7 Best CFD Brokers Online in 2024 – An Expert Guide
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If you want to elevate your trading experience, avoiding most retail traders who lose money when using a CFD trading platform is crucial. CFD trading is notorious for being an imbalanced playing field in public markets. The efficiency level and overall experience can vary significantly from trader to trader.
Choosing one of the top-rated CFD trading platforms is essential to navigate this risky and inconsistently regulated space. These platforms collaborate with reputable CFD brokers and serve as your reliable partner.
7 Best CFD Brokers
- IG – Best CFD Broker Overall
- Interactive Brokers – Best for Professionals
- CMC Markets – Best Platform Technology
- Saxo Bank – Best Web-Based Trading Platform
- XTB – Great Research and Education
- Plus500 – Best for Experienced CFD Traders
- eToro – Best for Transparent Fees
IG – Best CFD Broker Overall
IG provides a comprehensive trading package with top-notch trading tools, extensive research resources, and a wide range of tradable markets. As a reputable multi-asset broker, IG is publicly traded and regulated globally.
Besides offering nearly 20,000 CFDs (Contracts for Difference), IG also allows residents of the U.K., Germany, and Australia to access international stock exchanges through exchange-traded securities (non-CFDs).
If you’re interested in forex options, IG has you covered with their offering of exchange-traded Turbo warrants as part of Spectrum, their Multilateral Trading Facility (MTF) in Europe. For those looking for listed derivatives in the U.S., IG partners with Tastytrade. Eligible clients can also consider IG Bank in Switzerland as an option.
- Exceptional platforms and tools
- Over 19,000 tradable instruments
- Competitive pricing
- The absence of predefined layouts on the flagship web platform
- Restricted product range on MT4
Interactive Brokers – Best for Professionals
Interactive Brokers is an esteemed broker that offers a wide variety of tradable markets across different asset classes. Its trading platform suite is modern and institutional-grade, while its research and education offerings are of high quality. Interactive Brokers boasts competitive fees that make it a popular choice among traders.
The company was established in 1977 and has since been publicly listed on NASDAQ as IBKR. It operates under the regulation of nine Tier-1 jurisdictions, which adds to its credibility as a trustworthy and well-capitalized broker with Ending Client Equity worth USD 373.8 billion and Equity Capital amounting to USD 10.01 billion.
- Sturdy platform designed for professional traders
- Extensive selection of global markets
- Comprehensive research offerings
- The Trader Workstation platform may be too complex for novice traders
CMC Markets – Best Platform Technology
With its exceptional pricing and extensive range of over 12,000 tradable instruments, CMC Markets has earned a solid reputation worldwide for providing an outstanding trading experience. As a prominent player in the low-cost forex trading sector, CMC Markets offers notably lower trading costs than other industry leaders.
For active traders, competitive pricing options are available; however, eligibility for discounts and rebate programs depends on your country of residence and relevant regulations. The Next Generation platform by CMC Markets boasts an extensive array of over 12,000 tradable instruments.
- Economical trading expenses
- Superb web and mobile platforms
- Strong research resources
- There’s room for improvement in educational offerings
Saxo Bank – Best Web-Based Trading Platform
Saxo Bank stands out as a top-tier broker, offering a wide range of assets and an exceptional trading platform. With an impressive collection of over 40,000 securities and access to over 70,000 instruments (including crypto derivatives and forex options, depending on your location), Saxo Bank provides ample opportunities for traders.
The flagship platform, SaxoTraderGo, seamlessly integrates the excellent web-based experience across all devices. It’s user-friendly and equipped with all the tools to navigate the market effectively.
Saxo Bank’s mobile app, SaxoTraderGO, is highly regarded among traders and competes with other leading forex brokers like IG, CMC Markets, and TD Ameritrade (available to U.S. citizens).
- The flagship platform is of the highest quality
- Over 40,000 tradable instruments
- Exceptional customer service
- Elevated minimum deposit
XTB – Great Research and Education
XTB, a reputable broker in multi-asset trading, is renowned for its exceptional customer service and wide range of offerings, including forex and CFDs.
With an emphasis on delivering an outstanding trading experience, XTB has gained recognition for its top-notch xStation 5 trading platform, which boasts a user-friendly design and cutting-edge features. In addition, XTB’s comprehensive educational resources and research earned them the title “Best in Class for Research” in 2023.
Clients of XTB can access a diverse portfolio of investment options, including CFDs on 1,848 stocks, 135 ETFs, 22 commodities, 36 indices, 5 cryptocurrencies, and 57 forex pairs.
XTB extends its securities offering to encompass nearly 7,800 cash equities (non-leveraged) and 150 ETFs. However, this selection isn’t available through branches in the U.K. or Cyprus. An overview highlighting the various investment products accessible to XTB clients is provided below:
XTB presents two types of accounts: a spread-only Standard account and a commission-based Professional account. The latter option is exclusive to clients who meet specific criteria as elected Professionals within the U.K. and Europe. Regarding pricing, XTB falls within industry averages but falls short compared to leading brokers in this category.
- The xStation 5 platform stands out in the industry
- A comprehensive array of trading tools
- Exceptional customer service
- Pricing falls within the average range
Plus500 – Best for Experienced CFD Traders
Plus500, a specialized CFD brokerage firm, provides traders with an extensive range of options for CFD trading in stocks, forex, commodities, ETFs, options, indices, and cryptocurrencies. The platform offers over 2k instruments to choose from in its portfolio.
Users can access Plus500’s proprietary web trading platform, WebTrader, or its apps on iPhone/iPad, Android devices, and Windows-based computers.
Unlike other firms that charge a commission on trades made by users on their platforms, Plus500 doesn’t do so but makes money through spreads. Additional fees, such as an overnight funding fee and a $10 inactivity fee, are charged to users’ accounts by the firm.
They can set up a 0.7% currency conversion fee if you have trades involving currencies different from your account’s currency or when using a guaranteed stop order.
To ensure seamless user experience across diverse geographies worldwide, this brokerage firm offers customer support services in up to thirty-two languages via its website-specific FAQ page, which has an online form for asking questions not addressed by FAQs section along with round-the-clock availability of professional online support team to assist you with any issues that might arise while using the platform.
- Tight spreads with no commissions
- Authorized to operate under the oversight of six regulatory bodies
- Round-the-clock customer support is available in 32 languages
- Intuitive and responsive trading app
- Exclusive to derivative trading
- Limited educational resources
eToro – Best for Transparent Fees
eToro is known for its streamlined approach, particularly regarding its CFD trading tools. This is precisely why eToro stands out as the top choice for beginners interested in CFD trading.
In addition to its user-friendly app (which our editorial team has rated as the best stock trading app), eToro offers an extensive variety of stock and crypto CFDs. If you’re a long-term crypto investor, holding these assets in a retirement account may be more beneficial.
One of the standout features of eToro is its uniform and transparent fee structure. This makes it easier for traders at any level, not just beginners, to incorporate fees into their overall trading strategy when dealing with these high-risk products.
eToro’s Social Trading functionalities offer a valuable framework for novice CFD traders looking to adopt this complex strategy. By engaging with the extensive social network on eToro, users can learn from seasoned traders who freely share their trade ideas and experiences. This allows new traders to gain insights and guidance on implementing the strategy effectively.
- Intuitive trading platform
- Simulated trading (paper trading)
- Extensive selection of tradable CFDs
- Competitive and transparent CFD rates with a standardized fee structure
- Exclusive support for USD accounts
Our Ranking Methodology for the Best CFD Brokers
Choosing the optimal broker for CFD (Contract for Difference) is a pivotal choice for traders and investors. CFDs are financial derivatives that enable speculation on price fluctuations of different instruments without actual ownership of the underlying assets.
To select the finest CFD broker, we examined various essential aspects. Below is a comprehensive analysis outlining our selection criteria in detail.
- Regulation and Licensing: Ensuring the CFD broker is regulated by a reputable financial authority is critical. Regulatory bodies such as the Financial Conduct Authority (FCA) in the UK or the U.S. Commodity Futures Trading Commission (CFTC) offer investor protection and enforce stringent rules and standards.
- Asset Selection: We evaluated the broker’s range of assets available for CFD trading. A good broker should offer access to a diverse set of instruments, including stocks, indices, commodities, currencies, and cryptocurrencies, enabling the creation of a diversified portfolio.
- Trading Platform: The trading platform serves as your primary interface for executing trades. It should be user-friendly, reliable, and equipped with essential tools and features for technical analysis. While MetaTrader 4 (MT4) and MetaTrader 5 (MT5) are popular, proprietary platforms can also be excellent.
- Trading Costs: Evaluating the cost structure, including spreads, commissions, and overnight financing fees (swap rates), is essential. Lower trading costs can significantly impact overall profitability.
- Leverage: Leverage allows control of a larger position with less capital. While it can magnify profits, it also increases the risk of substantial losses.
- Risk Management Tools: The broker should provide risk management tools, such as stop-loss and take-profit orders, guaranteed stop-loss, and negative balance protection, to help manage positions and limit potential losses.
- Research and Analysis Tools: Accessing real-time market data, charting tools, technical and fundamental analysis resources, and economic calendars is crucial for making informed trading decisions.
- Customer Support: The quality and availability of customer support were assessed. Responsive and knowledgeable customer service can be invaluable in resolving issues or obtaining assistance with trading-related queries.
- Deposit and Withdrawal Methods: Ensuring the broker offers convenient and secure deposit and withdrawal options, considering transaction fees and processing times, is important.
- Education and Research: Many top CFD brokers provide educational materials, webinars, and research reports to help traders improve their skills and stay informed about market developments, which can be especially beneficial for beginners.
- Mobile Trading: The popularity of mobile trading apps has risen. Checking if the broker offers a reliable mobile app compatible with your device’s operating system is essential.
- Order Execution and Slippage: Reliable order execution and minimal slippage are crucial for CFD trading. The broker should provide a transparent order execution policy and aim to fill orders at the requested prices.
- Reputation and Reviews: Reading reviews and seeking feedback from other traders helps gauge the broker’s reputation. Looking for any history of regulatory violations or unethical practices is advisable.
Best CFD Brokers – Buyer’s Guide
What Are CFDs?
CFDs are financial instruments that mirror the value of underlying assets or securities. A CFD transaction occurs when a trader agrees with their broker to purchase or sell a specific underlying asset or security at a predetermined price. The aim of this transaction is to speculate on potential price changes within the timeframe between the agreement’s formation and expiration (or closure).
As the value of the underlying asset fluctuates, the CFD trader will encounter either an unrealized gain or an unrealized loss (or none if there’s no change in price). Profits are only realized if the trade is closed while still profitable (similarly, losses are realized if unprofitable upon closing).
To illustrate, let’s consider a scenario where a trader acquires a CFD on the EUR/USD currency pair. If the contract price rises above their initial purchase price, their unrealized profit would equal the difference between these two prices (excluding any associated trading costs).
Let’s talk about losses momentarily: It’s crucial to remember that actual losses can intensify if a margin call or an interruption in a stop-loss order occurs. This increased risk arises because CFDs are traded through a margin account, which has the possibility of accumulating a negative balance as leverage is used.
Short CFD Trading
In the realm of CFD trading, there exists a strategy known as “going short.” This approach involves opening a CFD position that generates profit when the market value of the underlying asset decreases. It entails speculating on potential losses rather than gains. Another term for this strategy is “selling.”
Long CFD Trading
When engaging in long CFD trading, also known as “going long,” you can start a conventional CFD trade. This trade becomes profitable when the market experiences a price increase. When you choose to “go long,” you’re making a purchase.
How Are CFDs Different From Stocks?
When you buy a stock using your broker’s trading platform, the broker holds the shares or share certificates in your name. This means that as the official shareholder, you have certain privileges and rights, including voting and taking part in proxy meetings. You become eligible to receive any potential dividends.
However, CFD traders don’t have these same ownership rights. When you purchase a CFD through a trading platform, you’re not actually buying or taking possession of the underlying asset itself. Instead, CFDs are financial instruments that track the price movements of an underlying asset like stocks.
- Leverage: While certain traders, such as pattern day traders in the U.S., may have access to a certain leverage when trading shares (up to 4:1). Most times, leverage is unavailable when trading cash equities (stocks). CFDs operate differently. In the EU, for instance, CFD traders can leverage up to 5:1 (reminder: CFDs aren’t available for trading in the U.S. or for U.S. residents).
- Risk: Unlike trading or investing in traditional underlying stocks, where it’s unlikely to see your portfolio plummet to zero, this isn’t the case with share CFDs. CFDs are tradable instruments that come with significant risk, and a majority of retail CFD traders incur losses.
Leverage introduces additional risk not present when trading underlying stocks. When trading CFDs, knowing the potential for significant risk exposure is imperative.
How Are CFDs Different From Forex?
The primary distinction between CFDs and forex (foreign exchange) lies in their classification. While CFDs are considered a financial instrument, forex is categorized as an asset class.
When engaging in CFD trading, investors speculate on the price movements of various asset classes without actually acquiring ownership of the underlying assets. Conversely, forex traders can take possession of physical assets (in this case, currencies) under certain circumstances.
CFDs function as derivative instruments that mirror the price fluctuations of underlying assets or securities but don’t involve physical delivery. As a result, all CFD transactions are settled through cash payments and don’t allow for the actual delivery of any underlying asset.
In specific instances within spot forex trading, traders can choose to receive the actual asset they have purchased (currency). For instance, if a trader buys EUR/USD with delivery capabilities, they will pay for the transaction using U.S. dollars and subsequently receive euros in their account.
If a CFD trader purchases EUR/USD, they cannot physically acquire any currency. Their only option is to close their position by selling an equivalent amount of EUR/USD to exit their trade.
In numerous instances, CFDs and forex exhibit similar behavior. Most retail forex trades resemble CFD trades because they’re settled in cash. Retail forex traders don’t physically possess assets or real currency.
It’s important to note that both non-deliverable forex and forex CFDs come with risks, and the level of regulatory protection may differ based on your jurisdiction or country of residence.
Pros & Cons of CFD Trading
- CFD traders have access to diverse markets, including instruments that may not typically be available in your country of residence
- In CFD trading, you can go long or short, making opening a short (sell) position relatively easy
- Most CFD trades are executed promptly, reducing the risk of slippage (depending on your trading account and order type)
- CFD trading platforms feature low trading fees and commissions
- Using leverage from a margin account in trading is risky, potentially losing your entire balance when trading CFDs
- CFD traders face overnight fees when holding a position overnight, commonly called carry charges
- CFD traders hold a contract rather than ownership of the underlying asset
- CFD trades are subject to capital gains tax
Are CFDs Legal in the U.S.?
CFDs aren’t allowed to be traded by residents of the United States as they’re considered a derivative in the country. They must comply with the regulations set forth by the Commodity Futures Trading Commission (CFTC) for licensing purposes. However, non-U.S. residents may engage in CFD trading through forex brokers’ platforms if said brokers accept clients from their country of origin.
U.S.-based traders who wish to participate in forex trading must work with a broker regulated within their home country (you can find these brokers using our guide on Best U.S. Forex Brokers).
Can CFD Trading be Profitable?
Indeed, it’s workable to achieve profitability in CFD trading. However, it’s crucial to acknowledge the fact that a large majority of CFD traders experience losses annually. Many CFD brokers openly share their data, which supports this notion. Many of the leading CFD brokers caution that over 70% of retail CFD accounts incur losses yearly (sometimes, this figure exceeds 80%).
The key to success as a CFD trader is consistently generating profits over many trades and extended periods. This can be accomplished by adopting trading styles that mitigate risk and implementing strategies to minimize average losses relative to average profits (although executing this is easier said than done).
To thrive as a CFD trader, it’s essential to have a clearly defined and consistent trading strategy for handling CFDs, along with an effective risk management plan. Selecting the most suitable CFD platform for your specific trading strategy would be prudent, ideally, one that offers an extensive range of tools and features.
Is CFD Trading a Good Idea for Beginners?
CFDs may not be ideal for beginners due to the additional risk of trading with leverage using a margin account. Trading from a margin account carries more risk than traditional investing, regardless of whether you’re trading CFDs, forex, or other derivative products.
Utilizing leverage can amplify both the potential reward and the risk of your investment capital and may even result in a negative balance (although this is rare).
If you already have experience with conventional investments such as stocks or ETFs and wish to learn how to trade using a margin account, starting with a demo account can be beneficial. Demo accounts allow traders to experiment and become familiarized with trading software without putting their investment capital at stake. The software used is similar. However, in a demo account, virtual funds are utilized, whereas in a “live” account, real money is deposited into the account.
What Can You Trade With CFD Brokers?
CFD brokers provide a diverse selection of financial instruments for trading. Among the top assets available for trading with CFD brokers are:
- Stocks: CFD brokers grant access to a diverse range of stocks from global markets, encompassing well-established blue-chip stocks, smaller-cap equities, and even penny stocks.
- Indices: Through CFD brokers, you can trade popular stock indices like the S&P 500, NASDAQ 100, FTSE 100, and DAX 30, among others.
- Forex: CFD brokers facilitate trading in the foreign exchange market, offering a multitude of currency pairs, including major pairs like EUR/USD, GBP/USD, and USD/JPY.
- Commodities: CFD brokers enable traders to speculate on the price movements of commodities, such as precious metals like gold and silver, energy commodities like crude oil and natural gas, and agricultural products like wheat, soybeans, and corn.
- Cryptocurrencies: CFD brokers provide access to the dynamic realm of cryptocurrencies, allowing you to trade popular digital assets like Bitcoin, Ethereum, Ripple, and various other cryptocurrencies.
It’s crucial to acknowledge that when participating in CFD trading, leverage is a factor and there can be substantial risks to your capital. Before entering into CFD trading with a broker, it’s essential to have a thorough understanding of the risks involved and consider seeking professional guidance if necessary.
What to Look for in a CFD Broker?
When selecting the appropriate CFD broker, consider various aspects such as regulation, expenses, tradeable asset categories, and the availability of trading platforms.
To safeguard your funds from potential internal fraud or bankruptcy, verifying that the broker you’re considering is regulated by the appropriate regulatory agency in their respective jurisdiction is imperative. For instance, in the United Kingdom, the Financial Conduct Authority (FCA) serves as the regulatory agency; in Australia, it’s the Australian Securities and Investments Commission (ASIC).
Cost of Trading
CFD trading incurs various costs such as spread, holding costs, commission, and potentially more depending on the chosen broker.
The spread refers to the disparity between the buying and selling prices in the order book. A narrower spread means that price movement needs minimal to gain profit or incur a loss if it moves against your favor.
Every trading day ends with potential charges called holding costs for positions open in your account. A separate commission charge will apply when engaging in CFD trades. Consider the ease of depositing and withdrawing funds. The availability of multiple funding options from your broker is preferable.
Broad Tradable Asset Classes and Markets
A diverse range of tradable asset classes and markets provides an excellent selection. You can trade various underlying assets such as stocks, indexes, commodities, currencies, cryptocurrencies, and ETFs.
Find a CFD trading platform that provides user-friendly CFD software, swift execution, top-notch trading tools, a pleasant trading experience, and an efficient order management system.
If the interface is subpar and navigation proves to be challenging, there’s a risk of missing out on potential profits. The platform must prioritize security while allowing you the freedom to execute various types of orders.
Best CFD Brokers – Frequently Asked Questions
How Should I Choose the Best CFD Trading Platform for Me?
Finding the ideal CFD trading platform relies on your whereabouts and the regulations set by your broker. For seasoned CFD traders, Interactive Brokers stands out as the top choice for a CFD broker, while eToro emerges as the optimal pick for novice traders.
Are CFD Brokers Legit?
CFD brokers are considered legitimate in most countries. However, CFD trading regulations and laws differ from country to country. This particular financial instrument is prohibited in the United States.
How Do I Choose a CFD Broker?
Begin by verifying the broker’s regulatory standing to ensure their operations are within a trusted regulatory framework. Evaluate trading costs, offered assets, leverage alternatives and customer assistance.
Additionally, read reviews and consult experienced traders for recommendations to assess the broker’s reputation. Your selection must align with your trading objectives, risk tolerance level, and the specific CFD markets you plan on engaging in.
Selecting the most suitable CFD broker holds great importance for traders, with significant factors to consider, such as regulatory supervision, range of assets available, user-friendly trading platforms, cost structures, risk management tools, and research materials.
It’s crucial to bear the inherent risks involved in leveraged CFD trading and employ responsible risk management techniques to safeguard your investment. Ultimately, making an informed decision on a CFD broker that aligns with your trading style and objectives serves as the foundation for a successful journey in trading.