In the world of financial markets, traders are constantly seeking new ways to profit from online trading. One popular instrument that has gained significant attention in recent years is the contract for difference (CFD). The appeal of CFDs lies in how they enable speculation on price movements while rendering ownership unnecessary. With numerous CFD brokers operating in the market, however, the process of finding the right one can be overwhelming. Below, you will find a set of factors that will help you determine which CFD brokers are viable options and which ones you should avoid.
Below you can find a list with regulated and trustworthy CFD trading brokers:
Top 20 CFD Brokers
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Fusion Markets
- Australia regulated broker
- MT4, MT5, TradingView, Ctrader
- Leverage up to 500
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Axi
- Raw spreads start from 0.0 pips
- Offers order execution faster than standard ECN model
- Axi Select Funded Trader Program offers funding up to $1 million
Trading Instruments- Forex
- Stocks
- IPOs
- Indices
- Commodities
- Cryptocurrencies
-
FP Markets
- Australia & CySEC regulated broker
- MT4/MT5, TradingView, Ctrader, Iress
- EUR/USD spread from 0.0 pips
Trading Instruments- Forex CFDs
- Shares CFDs
- Metals CFDs
- Commodities CFDs
- Indices CFDs
- Crypto CFDs
- ETF CFDs
-
Pepperstone
- Australia & CySEC regulated broker
- MT4/MT5, TradingView, Ctrader, Iress
- EUR/USD spread from 0.0 pips
Trading Instruments- Forex
- Indices
- Commodities
- Cryptocurrencies
- Share CFDs
- ETFs
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Global Prime
- Australia regulated broker
- Advanced MT4
- $0 Minimum Account Size
Trading Instruments- Forex
- Cryptocurrencies
- Indices
- Commodities
- Bonds
-
BlackBull Markets
- Broker boasting lightning-fast execution speed
- ECN brokers with tight spreads from 0.0 pips
- $0 minimum deposit requirement
Trading Instruments- Forex
- Commodities
- Futures
- Indices
- Stocks
- Cryptocurrencies
-
IC Markets
- Offers 2,200+ tradable markets, including 61 currency pairs
- Leverage of up to 1:1000 in select jurisdictions
- EUR/USD spreads from 0.8 pips for standard accounts
Trading Instruments- CFDs on Forex
- Commodities
- Index
- Bond
- Cryptocurrencies
- Stock
- Futures
-
Markets.com
- Featuring a wide range of CFD assets across 7 markets
- Supports popular platforms like MT4 and MT5
- Social trading app enables smooth trading alongside proven signal providers
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AvaTrade
- Minimum deposits from $100
- Licensed by 11 regulatory bodies
- Retail forex leverage of up to 1:400
Trading Instruments- Forex
- Major stock indices
- Cryptocurrencies
- Commodities
- Bonds
- Individual Shares
- ETFs
-
HF Markets
- Up to 1:2000 leverage in specific countries
- Supports trading in micro lots (1,000 units
- A $6 round-turn commission per standard lot for Zero accounts
Trading Instruments- Forex
- Metals
- Energies
- Soft commodities
- Indices
- Stocks
- Cryptocurrencies
- Bonds
- ETFs
-
eToro
- Popular broker for social trading
- Trading is conducted on innovative in-house platform
- Offers both investing and trading products
Trading Instruments- Crypto
- CFDs on Forex
- Stocks
- Commodities
- Crypto
- ETFs
- and Indices
-
Eightcap
- Traders can enjoy competitive trading conditions through different account types
- Offers access to over 800 CFD markets through TradingView
- Platforms like MT4 and MT5 enable multi-device trading
Trading Instruments- Forex CFDs
- Commodity CFDs
- Shares CFD's
- Index CFDs
- Crypto CFD's
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CMC Markets
- Provides a choice of 10,000+ trading instruments
- Supports MT4 and Next Generation (proprietary platform
- Spreads for EUR/USD from 0.5 pips
Trading Instruments- CFDs on Forex
- Indices
- Shares
- Commodities
- Treasuries
- Cryptocurrencies
- Share baskets Investments on ETFs
- Shares
- Managed funds
- Options
- and more
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Plus500
- Multi-Level Regulated Broker
- Proprietary trading platforms
- Easy to use mobile app
Trading Instruments- CFDs on: Forex
- Crypto
- Indices
- Commodities
- Stocks
- Options
- ETFs
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FxPro
- NDD broker offering deep liquidity and ultra-fast execution
- Over 99% instant order executions with no requotes
- Supports MT4, MT5, cTrader, and a proprietary platform
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Admirals
- Offers a great range of investment and trading products
- Multi-device trading available through MT4 and MT5
- Offers over 4,000 CFD instruments
Trading Instruments- CFDs on Forex
- Indices
- Stocks
- Commodities
- Bonds
- ETFs
- Cryptocurrencies
-
Saxo Bank
- Holds a banking license
- Offers forex options and spot trading
- Minimum EUR/USD spreads from 0.9 pips
Trading Instruments- Stocks
- ETFs
- Bonds
- Mutual funds
- Crypto ETPs
- Options
- Futures
- Forex
- Forex options
- Crypto FX
- CFDs
- Commodities
-
IG
- Offers different account types, including DMA (Direct Market Access) one
- Offers turbo warrants on forex pairs, commodities, indices, and equities
- Supports popular platforms like MT4 and TradingView as well as ProRealTime, L2, and more
Trading Instruments- CFDs on Indices
- Forex
- Shares
- Crypto
- Futures
- Commodities
- Options
- Interest Rates
- Sectors
- Bonds
- Knock-out trading
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Vantage FX
- Broker offering some of the lowest spreads from 0.0 pips
- Operating in multiple markets under licenses from tier-1 regulators
- Provides a range of account types with great trading conditions
Trading Instruments- Forex
- Indices
- Commodities
- Shares CFD
- ETFs
- Bonds
-
XM Group
- Registered for outward passporting with multiple EU regulators
- 99.7% order fill rates and low minimum deposit requirements ($5)
- Supports MT4 and MT5
Trading Instruments- Forex
- Stocks
- Indices
- Commodities
- Thematic Indices
What Is CFD Trading
CFDs (Contracts for Difference) are a type of financial derivative that involves speculating on the price movements of trading assets. Brokers typically offer CFDs on currency pairs, stocks, commodities, and indices, among other markets. This instrument enables investors to gain exposure to the markets and eliminates the need to own the underlying asset. By trading CFDs, investors can buy or sell a contract that reflects the price difference between the opening and closing of the trade.
CFDs often offer flexible trading hours, allowing investors to trade outside of traditional market hours. Additionally, these instruments can be used for long and short positions, enabling traders to profit from both rising and falling markets.
Leverage is one of the key benefits of CFDs, seeing as it lets traders control larger positions with a smaller amount of capital. This can amplify potential gains, which is what makes these contracts appealing to traders. However, leverage is also why CFDs are deemed a high-risk instrument and are even banned in some jurisdictions.
Margin calls and high market volatility are other risk factors associated with CFDs. As with any financial instrument, it’s crucial for traders to educate themselves about the potential benefits and drawbacks of CFDs and develop a solid trading strategy before entering the CFD market.
Once you feel confident in your CFD knowledge, you can open an account at a CFD broker. If you are not sure how to choose a broker, however, we invite you to continue reading.
Regulation and Security
The first and arguably most crucial factor you should consider is regulation. Specifically, whether a given broker has valid licenses issued by trusted regulatory entities. Regulatory bodies worldwide have implemented measures to safeguard investors in the CFD market. These regulations aim to promote transparency, fairness, and investor protection. In the European Union, the Markets in Financial Instruments Directive (MiFID) sets strict guidelines for CFD providers, including requirements for clear product disclosure and risk warnings. Brokers that operate in the EU are also obligated to provide negative balance protection to retail clients. Similar regulations are in place in other jurisdictions, including the United Kingdom and Australia.
In other words, if you go with a regulated CFD broker, it is far more likely that you will enjoy a safe and fair trading environment. Here are examples of the entities that oversee the offering of CFDs and the financial markets of their jurisdictions as a whole:
- Financial Conduct Authority or FCA (United Kingdom)
- Australian Securities and Investments Commission (ASIC)
- Cyprus Securities and Exchange Commission (CySEC)
- Vanuatu Financial Services Commission (VFSC)
- Federal Financial Supervisory Authority or BaFin (Germany)
- Commodity Futures Trading Commission or CFTC (USA)
- Financial Services Agency or FSA (Japan)
Do note that in the European Union, a license from one European regulator will be valid across multiple countries. For example, Italian traders can use CySEC regulated brokers. We should also mention that regulation can be the reason behind CFDs’ availability or lack thereof. In the USA, for instance, the CFTC has officially banned CFDs.
Another benefit of regulated brokers is security. Adequate security measures safeguard client data and funds through robust encryption. Segregation of assets is crucial as well. Capital requirements also mitigate risks, ensuring a secure trading environment and protecting investors from potential losses and data breaches.
Range of CFD Markets
Another factor to consider when determining if a broker is the right option for you is its roster of CFD instruments. The CFD market itself offers a vast range of trading opportunities, allowing investors to speculate on the price movements of various assets. This includes major, minor, and exotic currency pairs, which means CFDs enable traders to capitalize on fluctuations in global currencies. Popular stock indices, such as the S&P 500 and FTSE 100, can also be traded via CFDs at some brokers.
In addition, CFDs can provide access to a range of shares, including individual stocks and ETFs. CFDs can also be traded on cryptocurrencies, such as Bitcoin and Ethereum, which have become increasingly popular recently. In fact, cryptocurrency CFDs serve as the only way for the clients of most traditional brokers to gain exposure to the crypto market. Commodities, including gold, oil, and natural gas, are also available for CFD trading and should thus be a part of your broker’s CFD selection. They provide a unique opportunity for investors to take advantage of price movements in these markets.
This variety makes CFDs an attractive option for those looking to diversify their portfolios. Moreover, with the ability to trade on both rising and falling markets, CFDs offer a flexible and dynamic trading experience. Traders can choose from a number of trading strategies, including day trading, swing trading, and long-term investing.
CFD Spreads and Other Costs
When trading CFDs, traders can incur various fees that can impact their profitability. One of the primary costs associated with CFD trading is the spread, which is the difference between the bid and ask prices of a CFD. This spread can vary depending on the underlying asset, market conditions, and account type.
In addition to the spread, CFD traders also need to consider the commission charged by their broker, especially if they go with a zero-spread account. This commission can be a flat fee or a percentage of the trade value. Some brokers may also charge additional fees, such as overnight or swap fees, which can further increase the cost of trading CFDs. Other potential costs include currency conversion and inactivity charges. Some brokers also attach fees to deposits and withdrawals.
To minimize costs, traders can focus on selecting a broker with competitive spreads and commissions. For example, brokers that offer spreads of under 1 pip to all traders when it comes to CFDs on major pairs are usually considered a good option. As for what to look out for, it is advised to avoid brokers that charge clients for deposit transactions.
All in all, carefully reviewing the fee structure of brokers can help you make informed decisions and minimize unnecessary costs. Most brokers have a separate page or FAQ section dedicated specifically to their costs and fees. If you find yourself confused even after reading all of the fee-related information provided by a broker, you can contact its support team and ask for clarification.
Deposits and Withdrawals
When it comes to depositing and withdrawing funds from a CFD trading account, a good broker must provide a variety of payment methods that will cater to traders’ different needs and preferences. Online banking and wire transfers are popular options for depositing funds, offering a secure and reliable way to transfer money into your account. Digital wallets like PayPal, Skrill, and Neteller are also widely accepted, providing a convenient and fast way to deposit funds. These payment solutions often boast instant deposits, allowing you to start trading as soon as you create an account and verify your details. Crypto deposits, while rarer, might also be viable. Speaking of currencies, make sure that the broker you choose supports your preferred account currency.
For withdrawals, some brokers offer a similar range of options. Bank transfers, in particular, are a secure and reliable method to go with, although traders should be aware that transactions may take around a week. Credit and debit card withdrawals are also supported across many brokers and may ensure faster transaction speeds.
It’s essential to review the deposit and withdrawal options of a broker in order to ensure they meet your needs. Additionally, be aware of any fees associated with these transactions to avoid unexpected charges.
CFD Leverage Limits
Leverage is at the core of CFD trading. It basically lets you borrow capital from the broker, with a small sum serving as the collateral, known as the margin. This way, you can control positions well beyond your deposited funds and thus enjoy higher potential gains. Checking the leverage limits is an essential part of the process of finding a suitable CFD broker.
Since leveraged trading involves a lot of risk, regulators across the globe have imposed leverage limits to protect traders. As a result, it is often your location that will determine the leverage range you will be able to work with.
In the European Union, for example, the European Securities and Markets Authority (ESMA) has set a maximum leverage limit of 1:30 for CFDs on major currency pairs when it comes to retail trading. Therefore, Europe-based traders can only use up to 30 times the amount of capital they have deposited to control a position. The retail limits are the same in the UK and Australia, but in some jurisdictions, local laws permit CFD leverage of 1:500 or more, while in others, the cap is lower than 1:30. Moreover, keep in mind some brokers may limit leverage to thresholds lower than the maximums determined by your local supervisory entities. If you have aspirations to become a professional trader, you should also be aware that pros can take advantage of higher leverage.
CFD Trading Platforms
When picking a CFD broker, traders should not neglect to take a look at the supported platforms and their features. Here are several popular platforms that your potential broker of choice might include in its platform selection:
- MetaTrader 4 (MT4): A user-friendly platform ideal for beginners. MT4 is known for its simple interface, extensive range of technical indicators, and automated trading capabilities.
- MetaTrader 5 (MT5): MT4’s successor. MT5 is a comprehensive platform with advanced charting tools, a wider range of technical indicators, and enhanced automated trading features.
- TradingView: This is a social trading platform that combines real-time market data, advanced charting tools, and a global trading community, ideal for traders who want to stay connected and gain insights from others.
- cTrader: If you are looking for a feature-rich platform offering advanced charting capabilities and a clean, modern interface, you might want to pick a cTrader broker.
Most of the above options are mobile-friendly as well, and the same can be said about the proprietary platforms you might come across during your search for the perfect CFD broker. In terms of availability, MT4 is by far the most widespread, but more and more brokers have begun supporting multiple platforms.
Is the Broker Suitable for Novice Traders
CFD trading is often accompanied by a steep learning curve if you are just starting out. A beginner-friendly CFD broker, however, can make all the difference in helping you navigate the markets with confidence.
One of the key characteristics of a broker that is suitable for novices is the presence of a demo account. These accounts let traders practice CFD trading with virtual money before risking real capital. This is an invaluable resource for a beginner, as you will be able to test trading strategies, learn from mistakes, and gain experience in a risk-free environment. If the broker is ideal for novices, you will also be provided with educational resources like guides, video tutorials, and more.
Once you are confident in your trading skills and knowledge, you can move on to a live account and deposit funds. A broker that welcomes beginners should have a low minimum deposit requirement. Such brokers typically have deposit minimums of $100 or less, and there are even ones with no such requirements. Another factor that will give you an idea of whether the broker is suitable for traders lacking in experience is the availability of risk management tools.
Customer Support
Customer support can certainly make or break a CFD broker, and traders are usually advised to pick a broker offering 24/5 or 24/7 support. The customer service team should be able to communicate with you in the language you are most comfortable using, especially if it is licensed by your local financial regulator.
In addition, it is best to look for brokers that prioritize transparency and responsiveness in their customer support. Multiple communication channels should be offered, with phone, email, and live chat being the most important options. It is also a good idea to check if the FAQ section is extensive and easy to browse in case you run into a minor issue and do not wish to reach out to a representative of the customer support team immediately.
Other Factors to Consider
In addition to everything covered above, there are a few more things that are worth considering as your search for the best broker is underway:
- Fast Execution: If your broker offers swift execution, this will reduce the chances of slippage occurring. Some brokers have also partnered with virtual private server (VPS) providers, and VPS services can also help improve execution.
- Permitted Trading Strategies: Traders who plan on trying hedging and scalping will need to go with a broker that allows users to utilize these strategies.
- Account Types: Brokers typically provide clients with several account types. A popular account type, often called “zero spread”, involves commissions and spreads from as low as 0 pips. There are also Islamic accounts that enable swap-free trading. Another unique account type caters to professionals with higher leverage caps.
- Minimum and Maximum Trade Size: Flexibility in terms of trade sizes is also something of note. A minimum size of 0.01 lots is typically ideal, while the maximum can range from 100 to 1000 lots, depending on the broker.
Overall, choosing a CFD broker is far from an easy task. Once you know what to look for, however, you will be able to determine what aspects you value most and make the choice that will suit your trading preferences.
Why You Should Trust RationalFX
When it comes to making informed decisions about forex brokers, it’s essential to rely on trustworthy sources. Rational FX, a company with over 17 years of experience since its founding in 2005, has established itself as a credible authority in the industry. With an impressive collection of over 2500 reviews on Trustpilot, boasting a score of 4.2, it’s clear that Rational FX has built a reputation for providing reliable and unbiased information.
What sets Rational FX apart is its rigorous evaluation process, which considers over 30 different criteria when selecting forex brokers. This comprehensive approach ensures that every aspect of a broker’s service is taken in consideration, including regulation, forex spreads, trading platforms, deposit methods, and reputation. With its wealth of experience, transparent review process, and outstanding customer feedback, Rational FX is a trusted source for anyone seeking reliable information on forex brokers. You can reach us via e-mail at [email protected] or contact us through our social media accounts here: Facebook, YouTube, or leave a feedback here.