme to how friendly or efficient you find their customer support to the background information they offer. If you want to read reviews of the major CFD brokers in the industry our broker reviews for top CFD brokers can help;
- IG broker review
- ETX Capital broker review
- CMC Markets broker review
- Saxo Capital Markets broker review
CFD research and technical analysis
Most good CFD brokers provide some kind of research and analysis on the markets for their customers. But generally the better the broker the better the research, tools and analysis. It costs a lot of money to hire analysts and provide data to clients and some of it (if you know how to use it) can be exceptionally useful. Technical analysis provides a good overview of the markets based on charts and historical data
- Fundamental analysis users company financial releases to evaluate the health of a share price
- Economic data and calendars show when important announcements are due that could result in a price move.
Which CFD brokers offer the tightest spreads?
|CFD Broker||Wall Street||FTSE 100||Apple||Barclays||Oil WTI||Bitcoin||Gold||USDJPY||GBPUSD||EURUSD|
|IG||1.6 index points||1 index point||2 cents per share perside minimum online charge of $15||0.10% perside minimum online charge of £10.00||2.8||50||0.3||0.7||0.9||0.6|
|CMC Markets||2.40 index points||1 index point||6||0.3||3||37||0.3||0.7||0.9||0.7|
|Pepperstone||1.59 index points **||1.05 index points **||from 2 cents per share||NA||0.50*||10||0.50*||1||1||1|
|Fineco||1 index point||0.60 index points||0.00***||0.00***||0.2||NA||0.3||0.3||1||0.8|
|Saxo Capital Markets||1.00 index point ****||1.00 index point****||US$10.00||GBP8.00||0.05||NA||0.11||0.6||0.7||0.6|
|XTB||1.00 index point||0.90 index points||US$8.00 minimum ticket||EUR8.00 minimum ticket||0.4||1.0% xx||0.3||0.11 x||0.14x||0.7x|
|Spreadex||2.40 index points||1.00 index point variable||0.0015||0.001||3||40||0.4||0.7||0.9||0.6|
|eToro||0.6 index points||0.15 index ponts||0.0009||0.0009||0.05||0.0075||0.45||0.2||0.4||0.3|
|Plus 500||4.00 index points v||2.00 index points v||0.13 v||1.8 v||0.04 v||0.0038||0.91 v||0.1 v||0.13 v||0.8 v|
|City Index||1.60 index points||1.00 index point||1.8 cents per share||0.0008||0.4 ar||35||0.3||0.9 m||0.6 m||0.5 m|
|ETX Capital||1.00 index point m||1.00 index point m||0.001||0.0005||0.03 m||variable||0.40 m||0.90 m||0.90 m||0.60 m|
** Variable average spreads
*** No additional charges beyond the market bid offer spread
**** Spreads vary based on account tier
x Minimum spreads on xstation platform
xx minimum spread = 1% of market price
v variable spread
m minimum spread
ar around market spread
How to compare CFD brokers with the lowest trading costs
When choosing a broker the spreads and commission you are likely to pay are going to be high up on your list of priorities, however, it shouldn’t be the only items under consideration.
Increased competition amongst CFD and Spread Betting firms has helped to narrow or reduce spreads in highly traded instruments.
But it has also created a series of different business models and approaches to making prices and charging clients. Which in turn has meant that it’s not always easy to be certain that you are comparing apples with apples and not with oranges.
These days it’s probably better to take a holistic approach to choosing your broker comparing their whole offering and not just the spreads they advertise.
That will easier to achieve if you largely trade one product type for example indices trading or Forex speculation. However, there are other considerations to bear in mind, for example, your trade frequency or volume. These factors can make quite a difference to the prices you pay as a trader for example at Saxo Capital Markets your activity puts you a particular silo one of three possible client’s groupings or account tiers that determine the spreads you pay.
Which is the cheapest CFD broker?
Whilst at Pepperstone clients are offered a choice of accounts. More active clients may be tempted by the “raw “ spreads offered on the firm’s razor account. However, the broker charges an additional commission per lot on top of those narrower spreads, but if you meet certain volume thresholds you may qualify for a rebate of a percentage of those activity fees.
There is a more obvious difference in the way that brokers charge for transactions in individual shares, for instance, to trade CFDs on US shares at IG you pay from 2 cents per share per side. Whilst at eToro and ETX you can pay 0.09% and 0.10% respectively. There are minimum ticket charges on US stocks at Saxo and Polish brokers XTB. While Plus500 quotes minimum spreads that can and do vary.
Our comparison table shows the spreads on a selection of the most actively traded and popular instruments among retail traders And puts that information all in one place. It’s a good place to start your selection process but don’t forget to look at our in-depth broker reviews before making your decision.