We’ve made a list of the best CFD brokers available to British clients living in the UK. We’ve also put together a list of resources to further explain what CFD trading is and how to do it. Make sure you understand how any trading platform works in depth before committing your money to it. As a trader living in the UK, you have access to some unique trading tools which aren’t available to the rest of the globe. One of these tools is trading Contracts for Difference (CFD). We have a full list of best online brokers in the UK.
Best CFD Trading Platforms UK 2021
We looked at some of the highest regarded CFD brokers available to make this list. When comparing brokers, we examined fees and commission on trades, customer service, ease of use, and other important factors.
This is our selection…
- Interactive Brokers
- City Index
- Admiral Markets
- CMC Markets
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% 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.
Plus500 is one of the most regulated brokers on our list. They launched in Israel in 2008 and have since expanded, adding offices in 9 other regions.
They currently support over 15 different base currencies for trader accounts and are constantly adding more. The minimum deposit amount is relatively high, but Plus500 does very well with fees and commission. Their rates are highly competitive and they charge 0 withdrawal fees. Read Full Plus 500 Review
|Trading Platform||Research Tools|
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% 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 is one of the most popular brokers globally. Their are best known for their copy trading platform. eToro has millions of active users. Their platform is easy to use and has great risk management tools. Read Full Review
|Wide Range Of Securities||Minimum Deposit of $200|
AvaTrade is based in Dublin, regulated by the Central Bank of Ireland. They pride themselves on good financial and cyber security.
MetaTrader 4 & 5 (MT4/MT5) are both supported by AvaTrade. AvaOptions, their proprietary trading platform, is built to trade on CFDs.
The login system uses single-step authentication, which has been known to be a soft-spot for cybersecurity.
|Wide range of markets||Demo Account Limited to 21 Days|
|Mobile Trading App|
XTB is an online CFD and Forex broker with offices in London and Warsaw. They are primarily regulated by the FCA.
As part of their long track record of reliability, XTB regularly publishes financial statements.
Their commission charges are some of the lowest available. They are one of the rare brokers who have no minimum deposit amount. This is useful for casual traders, but you will need funds to open a trade.
|Forex Fees||Stock CFD Fees|
|Deposit And Withdrawal||Inactivity Fees|
XM is an amalgamated group of retail brokers. They are regulated by CySEC. They have won awards for responsive and attentive customer service as recently as 2020.
XM is a social trading platform that allows users to copy the trading strategies of leading traders. Their platform has over 1 million users so there are a lot of options.
XM has a wide variety of educational material and research tools to help traders be profitable. They have resources that are aimed at both novice and veteran traders.
|Copy Trading||Customer Support|
6. Interactive Brokers
Interactive Brokers have been around for decades. They started operating in the late 70s. Originally based in the UK under the FCA, they have expanded to offices across the globe.
Their platform is highly reliable and experiences next to no down-time.
Their platform is best for more experienced traders.
Interactive Brokers collect and compile lots of market information, but they do not present it clearly. It can be overwhelming to newer users who aren’t accustomed to reading financial data yet.
|Research Tools||Trading Platform Interface|
|No Minimum Deposit||Account Opening|
|Long Track Record|
7. City Index
City Index is part of the GAIN Capital brand listed on the NYSE. They are regulated by the FCA as well as other highly-respected bodies globally.
On top of offering CFDs, they provide access to Forex and Crypto markets.
They are one of the most affordable brokers on this list. Their spreads and commissions are very low. Although they do charge inactivity fees, they are relatively low and only begin after a year of inactivity.
|No withdrawal fee||No fundamental data|
|Easy to use platform||Trading Tools|
|Plenty of tutorials on CFD trading|
PepperStone is based in Australia but is also regulated by the FCA. PepperStone is a private company that is not listed on any stock exchange. Because of this, they do not release any financial statements.
They have a wide variety of account types on offer, including popular ECN and STP types. Accounts with Sharia-friendly investing are available if requested.
PepperStone offers trading with Forex, Crypto, and stocks. They support MT4 and MT5 platforms as well as a host of other options.
|Low inactivity fees||Research|
|Zero charge deposits and withdrawals||CFD Commissions|
|Risk Management Tools|
9. Admiral Markets
Admiral Markets is a retail broker based in Estonia that trades CFD and Forex. They are regulated by the FCA in the UK and other authoritative agencies.
AM has thousands of assets so that traders can use diverse strategies. Their system supports MT4 and MT5 as well as WebTrader.
If you want to trade more than just CFDs, there are commission-free accounts available.
|Segregated Accounts for Funds||Minimum Deposit|
|Wide Range of Trading Platforms||No Fixed Spreads|
|“Zero to Hero” 21-day training course|
10. CMC Markets
CMC Markets is a long-trusted publicly-listed forex broker. They are based in the UK and regulated by the FCA as well as other agencies.
CMC offers one of the widest ranges of tradable instruments at over 10,000 instruments.
Unlike most other brokers, their customer care line is open 24/7. This attention to detail when it comes to customer service is what sets them apart from their competitors.
CMC Markets has hours of educational content on their website which is great to get any novice trader right into the swing of things.
|Research Tools||CFD Commissions|
IG is one of the largest retail brokers in the world. They are regulated by trusted authorities in many regions, including the UK’s FCA and BaFin in Germany.
IG uses a proprietary trading platform. This platform outperforms other brokers that rely on MT4 or MT5. The UI is customizable and quick to learn. It generates concise reports for every trader.
|Company History||Account Opening|
|Release Financial Statements|
FxPro is a No Deal Desk (NDD) broker regulated by many industry authorities globally. They have been operating since 2011 and have a positive track record of reliability.
They have options for Islamic-friendly accounts, although these exclude CFD options.
The FxPro platform facilitates copy-trading, which allows users to mimic the trading strategies of high-profit portfolios. Their platform is best for new and novice traders looking to start.
|Account Opening||Customer Support|
|Allows Hedging and Scalping||Education and Research|
What is CFD Trading?
CFDs are contracts between traders and brokers for a set period. Contracts are bought or sold by traders and are linked to an underlying instrument.
Traders do not own the instrument they are speculating on. Instead, they use the CFDs to speculate on whether the instrument trends upwards or downwards over a specific period.
Regulation and specifics in the UK
CFD trading in the UK is legal, but it is subject to a set of region-specific regulations. These regulations cover tax status on CFD earnings, as well as rules on leverage maximums.
Brokers in the UK are regulated by the Financial Conduct Authority (FCA). They are the determining body that sets limits on leverage and stop-losses. They also monitor and enforce adherence among brokers.
Leverage limits in the UK are set at 30:1 at a maximum.
The FCA has insisted that a traders position will automatically close if funds fall below half the initial margin amount. Losses are also not allowed to exceed more than the total funds in the trader’s account.
New legislation in 2018 also enforced brokers to report on the total percentage of their accounts that make losses. This reporting has led to some eye-opening numbers in that the majority of retail traders lose money.
Profits made on CFD trades are subject to capital gains tax. On the other end of the spectrum, losses incurred are tax-deductible.
Pros and cons
CFDs are a complicated and volatile market. While it is possible to make large profits, it’s more common that traders make losses. We’ve put together a brief list of the pros and cons of CFD trading.
If you’re looking for more information, skip to the end of this article where we’ve put together an FAQ as well as other important information on the subject.
- Using leverage can lead to massive profits from a relatively small capital.
- It’s possible to make money from both positive and negative performance of the underlying stock.
- Commission on CFD tends to be lower than traditional trading vehicles.
- Brokerages charge overnight fees for any contracts that run over a trading day.
- Using leverage increases the potential loss.
- Traders do not own the underlying instrument.
How to pick a broker
Every broker is different. Depending on where the company is based, it will be subject to different regulations that affect the way you trade.
There are many other aspects, such as which platform brokers use to trade, that will affect whether or not they’re a good fit for you. We’ve gone over some of the most important factors to consider before committing to a broker.
Brokers that are listed in more than one country will be subject to the regulations of all the areas in which they are listed.
Regulation can affect things like leverage maximums, although in the UK leverage is limited to 30:1.
Also consider whether the regulations that your broker adheres to keeps your funds in segregated accounts, which will protect you financially if your broker sees financial difficulty.
Fees & Commissions
Brokers earn their money from people trading on their platform. Some brokers have a monthly or yearly subscription fee. Others earn by taking a proportional cut of each trade they execute.
Many brokers also charge inactivity fees. Brokers make their money from active trading accounts, so they will penalize traders who are inactive.
Brokers will give access to different trading securities, often depending on the platform that they use.
Trading is done based on the performance of an underlying asset. For this reason, the more variety of securities a broker has available, the more diverse your trading strategy can be. As we know, diversity is key to turning a profit.
Finding a broker with a wide range of securities is important, but it’s not the only thing traders should consider.Brokers such as eToro have a wide range of securities. Brokers that only offer CFDs, like Plus500, tend to have a more limited selection.
Retail brokers have many options of account types to choose from. The type of account that traders have access to will depend on many variables, such as the funds deposited and subscription fee.
An important type of account to have access to is a demo account. This lets you try out trading strategies before committing to a broker.
Trading platforms are third-party applications that execute trades and collect data for the broker.
Most brokers use the MetaTrader 4 or 5 (MT4/MT5) platform. Some brokers have designed their own platform. The platform that your broker uses is what determines which securities users can trade.
A broker that uses its own platform executes trades faster and has lower slippage. Smaller platforms tend to offer fewer securities.
One of the most frequent complaints from traders about their broker is poor customer service. Customer care lines are often restricted to office hours. Serving customers from multiple time zones can complicate the process
There are industry awards for brokers with good customer support. AvaTrade is one broker in particular who is well known for having good customer support and has won many related awards.
Leverage and Margin
Leverage and margin are controversial aspects of CFD and retail trading.
Because leverage maximums are set to 30:1 according to UK law, all of the brokers on this list keep to that limit.
Leverage of 30:1 means that you can increase your initial investment (your margin) by 30 times to secure a larger position. This is useful in that traders can earn profits from positions they would not have been able to otherwise secure.
A downside of leverage is that, while you can earn larger profits, you can also lose more than your initial investment.
Trading tools are useful for traders looking to further understand a particular market. Depending on which broker you choose, and which platforms they have access to, traders will use different tools while trading.
These tools are on display on the brokers’ websites. It’s important to go through the tools they have on offer. Some of these tools will be useful to you, others may only be helpful to traders looking for other things.
One of the most useful, if often overlooked tools, is access to an economic calendar. Market fluctuations can seem random, but they are often linked to specific calendar dates.
For example, if you bought CFDs based on the stocks of a Japanese company, it will be helpful to have access to the Japanese financial calendar.
Many brokers will require traders to put up a minimum deposit amount to open an account.
Other than meeting the minimum deposit requirements, your account will also need to have the requisite funds to open your position. Some brokers offer 0 minimum deposit, which is useful for some just looking to start.
Opening an account with nothing in it will mean you cannot start trading.
CFD trading in the UK is legal. This is dependent on your broker adhering to the regulations set out by the FCA. The FCA sets out several guidelines that brokers must follow to legally trade in the UK. One of these provisions is that leverage maximums are set to 30:1. They argue that leverage higher than that is too risky for retail traders. Recently, the FCA prohibited CFD brokers from trading using cryptocurrency derivatives. This means that you cannot trade speculating the value of cryptocurrencies such as Bitcoin.
The steps to open an account depend on the broker you’ve chosen. Before opening a real account, consider opening a demo account first.
Brokers will usually require you to set up an account on their platform by verifying your email and personal details.
After setting up an account, you will be required to link your bank card or other accepted forms of payment. Even brokers who do not have a deposit minimum will require this.
After receiving proof of your details and verifying your account details, you can start trading.
Traders who earn a profit on CFD trading will be required to pay Capital Gains Tax if their earnings exceed their annual CGT threshold. Traders do not have to pay Stamp Duty. If a trader loses money trading CFDs, they can write off their losses as tax-deductible.