How Can You Choose the Best CFD Broker

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Contents

Top 10 CFD Brokers – April 2020

Find the best CFD Broker for you & Start trading instantly!

Advertiser Disclosure

Understanding CFD Trading

CFDs are traded between traders and providers. Every provider has their own terms so there are no standard contract terms. However, many CFD providers share similarities in their contract terms. A CFD begins by opening a trade on a specific instrument – this establishes a position in that financial instrument and there is no expiration date. When the position is closed, the difference between the closing price and opening price is paid. This is either a profit or a loss. The CFD may charge fees including commission, big-offer spread, account management and overnight financing.
While CFDs do not expire, positions that are open overnight are rolled over. This means that any profit or loss is realized and is credited to the trader. CFDs are traded with margin and traders must keep a minimum margin level at all times. A common feature in CFD trading is that loss, profit and margin requirements are constantly calculated in real time and can be seen by traders. If the amount of funds in the trader’s account decreases to a level that is below the minimum margin level then margin calls may be made.

How to choose a CFD broker?

A CFD (Contract for Difference) is a derivative trading instrument. With CFDs, you simply speculate on the price movements of financial assets. There are multiple markets to trade including indices, equities, currency pairs, commodities and bonds.

Choose regulated cfd brokers

Unregulated CFD brokers are dicey propositions. Avoid them and choose online trading brokerages that have full licensing and regulation. CySEC (Cyprus Securities and Exchange Commission) is a popular regulatory authority.

  • Trading Platforms

CFD trading is conducted online. Traders have a preference for high quality trading platforms such as MetaTrader 4, WebTrader, mobile trading options for Android and iOS, as well as proprietary trading platforms tailored to the broker in question.

  • Available account options

Ideally, you want access to multiple account options. Each trader requires a unique set of options including minimum and maximum deposits, personalised support, educational resources, and exclusive trading opportunities. Competitive spreads, leverage and range of payment processing options are important for CFD trading.

  • Educational tools for CFD trading

The best CFD traders are the ones who understand market dynamics. CFD brokers can perform an invaluable service by providing their clients with access to the finest charting tools, market updates, economic calendars, expert financial insights, signal indicators, webinars and a comprehensive FAQ database.

Compare CFD Brokers

For our cfd’s comparison, we found 22 brokers that are suitable and accept traders from Russian Federation.

We found 22 broker accounts (out of 147) that are suitable for CFD’s.

Spreads From

What can you trade?

  • Forex
  • Crypto currencies
  • Indices
  • Commodities
  • Stocks
  • ETFs

About XTB

Platforms

  • MT4
  • MT5
  • Web Trader
  • Mobile App

Funding Methods

  • Credit cards
  • PayPal
  • Bank transfer

75% of retail investor accounts lose money when trading CFDs with this provider.

Read our in-depth XTB review

AvaTrade

Spreads From

What can you trade?

  • Forex
  • Crypto currencies
  • Indices
  • Commodities
  • Stocks
  • ETFs

About AvaTrade

Platforms

  • MT4
  • MT5
  • Web Trader
  • Mobile App

Funding Methods

  • Credit cards
  • PayPal
  • Bank transfer

71% of retail investor accounts lose money when trading CFDs with this provider.

Plus500

Spreads From

What can you trade?

  • Forex
  • Crypto currencies
  • Indices
  • Commodities
  • Stocks
  • ETFs

About Plus500

Platforms

  • MT4
  • MT5
  • Web Trader
  • Mobile App

Funding Methods

  • Credit cards
  • PayPal
  • Bank transfer

76.4% of retail CFD accounts lose money

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Spreads From

What can you trade?

  • Forex
  • Crypto currencies
  • Indices
  • Commodities
  • Stocks
  • ETFs

About IG

Platforms

  • MT4
  • MT5
  • Web Trader
  • Mobile App

Funding Methods

  • Credit cards
  • PayPal
  • Bank transfer

68% of retail investor accounts lose money when trading spread bets and CFDs with this provider

Read our in-depth IG review

Forex.com

Spreads From

What can you trade?

  • Forex
  • Crypto currencies
  • Indices
  • Commodities
  • Stocks
  • ETFs

About Forex.com

Platforms

  • MT4
  • MT5
  • Web Trader
  • Mobile App

Funding Methods

  • Credit cards
  • PayPal
  • Bank transfer

69% of retail investor accounts lose money when trading CFDs with this provider

Axitrader

Spreads From

What can you trade?

  • Forex
  • Crypto currencies
  • Indices
  • Commodities
  • Stocks
  • ETFs

About Axitrader

Platforms

  • MT4
  • MT5
  • Web Trader
  • Mobile App

Funding Methods

  • Credit cards
  • PayPal
  • Bank transfer

68.5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

eToro

Spreads From

What can you trade?

  • Forex
  • Crypto currencies
  • Indices
  • Commodities
  • Stocks
  • ETFs

About eToro

Platforms

  • MT4
  • MT5
  • Web Trader
  • Mobile App

Funding Methods

  • Credit cards
  • PayPal
  • Bank transfer

62% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

XM Group

Spreads From

What can you trade?

  • Forex
  • Crypto currencies
  • Indices
  • Commodities
  • Stocks
  • ETFs

About XM Group

Platforms

  • MT4
  • MT5
  • Web Trader
  • Mobile App

Funding Methods

  • Credit cards
  • PayPal
  • Bank transfer

71.6% of retail investors lose money when trading spread bets and CFDs with this provider.

City Index

Spreads From

What can you trade?

  • Forex
  • Crypto currencies
  • Indices
  • Commodities
  • Stocks
  • ETFs

About City Index

Platforms

  • MT4
  • MT5
  • Web Trader
  • Mobile App

Funding Methods

  • Credit cards
  • PayPal
  • Bank transfer

72% of retail investor accounts lose money when trading CFDs with this provider

EasyMarkets

Spreads From

What can you trade?

  • Forex
  • Crypto currencies
  • Indices
  • Commodities
  • Stocks
  • ETFs

About EasyMarkets

Platforms

  • MT4
  • MT5
  • Web Trader
  • Mobile App

Funding Methods

  • Credit cards
  • PayPal
  • Bank transfer

83% of retail investor accounts lose money when trading CFDs with this provider.

Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data.

The Ultimate Guide to

Choosing a CFD Trading Platform

  • Written by Marcus Taylor
  • Founder & CEO

Contracts for difference (CFDs) enable you to trade thousands of assets without needing to own the underlying asset. This means you can easily go long or short on instruments like cryptocurrencies and stocks without needing a crypto wallet or a share dealing account.

In addition to the wide range of instruments offered, CFD platforms typically allow you to trade on margin, which means you could execute a £1,000 trade with an account balance of just £100, assuming a 10% margin.

We’ll explore the pros and cons of CFD trading in more depth in this guide, but first, here’s what to consider when choosing between different CFD trading platforms. You can jump to a particular section using the quick links below:

What to look for in a CFD Trading Platform

With hundreds of CFD brokers to choose from, you might be wondering what differs from one broker to another, and what should you pay close attention to when trying to find the best CFD broker for you?

We believe there are four key differences to consider:

1. Is this CFD broker safe to use?

The most important thing to consider when choosing a CFD trading platform is how reputable the company behind it is.

While thankfully not common, brokers have gone bust in the past leaving traders out of pocket. This is why we suggest using a company that is regulated by a recognised regulator such as the Financial Conduct Authority, who are obligated to insure their clients investments against insolvency by up to £85,000 under the Financial Services Compensation Scheme.

In addition to this protection, major regulators also ensure that the broker runs their business in accordance with the laws and regulations designed to protect retail traders. We only feature brokers on our website that meet this criteria, but you can also check that a broker is regulated by visiting their website and looking for their regulation registration number.

2. Am I able to trade what I want to trade?

Each CFD platform will offer a different array of instruments that you can trade. If you have a specific asset or asset class you’d like to be able to trade, it’s wise to ensure that the broker you’re thinking of using offers these.

You can see a comprehensive overview of the instruments offered by any broker by reading their review, which can be accessed in the navigation menu at the top of this page.

3. How much will it cost me to trade?

There are three main fees to consider with CFD trading – the commission, spread, and overnight holding fee (swap rate).

The main fee is likely to be the commission rate, which you pay on each trade and is effectively the main way the broker makes money. This is sometimes a percentage (e.g. 0.1%) or a fixed price (£5 per trade) or a combination of the two.

The spread is the difference between the bid and the ask price. In CFD trading, it’s less common for this to be a major part of the cost, but it is worth paying attention to.

Finally, there’s the overnight swap rate which you will pay for every night that you hold a position open.

Not all brokers charge all three fees, but it’s important to run some example costings to calculate how much you’ll likely pay per trade with the different brokers.

4. How good is the trading platform & charting package?

CFD trading platforms range from being highly intuitive for novices (such as eToro or Plus500’s custom platforms) to more sophisticated platforms like MetaTrader 4 or IG’s L2 Dealer, which come with advanced features like automated trading & direct market access.

The right platform for you will largely depend on how experienced you are as a trader and what you trade. An experienced equities CFD trader, for example, may specifically want a CFD broker that offers direct market access, a good charting package and a wide range of stocks to trade. On the other hand, a novice crypto trader may be more interested in finding a platform that offers a high-quality news feed, a wide range of crypto assets to trade, and an intuitive platform.

One of the best ways to compare platforms is to open several demo accounts and see which platform feels right for your trading style.

What are CFDs?

We’ve briefly alluded to why people choose to trade CFDs – but what actually are they?

A CFD is simply a contract or ‘bet’ to pay the difference in the value of a particular underlying asset between when the contract is agreed and when it expires.

The underlying asset could be a company’s stock, cryptocurrency, forex pair, market index or a commodity like gold or oil. This underlying asset is never owned by the buyer or the seller.

The profit (or loss) is the difference in the price from when the contract was opened and the time it closed. There is no restriction on the time one has to hold the contract – it can be sold at any time the buyer deems fit.

While we’ve talked a lot about contracts, CFD trades are typically made with the click of a button from an online trading platform between an individual (the buyer) and a broker (the seller). This is why it’s essential to choose a trustworthy CFD trading platform that offers a variety of instruments at a reasonable price.

An example of a CFD trade

If Facebook’s shares were trading at a price of $192 and a trader bought one hundred shares at the current price, the total transaction would cost the trader $19,200.

Applying leverage

Now, let’s imagine a broker offered a margin (or leverage) of 10% or 10:1 on US stocks like Facebook. The trader could now make the exact same trade, but would only be required to put down $1,920 (10% of the cost).

What about the spread?

Some CFD brokers make their profits through what is called the spread.

This is a small difference in the buying and selling price of the CFD. When a trader enters a CFD trade, the online account will immediately show a loss equal to the size of the spread. Therefore, if the broker charges a spread of 10 cents, the trade will immediately show a loss of 10 cents when the trade is opened.

The blessing and curse of leverage

Using the example above, let’s imagine that Facebook made an announcement that increases its share price by 15% to $220. In this case, the trader would have made a profit of $2,800 (a 146% increase on their deposit of $1,920). As you can see from this example, leverage has the ability to magnify profits, but there’s also a dark side to leverage.

Now imagine that Facebook is involved in a scandal that unexpectedly plummeted its share price by 30% to $134. In this situation, the trader would have made a loss of $5,760, which means the trader would owe the broker more than the balance in their account.

Many reputable brokers now offer negative balance protection, which ensures that you never owe your broker more than your account balance. This works by closing out your trades when your margin is used up.

Limits on leverage (and how to get professional status as a trader)

In 2020, the European Securities and Markets Authority (ESMA) imposed rules that capped the amount of leverage that inexperienced traders were allowed to use. Prior to this, it was possible for most traders to get leverage as high as 500:1.

While the limits are constantly being reviewed, it’s currently only possible for retail traders to get leverage on major currencies of up to 30:1. For more volatile instruments like cryptocurrencies it’s 2:1. There may be a way to increase this, however.

If you meet the criteria of a professional trader, which means you meet at least two of the three criteria below, you can apply to be an elective professional with certain CFD providers which increases your leverage limits up to a possible 200:1 and usually includes a host of other benefits such as lower rates and a dedicated account manager.

Professional status criteria:

  • You’ve carried out a minimum of 10 significantly sized transactions at a frequency of 10 per quarter over the previous four quarters.
  • The size of your investment portfolio, including cash deposits and financial instruments, exceeds €500,000
  • You’ve worked (or work) in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged

It’s worth pointing out that there are often some features you lose access to by having elective professional status which varies from broker to broker that you should consider.

For more information on getting elective professional status, you can follow the links to the following brokers’ web pages on getting professional status with them:

What are the pros and cons of CFD trading?

Pros

  • Access to a huge range of markets – including instruments that may not normally be available in the trader’s country.
  • Go long and short – With CFD trading it’s relatively easy to open a short (sell) position, allowing traders to potentially make money when an instrument goes down in price. With some other forms of trading it can be difficult to execute short positions without having already borrowed the instrument or having a relationship with the broker.
  • Leverage – While we’ve covered the downsides of leverage, it does allow traders to potentially maximise their gains with a lower initial deposit.
  • Instant order execution – With CFD trading, most orders are executed instantly with the click of a button so there is little risk of slippage or requotes.
  • Low fees and commissions – In comparison to traditional share trading, where it’s not unusual to pay £7-12 per trade, most CFD trading platforms charge a relatively low commission that works out more cost-effective for higher-frequency trading or trading with lower amounts of money.
  • No stamp duty (UK only) – Because there is no exchange of an asset, there is no stamp duty to pay if you’re trading in the UK.

Cons

  • You can lose everything – While assets rarely plummet to zero in traditional stock or commodity trading, it’s possible to lose your entire balance (and more) with CFD trading as a result of using leverage.
  • Overnight fees – CFD trading is not ideal for holding positions for long periods of time as there are fees for holding a position overnight.
  • Lack of ownership – With CFD trading you own the contract – not the asset. This has its upsides – you can trade Bitcoin without having a crypto wallet, trade gold without having to pay for bullion storage, and trade foreign stocks without having to open accounts with international brokerages. There are some drawbacks, though. When you own a company’s stock, for example, you get voting rights and potential dividends.
  • Capital gains tax applies – Unlike spread betting, which is exempt from capital gains tax, CFD trades are subject to capital gains tax. You should seek specific financial advice for more information on this.

What CFD instruments can you trade?

As a CFD is simply a contract to pay the difference in value between the current price and a future price, there are few inherent limits on what can be traded as a CFD.

Generally speaking, though, the following asset classes are commonly available for online CFD trading, in approximate order of most popular to least:

  • Stocks (e.g. Facebook, Barclays, Vodafone, Tesla)
  • Cryptocurrencies (e.g. Bitcoin, Ripple, Ethereum)
  • Forex
  • Commodities (e.g. Gold, silver & oil)
  • Indices
  • ETFs
  • Options

To make it easy for you, we’ve highlighted which instruments each of the CFD brokers in our comparison table above.

How to Learn CFD Trading

While covering the vast number of CFD strategies is beyond the scope of this article, many brokers offer educational programmes, webinars, and seminars to make learning how to trade CFDs easier.

City Index has a particularly good online guide for learning how to trade CFDs using their Web Trader platform, which covers much of what we’ve already talked about but in greater detail and with specific examples.

XTB also provides an online trading academy, which has the advantage of offering different courses depending on your level of experience.

While their introduction to CFD trading is just two short lessons (and repeats much of what we’ve included here), they provide a very detailed course on fundamental analysis, which dives into specific strategies for trading CFD stocks, cryptocurrencies, commodities, as well as an introduction to interpreting macroeconomics, politics and central bank policy.

Why Choose XTB
For CFD’s?

XTB scored best in our review of the top brokers for cfd’s, which takes into account 120+ factors across eight categories. Here are some areas where XTB scored highly in:

  • 16+ years in business
  • Offers 1,500+ instruments
  • A range of platform inc. MT4, Mirror Trader, Web Trader, Tablet & Mobile apps
  • 24/7 customer service
  • Tight spreads from 0.20pips
  • Used by 230,000+ traders.
  • Offers demo account
  • 3 languages

XTB offers three ways to tradeForex, CFDs, Social Trading. If you wanted to trade DAX30

The two most important categories in our rating system are the cost of trading and the broker’s trust score. To calculate a broker’s trust score, we take into account a range of factors, including their regulation history, years in business, liquidity provider etc.

XTB have a AAA trust score. This is largely down to them being regulated by Financial Conduct Authority, segregating client funds, being segregating client funds, being established for over 16

Trust Score comparison

XTB AvaTrade Plus500
Trust Score AAA AAA B
Established in 2002 2006 2008
Regulated by Financial Conduct Authority Central Bank of Ireland, ASIC, IIROC, FSA, FSB, UAE and BVI Financial Conduct Authority (FRN 509909) and Cyprus Securities and Exchange Commission (License No. 250/14). Plus500AU Pty Ltd (ACN 153301681), licensed by: ASIC in Australia, AFSL #417727, FMA in New Zealand, FSP #486026; Authorised Financial Services Provider in South Africa, FSP #47546
Uses tier 1 banks
Company Type Private Private Private
Segregates client funds

A Comparison of XTB vs. AvaTrade vs. Plus500

Want to see how XTB stacks up against AvaTrade and Plus500? We’ve compared their spreads, features, and key information below.

Spread & fee comparsion

XTB AvaTrade Plus500
Fixed Spreads
Variable Spreads
EUR/USD Spread 0.20 0.70 0.60
GBP/USD Spread 0.1 1.6 0.01%
DAX Spread 0.9 1.5 0.01%
FTSE 100 Spread 0.50 1.0 0.02%
S&P500 Spread 0.10 0.25 0.02%

Comparison of account & trading features

XTB AvaTrade Plus500
Platform MT4, Mirror Trader, Web Trader, Tablet & Mobile apps MT4, Mac, Mirror Trader, ZuluTrade, Web Trader, Tablet & Mobile apps Web Trader, Tablet & Mobile apps
Services Forex, CFDs, Social Trading Forex, CFDs, Spread Betting, Social Trading CFDs
Base currency options USD, GBP, EUR USD, GBP, EUR, JPY, AUD GBP, EUR, CHF, JPY, AUD, CAD, NZD, PLN
Funding options Payoneer, Credit cards, Bank transfer, PayPal, Neteller, DebitCard, Payoneer, Credit cards, Bank transfer, PayPal, Neteller, WebMoney, Credit cards, Bank transfer, PayPal, Skrill,
Micro account
ECN account

Frequently Asked Questions

What is CFD Trading? A contract for difference (CFD) is a contract written between a ‘speculator’ and a ‘provider’ such as a CFD firm. At the end of the contracted term, the parties settle by paying or receiving the difference between the opening and closing price of a specific underlying financial instrument, asset or exchange rate, with a CFD speculator taking the opposing side of the financial outcome from the CFD provider. How Does CFD Trading Work? A CFD is an agreement to pay the difference in the value of a particular underlying asset after the period of the contract expires. The underlying asset can be a company’s stock, foreign exchange, or market index among other commodities. While the actual underlying asset is never owned by the buyer or the seller, the profit (or loss) will be the difference in the price of the asset from when the contract was opened to the time it was closed. How do you make money CFD trading? Like most forms of trading, you make money in CFD trading by correctly speculating on the direction that an asset will move in the future. After placing a trade (with or without leverage) you will have made an immediate loss due to spread (the difference between the buy and sell price) and other fees taken by the broker. You must first, therefore, make back the cost of placing the trade, and anything above this break even point will be profit that can be crystalised by exiting the trade. Of course, it is equally possible that the trade goes in the opposite direction to what you had expected, which would result in a loss. What are CFD stocks? Unlike traditional stock trading where you own a ‘piece’ of the company you buy stocks & shares in, in CFD stock trading you do not own the underlying asset (i.e. the stock). Instead, you agree to pay the difference in value between the current price and the price when you sell it, despite not owning it.

To discourage traders from holding onto assets indefinitely, there is usually a small fee for holding positions open overnight. Therefore, CFD trading is generally considered more suitable for shorter-term trading. How does CFD leverage work? Also called trading on margin, leverage enables traders to execute trades of a larger size than the balance in their account. For example, with 10:1 leverage you could make a £10,000 trade with an account balance of just £1,000. Is CFD trading halal? CFD trading is not permissable in Islam.

This is partly due to the interest that is incurred by holding positions overnight, which is problematic due to interest being forbidden in Sharia Law. Related to this is the existence of Riba, which is condemned in the Qur’an, and results from the counter-value being of the same genus as the value being traded. What does CFD stand for? CFD stands for contract for difference. Is CFD trading the same as spread betting? No. While there are many similarities between these two methods of trading, such as not owning the underlying asset you trade, there are also several crucial differences between them. For example, in spread betting each trade typically has a fixed expiry date, whereas CFD trades can be held indefinitely. Spread betting is also exempt from both stamp duty and capital gains tax in the UK, whereas CFD trading is only exempt from stamp duty. You can read more about the differences between CFD trading and spread betting here. Can you lose more money than you invest with CFDs? Yes. One of the main disadvantages of using leverage is that you can lose more money than you have available in your account if your trade moves too far in the opposite direction.

If a broker offers negative balance protection, this will prevent this from being the case as any trades that would force your account balance going below zero will be closed automatically. In 2020, this feature was made mandatory for retail CFD accounts in Europe under ESMA rulings in an attempt to protect retail traders from owing their broker more money than they had deposited. Is CFD trading taxable in the UK? CFD trading is subject to capital gains tax but not stamp duty in the UK, as there is no underlying asset being exchanged. However, if you are concerned about the tax treatment of CFD trading, we would recommend seeking the advice of a qualified financial advisor.

Best CFD Brokers 2020

Top 3 CFD Brokers 2020

ASIC, CySEC, IFSC

Min $5 Deposit

ASIC, BVI, CBI, FFAJ, FSA, FSCA

Min $100 Deposit

Min $200 Deposit

1. XM Group

XM Group are one of our best CFD brokers for 2020. This CFD brokerage offers a staggering 1,000+ CFD instruments so there is something for every type of trader. The CFDs they offer include forex, indices, commodities, stocks, cryptocurrencies (including popular choices such as Bitcoin, Litecoin, and Ripple XRP). This is a vast amount of CFD trading instruments compare to any other online broker.

XM Group offer online CFD trading through the most popular online trading platforms including MetaTrader. They implement a no-requote policy to ensure that trades have minimal slippage and are executed at the best possible prices. The XM Zero account has the tightest spreads starting from just zero pips which can help to bring down overall CFD trading costs.

Best CFD Brokers: XM Group Review

XM Group claim to have over 2.5 million clients from 196 countries across the globe. This makes them one of the largest CFD brokers in the world. They have strict regulation from 3 of the top regulatory authorities XM Group are authorised and regulated by the Financial Conduct Authority (FCA), Australian Securities and Investment Commission (ASIC) and the Cyprus Securities and Exchange Commission (CySEC).

XM Group is well known as a transparent and client focused online CFD broker with trading conditions being of primary importance to them. They provide clients with an abundance of additional trading tools for efficient analysis of different CFD charts. They also have many convenient methods for account deposit and withdrawal including online payment processors such as Skrill and PayPal.

There are many more reasons why we consider XM Group as one of our best CFD brokers. You can read our full XM Group Review to find out more and to discover if they are a CFD broker that you would like to open a trading account with.

XM Group Pros/Cons

Pros Cons
No-requotes policy, tight spreads, low fees No US clients
1,000+ CFD instruments No fixed spread accounts
Strict regulation
Sophisticated trading tools
Multiple account funding options
Min $5 deposit

XM Group is a multi-award winning globally established and regulated trading broker with over 2.5m clients from 196 countries offering no-requotes, low spreads, fast execution and negative balance protection.

2. AvaTrade

AvaTrade is included in our best CFD brokers of 2020. They offer award winning online trading services on a large variety of CFD instruments including forex, commodities, indices, ETFs, stocks, bonds, cryptocurrencies and more. Customer service is offered 24/5 with multi-lingual live support and a dedicated account manager.

AvaTrade give traders access to multiple free trading platforms including the most popular and widely used MetaTrader 4 platform. This is a very user-friendly platform thus making online CFD trading easily accessible to traders of all experience levels. In addition to various online trading platforms, they also offer a good selection of trading tools and educational materials to assist with trading online.

Best CFD Brokers: AvaTrade Review

AvaTrade have licenses from 6 regulatory authorities spanning 5 continents. Amongst these, they are authorised and regulated by the Australian Securities and Investment Commission (ASIC) and the Cyprus Securities and Exchange Commission (CySEC). This strict regulation across multiple jurisdictions can give clients peace of mind that they are using a safe and secure CFD broker.

AvaTrade are one of the largest CFD brokers in the world providing online CFD trading to over 200,000 clients across the globe. There is a demo account option should you wish to practice before opening a real account. You can read our full AvaTrade Review to find out more about why we consider them to be one of our best CFD brokers for online trading.

AvaTrade Pros/Cons

Pros Cons
Large range of CFD instruments for trading online No US clients
Award winning brokerage Min $100 deposit
Multiple trading platforms
Educational materials
Free trading tools for analysing charts
Regulation by 6 authorities

AvaTrade is an award-winning trading broker with regulation in 6 jurisdictions offering 250+ trading instruments across multiple markets and trading platforms.

3. Pepperstone

Australian based Pepperstone makes it into our best CFD brokers of 2020. They offer CFD trading on two of the best online trading platforms, MetaTrader 4 and cTrader. You can trade CFDs through one account on multiple platforms should you wish. This makes it useful should you wish to trade on the go using the web and mobile applications.

Despite primary focus on being a forex broker, Pepperstone offer a selection of CFDs for trading online via their multi award winning trading accounts with no dealing desk execution. They offer tight spreads, low fees and fast execution speeds. They are well known for providing innovative technology to traders around the world.

Pepperstone developed their CFD trading technology specifically for traders looking to execute large CFD orders with minimal slippage. They offer ultra-low latency execution from a deep pool of liquidity providers and no dealing desk interference. This makes them highly desirable to clients who need to trade large sizes on single ticket orders. They can handle multiple fills for sweeping large orders through multiple levels within their liquidity aggregator.

Best CFD Brokers: Pepperstone Review

They provide online traders with 24-hour customer support and funding through multiple different methods including bank transfer, credit/debit card and online payment processors. Pepperstone are authorised and regulated by the Financial Conduct Authority (FCA) and the Australian Securities and Investment Commission (ASIC). This strict regulation helps to reassure client that they are using an established and respectable CFD broker.

We are proud to include the highly respected Pepperstone broker in our best CFD brokers list. You can read our detailed Pepperstone Review to find out more about the reasons why we consider them one of the best CFD brokers available to traders across the globe.

Pepperstone Pros/Cons

Pros Cons
Large order sizes No US clients
Ultra-low latency execution No fixed spread accounts
Deep pool of liquidity providers $200 minimum deposit
No dealing desk
Tight spreads & low fees
Strict regulation

Pepperstone is one of the largest trading brokers providing traders worldwide access to trade across all markets with cutting edge technology, low cost spreads, low-latency high speed execution and award-winning customer service.

Best CFD Brokers

How did Trading Brokers choose our best CFD brokers?

Following on from our best CFD brokers of 2020, we will now look at what CFDs are and the most important factors to consider when looking for an online CFD broker.

What is a CFD?

CFD means Contract For Difference which is a financial instrument that allows you to trade and try to benefit from the movement in price of stocks, commodities (e.g. Gold, silver & oil), indices, stocks (e.g. Facebook, Barclays, Vodafone, Tesla), fx currencies, cryptocurrencies (e.g. Bitcoin, Ripple, Ethereum), ETFs, options, bonds and more. The introduction of CFDs made it possible for online traders to have access to a wide range of markets that were not previously available to them.

When trading CFDs, you do not actually purchase or own the underlying asset, you are speculating on the price movement, up or down. A CFD is a contract to between two parties to pay the difference between the value of the current price and future price

CFD is similar to forex trading in many aspects and are traded through an online brokers trading platform. You simply select the trading instrument that you wish to trade and place your orders. If you believe an instrument will increase in price, you would look to enter a buy (long) position. If you thought the instrument would decline in value then you would look to enter a sell (short) position. The profit or loss is realised depending on the difference between the entry and exit prices when you close the trade. CFDs can be bought or sold at any time that you deem suitable as they do not have an expiry date.

CFDs have become very popular in recent years, especially for day traders. The high leverage and low costs associated with trading CFDs online make them an attractive proposition to retail and institutional traders.

What makes a good CFD broker?

CFD broker regulation

It is vitally important to ensure that you are using a trusted and established online CFD broker. Many online brokers come and go over the years so it is considered a wise idea to use a regulated broker that has been in business for a long time. The most respected regulatory authorities to look for include the Australian Securities and Investment Commission (ASIC), Cyprus Securities and Exchange Commission (CySEC) and the Financial Conduct Authority (FCA). A regulated broker has to conduct business according to strict rules and investors are more protected.

If a broker is listed on an exchange they have to abide by stricter regulations with frequent audits. Furthermore, if the broker is part of a banking group then they must meet specific capital requirements with the upmost transparency.

CFD broker trading instruments

Each online CFD broker will provide a wide range of different instruments, so make sure that the broker you are considering offers the instruments that you wish to trade. If you want to invest in Facebook CFDs or Tesla CFDs, make sure they are offered. It is also worth considering if you will branch out into other markets in the future. If a broker offers multiple markets then it would make the transition in the future more convenient. As there are so many markets to trade, CFD trading hours run 24 hours a day. You will therefore want to make sure your brokers trading hours cover as many of these hours as possible, if not all.

CFD broker trading fees

When trading CFDs online, there are three main fees you need to factor in. This is the spread, commission and overnight holding fee (swap). Not all brokers will charge all fees but it is important to factor these fees into your trading costs. Fees can vary significantly on each broker so it is a good idea to consider them when choosing a suitable broker.

CFD broker spreads

The spread is the difference between the buy and sell (bid/ask) price which can vary depending on the current liquidity and brokers mark-up if applicable. Generally, the more liquidity, the more competitive the spreads will be. Be aware that some brokers use dealing desks and will add a mark-up to the spread to cover operational costs.

CFD broker commissions

The commission is a fee you pay to the broker for each trade that you place. This is the primary way in which brokers make their money. Commission is usually charged as a percentage of the trade or a fixed amount, sometimes a combination of both. The lower the commission fee, the lower your overall trading costs are likely to be.

CFD broker swaps

If you hold a position overnight you will need to pay a swap fee. This is an interest fee for the procedure of moving open positions from one day to another, also known as the rollover. Many CFD traders are day trading so they do not hold positions overnight but if you plan to do so, this is another cost to consider. Some brokers offer swap free Islamic trading accounts which allow Muslims to engage in online trading that conforms with Sharia law

Other CFD broker fees

Some brokers will charge additional fees which are worth considering such as withdrawal and inactivity fees.

CFD broker trading platforms

Each online CFD broker will offer a range of free online trading platforms. You should ensure that they offer a trading platform that you are familiar with. If you have no previous experience using a trading platform, MetaTrader 4 is one of the most popular due to its user friendliness and advanced features. Some brokers provide their very own proprietary platforms such as eToro, Plus500 and AvaTrade. If you plan to trade on the go, then you should check that they offer web and mobile version of your desired trading platform.

Trading platforms can vary in features, some will offer advanced charting tools for detailed market analysis whilst others can incorporate news feeds and other features to assist with your trading. Depending on your individual trading requirements, make sure the platform offers all of the tools you need to trade with efficiency. It could be a good idea to open demo accounts on multiple platforms to compare them and see which you deem more suitable for your own needs.

CFD broker leverage

CFD brokers allow you to trade on leverage which means that you can open a position larger than your account size would allow without it. With an account balance of just $100, you could open a position of $1,000 using 1:10 leverage. Whilst leverage can increase profits, it also increases risk and can lead to large losses. It is of upmost importance that that you have a thorough understanding of what leverage is and the risks involved before you start trading CFDs. Check the broker offers a leverage that you require for your trading strategies.

CFD trade example

If you wanted to trade a stock with an asking price of $20 and buy 100 shares, this would traditionally have cost $2,000 ($20 x 100). With a CFD broker who requires 5% margin, you could open this position with just $100 ($2,000 / 100 * 5). Leverage will vary between brokers and you will need to factor the spread, commission, swap and any other fees into each trade.

Most reputable CFD brokers will offer negative balance protection, which ensures that you will not end up owing your broker more than your initial account balance. They will close out your trades once your margin is used up to prevent further losses.

CFD broker education

Many CFD brokers will provide their own educational materials such as CFD trading guides, webinars and seminars. This can help beginner traders learn more whilst honing their trading skills. Even the more advanced traders can benefit from further education.

CFD broker trading tools

Some CFD brokers will offer clients trading tools that can assist with trading. These tools range from technical chart analysis and economic calendars. If you would like additional tools, see what a broker has to offer and if these come and an extra cost or are free to existing clients.

CFD broker account opening

Each CFD broker will have its own minimum deposit policy so check that you can meet this requirement.

CFD broker account funding

Methods of funding and withdrawing from your online trading account can vary from one CFD broker to another. Check what methods they offer and ensure that it is suitable and convenient for you. Some brokers will offer online payment processors such as PayPal and Skrill which and be processed faster than other methods which can take up to 5 days.

CFD broker customer service

As the CFD market contains so many different instruments and runs 24 hours a day, you will need to ensure that the broker has adequate customer support to answer your questions as and when necessary. Consider the location of the broker and what days/time they offer their support. Ideally, the broker should provide support in multiple languages, at least 24 hours a day and 5 days a week. Check that they have a method of contacting support that is most convenient for you. Online chat can be quick and easy, but some traders may prefer to speak to someone over the phone.

ESMA Regulations

New regulations and measures are constantly being put in place to protect retail CFD traders. European regulators want to clamp down on how CFD brokers conduct their business and how products are offered to clients. Research from European Securities and Markets Authority (ESMA) shows that around 80 to 95% of investors are losing their investment which is not always through fault of their own.

Specifically, when a broker uses a dealing desk there can be a conflict of interest. Instead of executing a trade directly to the liquidity providers, it goes through a dealing desk which can lead to delays (slippage) and spread mark-ups. This makes it even more difficult for retail traders which is another reason why it is so important to choose a reliable broker.

Amongst the new rules introduced in 2020 by ESMA for European traders are:

Leverage Limits

The maximum amount of leverage offered to European CFD traders has been capped. Some brokers will lift this limit if you meet certain requirements and qualify as a professional trader. To qualify you would usually have needed to have conducted a large amount of transactions, have a significant portfolio and experience in the financial industry.

  • 30:1 for major currency pairs
  • 20:1 for non-major currency pairs, gold and major stock indices
  • 10:1 for commodities other than gold and non-major stock indices;
  • 5:1 for single stocks and any underlying not otherwise mentioned
  • 2:1 for cryptocurrencies

Margin Limit

A margin close out rule on a per account basis. This will standardise the percentage of margin (at 50% of minimum required margin) at which providers are required to close out one or more retail client’s open CFDs.

Negative balance protection

Negative balance protection on a per account basis. This will provide an overall guaranteed limit on retail client losses.

Restriction on marketing and incentives

Brokers must clearly state the percentage of clients who are losing money and not offer any incentives to attract new clients to trade CFDs.

Best CFD Brokers: CFD Trading Online

How to start trading CFDs online?

Now that you have had a brief overview of what CFDs are, you may be considering opening an online trading account which is a quick and easy process. Simply choose an online CFD broker, follow the account opening process and you will be able to start trading CFDs online through one of their trading platforms.

Need help choosing from the best CFD brokers in 2020?

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Trading Brokers have spent thousands of hours researching and conducting in-depth analysis on hundreds of online trading brokers.

We aim to provide unbiased online trading broker reviews to give traders a clear understanding of the different brokers available to them. Many traders have used our free service to find an online trading broker suited to their individual needs.

Whilst most of our data has been verified directly from these brokers, it can occasionally vary. We are not responsible for incorrect or outdated information within our online trading broker reviews and you should confirm all data directly with the broker.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. All providers have a large percentage of retail investor accounts that lose money when trading CFDs with their company. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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