Compare CFD Trading Brokers

> Compare CFD Trading Brokers

CFD brokers let you trade CFDs on the financial markets through their online platforms and mobile apps. Choose a broker that offers the best pricing, cheapest fees, leverage, and useful educational tools to get a CFD account for your trading.

Featured CFD Broker	CFD Trading Information	CFD Trading Markets	CFD Trading Costs	More Info
IG	Minimum Trade: 50p Minimum Deposit £250 Index Margin: 5% Forex Margin: 3.33% Pro Index Margin: 0.45% Pro Forex Margin: 0.45%	Total Markets: 17,000 Forex Pairs: 51 Commodities: 38 Indices: 34 UK Stocks: 3,925 US Stocks: 6,352	EURUSD: 0.6 pips UK 100: 1 point Wall Street: 2.4 points Gold: 0.3 points UK Shares: 0.10% US Shares: 0.10%	See Offer Your capital is at risk. 70% of retail CFD accounts lose money
CMC Markets	Minimum Trade: 50p Minimum Deposit £100 Index Margin: 5% Forex Margin: 3.33% Pro Index Margin: na Pro Forex Margin: na	Total Markets: 9,300 Forex Pairs: 71 Commodities: 33 Indices: 22 UK Stocks: 629 US Stocks: 3,441	EURUSD: 0.7 pips UK 100: 1 point Wall Street: 2.4 points Gold: 0.3 points UK Shares: 0.10% US Shares: 2¢ per share	See Offer 66% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider
Pepperstone	Minimum Trade: 50p Minimum Deposit £100 Index Margin: 5% Forex Margin: 3.33% Pro Index Margin: 0.2% Pro Forex Margin: 0.5%	Total Markets: 178 Forex Pairs: 36 Commodities: 16 Indices: 14 UK Stocks: 0 US Stocks: 64	EURUSD: 0.13 pips UK 100: 1 point Wall Street: 2.4 points Gold: 0.05 points UK Shares: na US Shares: na	See Offer 79.3% of retail investor accounts lose money when trading spread bets and CFDs with this provider
City Index	Minimum Trade: £0.5 Minimum Deposit £100 Index Margin: 5% Forex Margin: 3.33% Pro Index Margin: 0.25% Pro Forex Margin: 0.25%	Total Markets: 12,000 Forex Pairs: 84 Commodities: 25 Indices: 21 UK Stocks: Yes US Stocks: Yes	EURUSD: 0.5 pips UK 100: 1 point Wall Street: 3 points Gold: 0.3 points UK Shares: 0.1% US Shares: 1.8¢ per share	See Offer70% of retail investor accounts lose money when trading CFDs with this provider
Markets.com	Minimum Trade: £0.5 Minimum Deposit £100 Index Margin: 5% Forex Margin: 3.33% Pro Index Margin: 0.5% Pro Forex Margin: 0.34%	Total Markets: 8,000 Forex Pairs: 20+ Commodities: 10+ Indices: 10+ UK Stocks: Yes US Stocks: Yes	EURUSD: 0.6 pips UK 100: 2 points Wall Street: 2 points Gold: 0.5 points UK Shares: 0.1% US Shares: 0.1%	See Offer 77% of retail investor accounts lose money when trading CFDs with this provider
Spreadex	Minimum Trade: 1p Minimum Deposit £100 Index Margin: 5% Forex Margin: 3.33% Pro Index Margin: 0.5% Pro Forex Margin: 0.5%	Total Markets: 10,000 Forex Pairs: 53 Commodities: 21 Indices: 37 UK Stocks: 2,000 US Stocks: 500	EURUSD: 0.6 pips UK 100: 1 point Wall Street: 2.4 points Gold: 0.4 points UK Shares: 0.1% US Shares: 0.15%	See Offer 64% of retail investor accounts lose money when trading CFDs with Spreadex
Saxo Markets	Minimum Trade: £1 Minimum Deposit £100 Index Margin: 1% Forex Margin: 3.33% Pro Index Margin: na Pro Forex Margin: na	Total Markets: 19,999 Forex Pairs: 57 Commodities: 19 Indices: 23 UK Stocks: na US Stocks: na	EURUSD: 0.6 pips UK 100: 1 point Wall Street: 3 points Gold: 0.6 points UK Shares: 0.05% US Shares: 2¢ per share	See Offer70% of retail investor accounts lose money when trading CFDs with this provider

A CFD broker is a financial services firm that offers contract-for-difference (CFDs) an over-the-counter (OTC) type of trading that enables traders to speculate on the price of underlying financial markets without actually owning the asset by either taking a long (buy) or short (sell) position directly with the broker.

How to choose a CFD broker - ten things you need to consider

When choosing a CFD broker, you need to compare more than just costs. Here is an expert ten-step guide to the major points you should consider to help you find the most appropriate CFD broker for your CFD trading.

1. Make sure you understand what CFD brokers offer

CFD trading is speculating on financial markets with derivatives. Traditional investing involves paying outright for shares in companies, whereas with a CFD, you are entering into a “contract for difference” between the opening and closing prices of a position.

CFDs are a form of leveraged trading that enables traders to essentially buy more than they can afford by trading on margin. This means that instead of paying full price for £1,000 worth of shares, by using a 10% margin, traders can speculate on £1,000 worth of shares with £100 on the account. You do not own the underlying shares with CFDs but are buying or selling 1,000 CFDs instead of 1,000 shares. Your profit and loss on 1,000 shares will be equivalent to investing, but unlike buying physical shares, the amount you need to deposit with your broker will be less.

For example, if you buy 1,000 CFDs in a share worth £1, that position is worth £1,000. To do this, you will need to deposit an initial margin of 10% (£100).

If the share goes up by 10%, you make £100 profit, which is the equivalent of a 100% profit on your deposit. However, if the share goes down by 10%, you will have lost 100% of your deposit.

CFD trading is available to almost anyone who can access a broker online, including professional and retail traders. However, before opening a CFD account, you will have to demonstrate that you understand the risks involved.

Here's more about ECN brokers and STP brokers which may be of interest to more experienced traders

2. Compare the key features of what CFD brokers offer

When comparing CFD trading platforms, here are the main things you need to look at:

A CFD broker’s trading costs (commission/spreads)
The margin available (leverage)
What CFD markets you can trade (indices, forex, stocks, commodities & treasuries)
The regulatory status of a CFD broker
The cost of overnight financing rates
Retail versus professional account options

3. How to choose the cheapest CFD broker

The main things to consider when looking for the cheapest CFD broker are:

Cost per trade: When comparing CFD trading brokers, the cost of executing a trade is one of the most important factors. CFD brokers either charge commission for DMA trading, but more frequently for retail traders (private clients), CFD brokers charge by widening the spread. As a trader, you should consider how often you intend to trade, because if you are a frequent trader who is attempting to make lots of profitable trades, a CFD broker that is 10% more expensive will have a significant impact on your overall profit and loss.
Inactivity Fees: If you do not intend to be a regular trader then you need to consider if your CFD broker will charge you an inactivity fee. An inactivity fee is simply a fee that brokers will deduct from your account if you do not use it. There are compliance and regulator costs for CFD brokers to keep accounts open, so CFD platforms charge this fee to cover the cost of dormant accounts. Inactivity fees usually start at around £10 per month. Inactivity fees will stop when your account balance reaches zero, at which point, a CFD broker may automatically close your account if it has not been used in a while.
Overnight CFD Financing Charges: Overnight financing fees are charged in CFD trading when you hold a position overnight. Because essentially, a CFD broker is lending you money to trade. If you are trading on a 20% margin and want to trade £10,000 worth of shares, you will need to put down a £2,000 deposit as the initial margin. Then the broker will charge interest on the remaining £8,000. Some say these are hidden CFD charges as most traders don't notice them or even have any idea what they are being charged for. Here's an explanation of overnight trading fees and charges for CFDs & Spread betting.
Frequent CFD trader discounts: CFD traders who execute more frequently can sometimes expect a reduction in commission or spread prices. However, you will need to be doing significant volumes. Commission and spread discounts normally take the form of rebates. A frequent CFD trader rebate is when a CFD broker will refund some of the commission or spread you have paid over a month. CFD brokers tend to pay these in arrears as they are based on the previous month’s trading.

3. Choosing a CFD broker that offers DMA CFDs

The main advantage of DMA (direct market access) CFD trading is that you get better prices.

For normal investing, a stock broker will charge a commission after you buy shares, but for CFD trading, the commission is included in the spread. Unless you are trading DMA. DMA means direct market access, and your orders sit directly on the exchange. You get a clean price and your commission is added afterwards.

Being able to buy at the bid rather than the offer and sell at the bid rather than the offer can make a big difference to when you enter and exit positions.

4. Choosing a CFD broker based on margin and leverage

CFD trading margin is the deposit you have to have in your account to put on a trade.

It varies from broker to broker and the lower the margin requirements, the more exposure you can have with the least funds on the account. You can compare the CFD trading margin in our comparison table, but beware, the lower the margin, the riskier a trade, as you are leveraging your money sometimes up to 500 times.

So, if you have £1,000 on account, you could have £500,000 of exposure. If a price moves 10%, you have lost £50k, meaning that you owe the broker £49k. Many brokers now are introducing no negative equity protection, which means that you can never lose more than your account balance. Of course, this means that the leverage on offer will be reduced.

5. Choosing a CFD broker based on what markets can you trade

This means how much access your broker provides. The more the better, as you want flexibility when trading to give you as many opportunities as possible.

The major markets for CFD trading are:

Forex
Indices
Shares
Commodities
Treasuries

6. Choose an FCA-regulated CFD broker for CFD Trading

Never go with a broker that is not fully authorised and regulated by the FCA or some of your funds are not covered by the FSCS scheme. Most client funds are segregated now, but if your broker goes bust, provided FCA regulation and FSCS contributions are up to date, the Government will cover your deposit losses up to a certain point. You can view more information on the FSCS website here.

Here’s where to find a CFD stockbroker and how to spot brokers to avoid.

7. Understand how CFD brokers make money

When you open a CFD position, your CFD broker takes the opposite or opposing side of the trade. So, for example, if you choose to open a long (buy) position on 5,000 shares of ABC Inc. at $10.00 per share, your broker will incur a short position in 5,000 shares of ABC Inc. at $10.00 per share.

You and your broker are the counterparties to the CFD trade. The profit and loss, or exchange of cash flows in the trade, will be between those two counterparties and no one else.

The CFD provider has three potential sources of income.

Trading Revenue: it’s common for the broker to charge a commission or widen the spread around the market. If a broker offers DMA, CFD trading commission will be added post trade, otherwise, CFD commission will be built into the spread around the underlying market bid/offers.
Financing Charges: if CFD positions are held open overnight then a financing charge is applied and is typically set at a percentage above and below an interest rate benchmark. For example, funding might be set at + or - 2.50% over LIBOR. The mark-up over the benchmark creates another source or venue for the CFD broker. CFD traders pay to fund long positions overnight, and when interest rates are normalised, they can receive funding on their short positions. However, with interest rates at close to or even below zero, that tends not to be the case.
B-Book: if the broker opposes its client’s positions and does not hedge that exposure then the broker’s trading P&L will be the inverse of its clients, such that it will make money if they lose and lose if they profit. Whether the broker hedges its position or opposes them is a commercial decision. However, if we assume that brokers hedge, then having written a CFD to their client, the broker now has an equal and opposite position to them – shorts to their longs and longs to their shorts. In our hedged example, the broker will enter the exchange-traded market and trade against their position by selling stock against a long position (a client short position) or buying stock against a short (a client long position). If the broker purely acts as an agent however, then they will not hedge against a client’s short position in this way. Rather, they will sell stock in the market and borrow the stock from a third party, for a fee, to make delivery/settlement of the physical stock. If a stock is in demand, then additional fees may be incurred in borrowing the stock, and these may be passed on to the end client.

8. Understand the pros and cons of CFD trading

There are many benefits of trading CFDs, but there are drawbacks too. Here's a summary of the main pros and cons of CFD trading.

Pros of CFD trading	Cons of CFD trading
Leveraged trading	High-risk instruments
Trade long or short	No ownership or voting rights conferred
No stamp duty	May not rank equally for dividends or corporate actions
Low commissions	Not economic for long-term positions
No fixed expiry dates	Margin requirements + P&L swings can force traders out of positions prematurely
Cash settled	Profits are subject to UK Capital Gains Tax
DMA/online trading	Counterparty risk resides with the broker and not a clearing house or central counterparty
Daily funding
24-hour markets available

Trading CFDs offer numerous benefits when compared to other products.

First of all, they are leveraged products, which means that traders can take and hold larger positions in the market than they might otherwise be able to afford. CFD trades on UK and Irish equities attract no stamp duty, creating an immediate cost advantage when compared to trading physical stocks. This can be a material difference for those trading an active strategy.

Because CFDs are cash-settled and not deliverable contacts, traders can take long or short positions with equal ease.

Being able to trade on the short side opens up many more trading opportunities and allows traders to profit from or hedge against the effects of falling markets.

Because of the leverage in CFD contracts, traders do not need as much capital to trade CFDs as they would to trade comparable positions in physical stocks and shares. CFDs have no fixed expiry dates and are priced to reflect the cost of carry. This means that they are transparently priced and ideal for trading on a short-term basis.

CFDs opened and closed within a business day attract no overnight funding charges, though CFD positions held open over prolonged periods may prove to be uneconomic because of those daily funding charges.

CFDs on leading equity indices and some shares can be traded 24 hours per day, providing a further degree of flexibility to traders. And the larger CFD providers offer a near-global coverage, with thousands of instruments available.

Here's how to choose an equity CFD broker.

CFD trading offers low commission rates or sometimes a flat fee per deal, and active traders can receive rebates or reduced commissions, which can bring down the trader’s cost even further.

CFD trading is mostly conducted online using state of the art trading platforms that have charting, news flow, position and money management functionally built-in.

CFDs are leveraged derivatives and they are considered to be high-risk products because trading losses can, in theory, exceed initial deposits though UK retail benefit from negative balance, meaning they cannot incur losses larger than their deposits.

Before you can open a CFD trading account, you will need to demonstrate that you understand the risk involved and the way that CFDs operate. Clients need to remember that leverage can magnify trading losses just as easily as trading profits. CFDs offer no ownership of the underlying assets that the contracts are over and CFD traders take on the counterparty risk of their broker.

This means that if the broker fails, those contracts have no value. Retail CFD traders in the UK are however protected by the Financial Services Compensation Scheme up to the value of £85,000.

Whilst CFDs do not attract stamp duty, profits made through CFD trading are subject to UK capital gains tax, and traders need to allow for these liabilities and ensure they keep proper trading records.

CFDs are a highly flexible way to trade the financial markets, though they are not without their drawbacks and are not suited for use in long-term investment planning, and only risk capital should be used to trade them. That said, they can provide long-term investors with a way to hedge portfolio risk in periods of market volatility, and for traders to create market neutral pairs trading and spread strategies.

As with all geared derivatives, CFDs were designed to allow traders to diversify risk. The problems with them tends to arise when traders use them to concentrate risk instead.

9. The process of opening a CFD account

If you want to be a better CFD trader, our guide, How to trade CFDs, can give you an advantage by offering free tips, trading strategies and an overall understanding of what CFD trading involves.

The process for starting to trade CFDs is:

Compare CFD trading accounts: When you are comparing CFD accounts, it is a good opportunity to decide if you want to trade on margin with a CFD or a financial spread bet. Whilst both CFD and spread betting offer leveraged trading, there are some differences between the two (like tax, for instance). Read up on the key differences in What’s the difference between CFDs and spread betting?
Choose a CFD broker: Once you have decided that CFD trading may be for you, choose a CFD broker based on what is most important to you. The key things to consider when choosing a CFD broker are available markets, costs, fees, trading platform features and customer service. You can compare CFD brokers in the main comparison table or find broker reviews, which highlight what individual CFD brokers are good at.
Research a CFD trading strategy: Some very basic strategies can be valuable to new CFD traders, such as portfolio diversification, maintaining adequate risk capital and understanding the markets that you trade. Be careful when looking for CFD strategy information that you avoid CFD scams and beware of CFD educational providers, as many are only there to charge you for basic information.
Open your account: When you have picked a CFD broker and decided to open an account, you will have to demonstrate that you understand the risks involved in CFD trading during the application process. For AML (anti-money laundering) requirements, you will also have to supply identification documents and proof of address.
Pick your market / CFD trade type: Once your account is open and spending on what broker you have picked; you should have access to the global markets via CFDs. Decide what you want to trade by researching the underlying markets. The more you understand what you will be speculating on, the better chance you will have of success.
Deposit funds: Most CFD brokers offer deposits via card or bank transfer. Some offer deposits by services like PayPal. Card and bank transfer are usually the quickest and cheapest ways to fund your account. It’s important to note that due to AML, you can only withdraw funds back to the method you deposited from.
Making your first CFD trade: As CFD trading is high risk, it is sensible to start small and to not put all your eggs in one basket. By not risking all your capital on one trade, you will gain a gradual understanding of how the market moves and your positions react in a live environment. Trading with real money is very different from trading on a demo account.
Setting up stop losses: A major element of CFD trading is “protecting your downside”, which means using a stop loss to minimise your losses. A stop loss will automatically close a position at a level you set, even if you are not there to click the buy or sell button.

10. Our rankings of the best CFD brokers in the UK by category

Our CFD broker comparison tables display only UK CFD brokers that are properly regulated to offer CFDs to UK traders. Our rankings are based on extensive product testing and our industry survey, which measures customers’ satisfaction on 10 key CFD account features.

Best Overall CFD Brokers

Saxo Markets gets the top spot as the best overall CFD brokers, as they offer one of the OTC and DMA CFD trading on a very broad range of markets. Saxo Markets, as with CFD trading, is aimed more at semi-professional traders.

IG comes in a close second as it also offers DMA CFD trading, but is not quite as heavy-duty a trading platform.

CMC comes third as whilst they offer a very broad and competitive CFD product, there is no DMA CFD trading for stocks.

Best CFD brokers for beginners

As stated above, IG have an excellent CFD trading platform and offer access to a very broad range of markets. The platform is simple to use, with a clear layout. IG also have a reputation within the industry for having their clients’ interests at heart (as you read in our interview with the CEO, June Felix) and do not B-book clients (profit from client losses). If you are looking for your first CFD account, IG is a good place to start as they cater for all types of clients, from absolute beginners to hedge funds and institutional traders.

CMC Markets is also good for beginners as their platform is one of the most comprehensive around without being too institutional-based. The platform gives the feel of trading like a professional, but everything is easy to configure and there are some good sentiment tools for new traders to get an idea of what other CMC Markets customers are trading.

eToro, despite its reputation for being a bit trendy, is a fairly good platform to get started on. Toro offers a very wide range of markets to trade and the platform is quite user-friendly (almost to the point where it suckers you in). There are some very annoying features like only being able to trade in USD. So, if you buy a UK stock, your P&L will be in USD (eToro makes additional money on the foreign exchange conversion). There is a fairly large community of traders and you can opt to see (and copy) what other traders are buying and selling. However, it’s not a platform for serious traders. But if you want to dip your toe into CFD trading to see exactly how hard it is then eToro is worth considering before you graduate to a more sophisticated platform.

Best CFD brokers for professional traders

All three of these brokers have something in common – they all have their own proprietary trading CFD platform in that they built it themselves for their customers.

Saxo Markets is one of the best CFD brokers for professional traders, predominantly because their client base is generally more sophisticated than other CFD brokers. As such, their trading platform has been designed with professional traders in mind with DMA access, physical trading on a robust, institutional-grade platform.

Likewise, IG and Interactive Brokers (IBKR) both offer DMA trading and physical investing.

Whilst both IG and IBKR both offer institutional trading for hedge funds and professional traders, IBKR (as with Saxo Markets) also offers on-exchange futures and options trading, so comes in second and IG, third.

For more information on professional trading accounts, see our dedicated pro trader comparison page.

Best CFD brokers for Forex

CMC Markets won best forex brokers in our Good Money Guide 2020 awards on the basis that the entire brokerage was founded to trade forex and was one of the first to offer it to private clients. CMC Markets hasn’t lost focus over time and offers forex trading via CFDs on a wide range of markets with really tight spreads. If you only plan to trade outright forex CFDs then CMC Markets should give you everything you need.

Saxo Markets and IG have excellent forex trading offerings too, although whilst IG has a broad forex CFD universe, their spreads are a little wider.

See a detailed comparison of forex brokers in our comparison table.

Best CFD brokers for Commodities

Whilst every CFD broker under the sun will probably offer access to gold, silver and crude oil, a good CFD broker for trading commodities should also include the lesser traded softs and exotic commodities. IG has one of the broadest ranges of commodities trading via CFDs.

Saxo Markets and Interactive Brokers of course offer DMA commodities trading, but if you want the simplicity and flexibility of trading commodities via CFD then IG have an excellent offering. For a full breakdown of CFD brokers that offer commodities trading, view our comparison table.

Best CFD brokers for index trading

Index trading is fairly straightforward and is second only to forex trading in popularity, and IG is the original index broker; IG also offers CFD trading on over 80 global indices, as well as ETFs. Spreads are competitive and IG also offer index trading at the weekend on European, UK, Asian and US indices. IG offers CFD trading on over 80 global indices, as well as ETFs.

CMC Markets comes in a close second as their primary focus is Forex.

Saxo Markets are also a good choice for trading indices via CFD, and for more information, you can compare all brokers for trading indices here.

Best CFD brokers for UK Stocks

If you are trading UK stocks via CFD then IG is your best option because they offer some unique trading features that others don’t. For instance, you can trade CFDs on the grey market price of an IPO before it lists. IG offer out of hours trading on UK stocks, as well as CFD trading on smaller cap UK stocks.

Saxo Markets has a great offering for UK CFD trading and also the option (as with IG) to trade UK stocks via DMA.

Spreadex is also worth a look as they have recently launched CFDs (in addition to spread betting). Spreadex are a much smaller broker but offer personal traders who can work CFD orders on smaller stocks on request.

Best CFD brokers for US Stocks

If you are going to trade US stocks via CFD, you may as well do it with a US broker, and the best of the bunch is Interactive Brokers, AKA IBKR for short. IBKR was the pioneer of electronic trading (read up on them in our interview with Thomas Peterffy, the founder and CEO). While the Americans are not allowed to trade CFDs themselves, IBKR offer CFD trading through their UK office.

Saxo and IG are a close second and third as both brokers offer round the clock CFD trading on US shares. Both brokers offer DMA and out of hours trading, although IG pips Saxo to second place because of their presence in the US (albeit for forex trading only).

Best CFD brokers for MT4

MT4 brokers are a dime a dozen and there are so many terrible ones, to be honest. MT4 is the most popular trading platform out there because of its plug and play nature.

Pepperstone, one of the largest brokers globally, but HQ’d in Australia, offers MT4 and is worth a look as they won “Best MT4 broker” in our 2020 awards.

While not overly promoted, IG and Saxo also offer MT4 as a trading platform option, should you find their proprietary trading platforms not sufficient for your needs.

Best CFD brokers for options

CFD trading on options has grown in popularity as brokers try to compete on market coverage. Most CFD brokers offer a smattering of CFD options on the most popular traded instruments, but Saxo Markets stands out, with an excellent options board on a wide range of markets. For more information on brokers offering options trading, view our options broker comparison table.

Best CFD Brokers for market coverage

While you can trade more things with Saxo Markets overall, IG has one of the widest choices of markets to trade CFDs on. If you want to trade something unusual, Spreadex will also look at markets on request.

Best CFD brokers for trading platforms

Saxo Markets has the best platform for trading CFDs available to private clients. You can work a significant number of algo-based orders, as the CFD trading platform is designed with professional traders in mind.

IG’s CFD trading platform is a great all-rounder, and CMC Markets makes you feel a bit more like a pro with its easily configurable layout and trading tools.

Best CFD brokers for spread costs & margin rates

Margin rates are the same for every broker and spreads change every month. Many brokers run special promotions with reduced spreads. Whilst some have fixed spreads, no matter how wide the underlying markets, for example. For example, economic indicators like non-farm payrolls can make the market more volatile and widen spreads. Whereas, high market liquidity times like the open and close can mean that spreads are tightened. The general norm though is for brokers to offer spreads slightly wider than the underlying bid/offer to incorporate their commission.

Best CFD brokers for high net worth individuals and 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.

IG tops this list as they are a publicly listed CFD broker and offer DMA CFD trading and a personal service for larger clients.

Saxo Capital Markets is another good CFD broker for HNWs, as you can trade DMA, buy physical shares, bonds, and trade all sorts of exotic derivative products. They also have professional brokers available over the phone for trading if you want to work VWAP or other algo orders that may otherwise move the market if you did them yourself.

Best CFD brokers for research and technical analysis

Most 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. For example, some brokers like IG will provide lots of analysis tools, economic calendars, stock screeners and technical analysis signals. Whereas, others like Plus 500 will only provide a trading platform with no added value. 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 uses 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.

Here's where you can find out about 2020's award-winning brokers.

Can you lose more than you deposit from CFD trading?

Yes. If you have a professional trading account, you can lose more than your account balance. However, for traders classified as retail clients, there is negative balance protection, which means that your account is guaranteed to not go into negative equity.

How long can you hold a CFD trade open?

In theory, you can keep a CFD trade open indefinitely. However, as overnight financing charges can add up quickly, CFD trading is more of a short-term speculation tool or hedge rather than a product for long-term investing.

Is CFD trading taxable?

Yes. You have to pay capital gains tax on CFD trading profits. You can offset CFD losses against other investment profits.

What are STP CFD brokers?

STP means Straight Through Processing, which means that when you put an order in, it goes into the market and 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.

Which CFD brokers offer the tightest spreads?

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 consideration you make. You should also consider market range, customer service and trading platforms.

Which is the cheapest CFD broker?

There is no single answer to which is the cheapest CFD broker as there are too many contributing factors to accurately calculate which CFD broker is the cheapest.

What Does Leverage Mean on CFD Accounts?

CFD trading means investors can leverage their money (or capital) to increase their exposure by trading on margin. CFDs allow those investing to take larger positions than they would be able to do through traditional investing. The benefit is that your profits are multiplied. However, inversely, if you lose money, your losses are equally multiplied.

Do CFD brokers charge commission?

Widening the spread is equivalent to charging a commission. It is not normal for CFD brokers to charge private clients and retail traders a commission for CFD trading. Normally, it's only DMA (direct market access) CFD brokers that charge commission. One of the advantages of trading CFDs is that the commission is built into the price you buy and sell at, so there is no need for additional calculations to determine your profit and loss after the commission is charged. The disadvantage of this is that when trading CFDs, the bid-offer spread will be wider, so the market needs to move further before a trade turns profitable.

Why is the CFD Spread Important?

The tighter the spread, the better, as this reflects what your trading costs are. The spread is usually a fixed amount per share and for things like Forex and Index trading and is comparable to a percentage. For example, the spread on Vodafone shares could be 0.25% from the actual price, and this represents a commission of 0.25% on the value of the trade. Or if you are trading the FTSE 100 and the market price (or bid/offer) is 5801 (to sell), 5801.5 (to buy), a CFD broker may offer a spread of 5801 (to sell) and 5802 (to buy), which means they have widened the spread by 0.5. The size of the bid-offer spread quoted by a CFD broker is important because it has a big impact on the cost of your trading. If a CFD platform quotes spreads that are 0.5 points wide and you are trading 1,000 CFDs, the cost of each trade will be £5. So, if you trade 100 times over a year, you will have paid £500 in dealing costs. But, if that spread is 1 point instead of 0.5 points, you will have paid £1,000 in spreads. The difference of £500 can have a significant impact on your profit and loss.

How important is CFD spread width when trading CFDs?

As you have to sell at the lower bid price and buy at the higher offer price, the closer the two prices are, the less the market has to move in your favour before you can lock in a profit. If you are scalping the market and trying to make lots of small, profitable trades, the tightness of a spread can make all the difference between success and failure. Essentially, narrower spreads mean quicker potential profits and wider spreads mean greater price changes needed to make a profit.

Do I need a DMA (direct market access CFD) broker?

If you’re a professional trader dealing in significant sizes and frequently, you will get much better execution prices if you deal through a DMA CFD broker. As the commission is charged after a DMA CFD trade, it is easier to make small, profitable trades as the bid/offer spread is tighter. However, you will have to calculate your commission in your P&L as it may turn a profitable trade into a loss. DMA CFD brokers are usually only suitable for clients that qualify for institutional traders or private clients with professional account status, who have a thorough understanding of CFD trading.

How to check if a CFD broker is 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.
Closeout 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 that 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.

Can US residents trade CFDs?

Unfortunately, you can't trade CFDs in the US. Derivatives trading in the US needs to be done on regulated exchanges. As CFDs are an OTC (over the counter) product, they are not allowed and are illegal to offer to US residents. Therefore, if you want to trade on margin, you must do it with either futures, options or through a broker that offers margin trading. 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. The US equivalent of CFD trading is margin trading. Margin trading in the US is where a broker lends you money to buy shares. So, unlike CFDs, where you are not buying shares but taking out a “contract for difference” with US margin trading, you are paying full price for the shares you want to buy. You will need to put down some initial margin of (for example) 25%. Then the broker will lend you the rest of the money for the purchase. For instance, if you want to buy $1,000 of Apple shares, you will need to put down $250 and the broker will lend you the other $750. You cannot withdraw money a US broker lends you and you pay daily interest on what you borrow.

What's the difference between CFD trading and spread betting?

Spread betting and CFDs are fairly similar in some respects but very different in others. The key similarities for both financial spread betting and CFD trading are:

You can go long and short
You can trade on margin
Both are OTC derivative products
Both are regulated by the FCA
Both are a high-risk investment product

The key differences between CFD trading and financial spread betting are:

Spread betting is free from capital gains tax, CFDs profit and losses are taxable
With spread betting, you bet a certain amount per point move
With CFDs, you buy an equivalent amount of CFD as you would shares
CFDs are available to international clients
Financial spread betting is unique to the UK

Here's more information on the difference between spread betting and CFD trading.

Where can I find CFD Broker reviews?

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 as we ask three very simple questions:

What do they do?
How much do they cost?
Are they any good?

Our CFD broker review includes interviews with CFD broker CEOs and the results of our customer satisfaction surveys, which rank brokers based on:

Pricing
Markets
Size
Customer service
Trading platform
Margin rates
Educational material
Trading tools
Reliability

You can read reviews of the major CFD brokers here: ● IG review ● CMC Markets review ● Pepperstone review ● Saxo Markets review ● Interactive Brokers review ● Spreadex review ● XTB review ● ETX Capital review ● eToro review ● Plus 500 review ● City Index review ● Fineco review

Should I use an advisory CFD broker?

Advisory CFD brokers used to be quite common when it was harder to open a CFD account. Before CFDs became available to all private clients, investors wishing to trade CFDs would have to prove that they understood the risks involved. As CFDs were mainly offered to sophisticated investors, the regulators were less concerned with the fact that advisory CFD brokers offered little added value to traders. However, CFDs are a very high-risk product and clients must understand the risks involved before opening an account. Over the years, the FCA has clamped down on advisory CFD brokers providing advice and hardcore 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.

Can you make money trading CFDs?

If you want to be a profitable CFD trader then 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-known 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. Here's where you can find out more about how to trade CFDs.

What are the basic rules for trading CFDs?

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
Don't trade with more than you can afford to lose

You should not risk money by trading CFDs that you need for something else. CFD trading is high risk and there is a high probability that inexperienced traders will lose money quickly. CFD trading can successfully form part of your overall investment portfolio. Around 10% is a suitable percentage to assign to high-risk investments. It’s important to budget and balance your portfolio to include a range of diversified low, medium and high-risk investments, with a larger portion being allocated to medium and low-risk, long-term investment products such as tax-efficient SIPPs and stocks and shares ISAs. If you only have a small amount of money to invest and choose to trade it all through CFDs, there is a large chance that your entire risk capital will be eroded as you learn to trade CFDs.

Run your profitable trades: Managing a position is one of the most challenging aspects of trading CFDs. CFD traders are often too keen to take small profits, rather than keep a winning position alive. Using trailing stop losses can be effective in running profitable positions as the market moves in your favour. If you buy as the market is going up (or go short as the market is going down), it is more profitable to keep the position open and ride the trend as far as you can.
Cut your losing trades quickly: Another key mistake that CFD traders make is to let losses increase without closing a position in the hope that the market will turn around. When trading, it is good practice to have a loss limit in place so that your profitable trades are not wiped out by a large loss. If you have a losing position, consider closing it and re-evaluating the market and trying again when the market is looking more predictable.
Use stop losses to minimise risk: Using a stop loss means having a level in the market where your position is automatically closed to minimise loss. Stop losses are triggered automatically, even when you are not in front of your trading platform. The benefit of using stop losses is that you limit your downside risk (loss) on a position automatically and protect your account balance. Some CFD brokers offer guaranteed stop losses, which trigger even if the market crashes, and guarantee to give you your stop price, regardless of slippage.
Combine technical and fundamental analysis before trading: The two most common forms of generating trading ideas are fundamental and technical analysis. Fundamental analysis means looking at the financial health of a business or economy. Technical analysis means looking at charting patterns of markets to see what has happened in the past and what is likely to happen in the future. The benefits of technical analysis are that it is somewhat self-fulfilling in that in the most liquid CFD markets, traders are looking for similar patterns and will trade when they occur, potentially moving the market. It is more popular in short-term trading. Fundamental analysis can be used to trade around economic indicators if you disagree with the consensus before the data is announced. Fundamental analysis is more popular for longer-term investing. For more information, read our guide on the difference between technical and fundamental analysis.

What is CFD trading video discussion transcript

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? No. 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? Yeah. 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. Thank you.

Broker	Expert & User Reviews
IG	IG Reviews See Offer Your capital is at risk. 70% of retail CFD accounts lose money
CMC Markets	CMC Markets Reviews See Offer 67% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider
Pepperstone	Pepperstone Reviews See Offer 79.3% of retail investor accounts lose money when trading spread bets and CFDs with this provider
City Index	City Index Reviews See Offer 74% of retail investor accounts lose money when trading CFDs with this provider
ETX Capital	ETX Capital Reviews See Offer 69% of retail investors lose money when trading spread bets and CFDs with this provider
Spreadex	Spreadex Reviews See Offer 69% of retail investors lose money when trading spread bets and CFDs with this provider
Saxo Markets	Saxo Markets Reviews See Offer 70% of retail investor accounts lose money when trading CFDs with this provider

What is a CFD broker?