5 Best CFD Brokers and Trading Platforms [month,year]
Best CFD Brokers
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Our team of experts work to continually re-evaluate the reviews and information we provide on all the top Forex / CFD brokerages featured here. Our research focuses heavily on the broker’s custody of client deposits and the breadth of its client offering. Safety is evaluated by quality and length of the broker's track record, plus the scope of regulatory standing. Major factors in determining the quality of a broker’s offer include the cost of trading, the range of instruments available to trade, and general ease of use regarding execution and market information.
Huzefa Hamid
Demand for CFD trading continues to soar among professional & retail traders alike, as CFDs represent the ideal instrument for short-term trading & hedging. Finding the best CFD brokers poses a challenge, with hundreds of available choices. We've researched them thoroughly to assist you in your trading journey.
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
MT4, MT5, and cTrader trading platforms & Autochartist and Trading Central services.
MAM/PAMM modules for traditional account management & copy trading options.
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Commission-free and commission-based pricing environments
Trusted broker operational since 2014 & compliant with five regulators
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Raw spreads from 0.0 pips for a commission of $7.00 per 1.0 standard round lot.
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Choice of trading platforms & reasonable commission-free trading costs.
Guardian Angel MT4/MT5 plugin & good education for beginner traders.
Best all-around broker with high floating leverage and fast execution
FXTM opened their forex/CFD brokerage firm in 2011 and are perhaps better known as “ForexTime”. The company is primarily regulated through the Cyprus Securities and Exchange Commission (CySEC), with additional regulation through the Financial Conduct Authority (FCA) UK, the Financial Services Commission (FSC) of the Republic of Mauritius, and by the Financial Sector Conduct Authority (FSCA) of South Africa. An important feature of FXTM is that it can tailor its offerings based on where its dealers are located in the world. This includes a wide range of forex pairs and crosses (including some exotics), gold, silver, natural gas and crude oil, as well as various cryptocurrencies, CFDs on major American stocks, and major equity indices
Pros
Excellent commission-based Forex pricing environment and transparency
Upgraded MT4/MT5 trading platforms plus proprietary mobile trading app
Quality market research and educational content for beginner traders
Proprietary copy trading platform, low minimum deposit, and high leverage
Cons
No cryptocurrencies and limited choice of
commodities
The twelve MT4/MT5 add-ons at FP Markets upgrade the core trading platform to a competitive version. It also supports retail account management via the MAM/PAMM infrastructure and offers Autochartist to manual traders and VPS hosting to those with automated trading solutions. Myfxbook AutoTrade caters to social traders. The proprietary Iress trading platform remains location-restricted but is the only one offering access to the 10,000+ CFDs. Traders will benefit from the ECN cost structure of 0.0 pips raw spreads and a commission of $6.00 per round lot.The minimum deposit is $100, and the maximum leverage is 1:500. Additional benefits include an execution speed below 40 milliseconds and a no dealing desk (NDD) execution model. The unregulated FSC-registered unit caters to most international clients.
Pros
Choice of trading platforms and auxiliary trading tools
Very competitive cost structure and excellent asset selection
Low minimum deposit requirement and leverage of up to 1:500
Trade Nation established itself among the best CFD trading Forex brokers due to its ongoing addition of trading tools and services. Besides 1,000+ CFDs, traders can connect to TradingView, where 50M+ traders discuss and share ideas. Manual traders may opt for the user-friendly proprietary TN Trader Platform, while MT4 provides algorithmic traders with its industry-leading trading infrastructure.
The absence of a minimum deposit requirement ensures accessibility for all CFD traders, who can deposit using cryptocurrencies. Beginners benefit from a quality trading introduction covering the basics, while Trade Nation also publishes actionable trading signals and presents its proprietary TradeCopier.
Pros
Simplified
trading environment for beginners
One
account type for all traders in eight account base currencies
Quality
trading tools embedded in the proprietary trading platform
Balanced
asset selection for international traders
Spreads starting from 0.0 pips + leverage up to 1:500
Axi offers 220+ CFD and is primarily a Forex CFD broker, where it shines with its deep liquidity pools, provided by 20+ liquidity providers via direct connection for ultra-fast order processing. It makes Axi one of the best-execution CFD brokers, evidenced by its annual turnover exceeding $2.4 trillion.
Axi upgrades the MT4 trading platform via the MT4 NextGen suite and Autochartist. The former offers advanced management tools, sentiment trading, and enhanced ordering, while the latter features automated chart pattern recognition and trading signals. Traders get 10 account base currencies, 28 deposit and withdrawal currencies, and competitive trading fees.
Pros
No minimum deposit and high leverage for most international traders
Autochartist plugin for MT4 and API trading for algorithmic traders
Highly regulated, choice of fixed or floating spreads
AvaTrade has an exceptional educational unit in SharpTrader, but traders must carefully consider the subsidiary they decide on. The ASIC, FSCA, BVIFSC, and FSRA provide a competitive trading environment. The minimum deposit of $100 unlocks maximum leverage of 1:500 and provides access to more than well-selected 1,250 CFDs. Traders also have a broad range of trading platform choices, including the core MT4/MT5, together with the proprietary WebTrader, AvaOptions, AvaTradeGO and AvaSocial. Additional copy trading platforms available at AvaTrade are ZuluTrade, MQL5 Signal Service and DupliTrade. The commission-free cost structure is average with minimum spreads of 0.9 pips or 0.13%.
Pros
High-quality educational offering via SharpTrader
Excellent choice of trading platforms catering to various trading needs
Broad asset selection and cross-asset diversification opportunities
Well-regulated and trusted broker with oversight from a central bank
CFDs became the best trading instrument for professional traders and retail traders alike. First introduced in London in the early 1990s for professional clients and in the late 1990s to retail traders, they offer leveraged trading without owning the underlying asset. CFDs grant trading opportunities in a cost-efficient manner, as transactions do not require settlement of underlying assets. Therefore, it allows retail traders to participate in any market their broker provides.
Several regulators took steps to limit leverage or ban advertising of CFDs amid mounting retail losses related to an absence of understanding. They are an over the counter (OTC) product specifically written for leveraged transactions, but traders must understand the risks involved before using CFDs. CFD brokers are usually market makers who hedge exposure by taking positions in the underlying assets matching their order book. They also profit from client losses, with an average of 75% of retail traders managing loss-making portfolios.
Pros and Cons of CFDs
Pros
A vast universe of instruments to trade including shares, indices, commodities, and currency pairs.
The high degree of leverage available means you have small margin requirements, making CFD trading highly efficient.
You can short CFDs without having to go through the intricacies of traditional short selling.
When used improperly, leverage can magnify losses so be sure to use solid money and trade management strategies to insulate your account from large losses.
Trading CFDs profitably requires skill and experience. Get to know the intricacies of the instruments you are trading and consider trading with a demo account for some time before risking any real money.
Any positions left open overnight are subject to funding fees.
CFD profits are subject to capital gains tax (in the U.K.).
Types of CFDs
CFDs are available on a huge range of assets including global indices, stocks, currencies, commodities. Therefore, by trading CFDs you can diversify your positions which means that your range of opportunities increases exponentially compared to a trader that only focuses on one asset class such as Forex, for example.
Let us examine the main differences between CFDs and other financial instruments.
CFDs vs. Forex: like Forex, CFDs are OTC (over the counter) products (so there is no central exchange) and if you take a position with a CFD you do not physically own the underlying asset. Whether you buy EUR/USD or the S&P 500 Index CFD, you are just taking an educated bet on the possible short-term price movement. However, whereas all currency prices are driven by geopolitical events (Brexit, Coronavirus), economic data (inflation, GDP, employment) and interest rates (yields), CFDs can differ. The price oscillations of a CFD depend on the underlying instrument. A CFD based on WTI Crude Oil will move depending on the demand/supply characteristics of the oil market; a CFD on the S&P 500 Index will be mostly dependant on global growth prospects; a CFD on a single stock like Tesla will be dependant on specific news relative to renewable energy, tweets by Elon Musk, earnings prospects, growth prospects, and the company’s regulatory environment.
CFDs vs. Futures: CFDs and futures are both derivative products that are based on an underlying asset. You can go long or short in both CFDs and futures. The main differences between CFDs and futures contracts are the contract size and margin requirements. CFDs allow much more flexibility and can be traded with smaller account sizes because of the granularity of their pricing structure and leverage. Yet CFDs are also simpler: while futures have expiry dates, CFDs do not. Also, CFDs do not require physical delivery. Imagine trading WTI Crude Oil futures and forgetting to roll the position over: you would be accountable to take physical delivery of the number of barrels you were trading. This cannot happen when trading CFDs, because you do not physically own any of the underlying asset.
CFDs vs. Commodities: “fewer headaches” is how we can describe CFD trading as opposed to traditional commodity trading. CFD traders need not worry about physical delivery, contract expiry, or lot sizes. As such, when trading CFDs on coffee, crude oil, wheat, copper etc., you only need to focus on your pre-trade analysis, trade execution and trade management. Your trading is much more efficient and much less complex.
CFDs vs. Stocks: whether to trade physical shares or CFDs boils down to capital availability and objectives. For example, when trading stocks you pay the full value of your stocks upfront, whereas the leverage available on CFDs make them a more efficient instrument to use. However, on CFDs your losses can exceed your initial deposit, whereas in stocks you can only lose the amount you invested. However, stocks have limitations on short selling, whereas CFDs allow you to trade either long or short without any restrictions. Stock trading is limited to the open hours of the relevant stock exchange, while CFDs can be traded around the clock subject to your broker’s market hours. Ultimately, stock trading is perhaps better suited for longer-term objectives because there is no time-based fee incurred to keep trades open, whereas there is a cost to holding CFDs overnight (as described previously). Therefore, CFDs are more directed towards intraday and swing trading, whereas stocks are more suited for long-term investing.
CFDs vs ETFs: this is a more interesting comparison because CFDs and ETFs are both speculations on the movement of the underlying instrument (in neither case does the trade own the underlying instrument). However, ETFs are perhaps more useful for longer term strategies (like stocks) whereas CFDs are more useful for short-term strategies. ETFs are quoted on public stock exchanges and can represent entire sectors, industries, commodity baskets, and as such can offer internal diversification benefits while maintaining low costs. The closest match to CFDs are index ETFs (like Dax or S&P 500 ETFs). But even here there are differences: with ETFs you must pay the full price of your underlying asset, whereas the leverage available on CFDs make them more efficient to use. With ETFs you can never lose more than your initial investment, while with CFDs you can. ETFs are not subject to rollover fees, whereas CFDs are. As such, ETFs are best used for longer-term strategies like dollar-cost averaging, asset allocation, and risk-parity; CFDs are best used for short-term directional trading. Happily, several Forex brokers now offer CFDs on more popular ETFs, meaning that traders can perform ETF CFD trading and benefit from exposure to ETFs in CFD format.
CFDs vs Options: options are perhaps a more efficient way to trade stocks due to the fact they have embedded leverage (1 option typically allows you to control 100 shares of a company) but the benefit might end there. Like CFDs, options are derivative instruments that move based on the direction, volatility, and liquidity of the underlying security, as well as the time to expiry. Options have an expiry date and so have something in common with commodity futures. But options are certainly more complex to understand due to the multiple variables that impact their price. Also, options are almost entirely directed at stocks whereas brokers have created CFDs on many different asset classes.
How Does Online CFD Trading Work?
CFDs grant traders exposure to price action without asset ownership. Traders can benefit in either direction in a leveraged transaction, freeing up trading capital and gaining exposure to international markets with a cost-efficient and competitive product, as long as traders use it for short-term trades. CFD traders enjoy unparalleled freedom and diversification opportunities, even from smaller deposits, if proper risk management exists.
Types of CFD Brokers
CFD traders have two distinct choices:
Market Makers: They work with liquidity providers and match orders from their internal order book. Market Makers may also become the direct counterparty to client positions. Spreads are generally higher in a commission-free trading environment.
Direct Market Access (DMA) Brokers: Traders have direct access to liquidity providers via ECN and no broker intervention. Active traders get access to raw spreads for a commission. They are ideal for active traders and often come with a volume-based rebate program.
How Do CFD Brokers Make Money?
Trading costs will have the most significant direct impact on your trading strategy and portfolio. The two most significant ones consist of:
Spreads & Commissions: Spreads are mark-ups and translate into broker profits above market rates. Market makers derive their income primarily from them. Commissions apply at ECN brokers, where traders usually have access to raw spreads.
Financing & Hedging: Swap rates on leveraged overnight positions is another cost traders must consider. Hedging is another way CFD brokers make money. It is necessary to limit liabilities when clients earn profits, which remain offset by hedged positions in other markets totaling the order book.
The Best CFD Trading Platforms
The MT4, MT5, and cTrader remain among the most deployed trading platforms with full support for automated trading solutions. They are available as a desktop client, a webtrader, and a mobile app. The best CFD brokers additionally deploy proprietary trading platforms or offer upgrades to existing ones to ensure clients have an edge.
What Makes a Good CFD Broker?
While preferences among traders differ, the following deserve consideration:
Fee Structure: Tight spreads and low commissions with a volume-based rebate system remain the most competitive offer for active traders.
Products and Markets: Traders should seek a broad asset selection and competitive trading tools to gain a competitive edge. Support for third-party applications is an additional benefit.
Account Opening: A swift online process with mandatory account verification remains the established industry standard.
Deposits and Withdrawals: The best CFD Forex brokers offer low-cost and instant third-party non-banking payment processors.
Web Trading Platform: Proprietary trading platforms offer manual traders an excellent alternative. The best CFD brokers have APIs to allow third-party solutions access.
Final Thoughts
CFDs are a flexible, leveraged, short-term trading instrument. The benefit of CFDs is that traders can trade a vast array of different instruments via CFDs, since brokers nowadays create CFDs on practically all asset classes (stocks, forex, commodities, indices, metals, bonds). However, traders need to have a firm grasp of risk management and money management principles to properly trade CFDs while avoiding margin calls.
FAQs
Is Forex trading a CFD?
Forex trading is not CFD trading per se, but there are CFDs available to trade on currency pairs provided by CFD Forex brokers.
Why is CFD illegal?
CFD trading is legal in most parts of the world, with the US and Canada being an exception, where outdated regulation does not permit OTC products that do not pass through a regulated exchange.
How do you trade CFDs in Forex trading?
You need to have a funded account with a CFD Forex broker and trading knowledge with experience.
How do brokers make money on CFDs?
CFD brokers primarily earn money from spreads, commissions, and swap rates on leveraged overnight positions. As market makers, they also profit from client losses where they are the direct counterparty.
Are CFDs good for beginners?
CFDs are suitable for beginners who take the appropriate time to learn and understand what CFDs are and how to trade them. From an educational perspective, they are neither better nor worse than other wrappers, but they are the most efficient ways to trade financial markets.
Can CFDs be profitable?
Profitability depends on traders and their strategies, as CFDs are only a tool that allows traders to earn profits but cannot do so on their own, like other assets. CFDs, given their structure, represent the most efficient methods for traders to profit from price action.
How much money do you need to trade CFDs?
Capital requirements to trade CFDs depend on the expectations of individuals, but portfolios below $5,000 will struggle to execute a diversified trading strategy. While traders may start with notably smaller accounts, they may not warrant the efforts necessary to achieve micro-profits unless portfolio managers ignore risk management, which usually results in losses. Therefore, traders should follow a portfolio growth strategy consisting of organic growth and follow-on deposits until they have sufficient funds, often a minimum exceeding $25,000, to achieve desired portfolio performance within acceptable risk parameters.
What assets can you trade with a CFD broker?
The asset selection depends on the broker offering CFDs, but all financial instruments are available as CFDs, especially at brokers that write CFDs based on client demand.
I’m a trader and manage my own capital. I trade the major Forex pairs, some Futures contracts, and I rely entirely on Technical Analysis to place my trades. Today, I am also a Senior Analyst for DailyForex.com.
I began trading the markets in the early 1990s, at the age of sixteen. I had a few hundred British pounds saved up (I grew up in England), with which I was able to open a small account with some help from my Dad. I started my trading journey by buying UK equities that I had read about in the business sections of newspapers. The 1990s were a bull market, so naturally, I made money.
I was fortunate enough in my early twenties to have a friend that recommended a Technical Analysis course run by a British trader who emphasized raw chart analysis without indicators. Having this first-principles approach to charts influences how I trade to this day.
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