In this guide, we go over the best CFD trading platforms based on various factors. We looked at some of the top CFD brokers available to make this list. When comparing CFD brokers, we examine the fees and commissions on trades, customer service, ease of use, and other essential factors.
Table of Contents
- List of The Top CFD Brokers 2023
- 1. eToro – Best CFD Trading Platform Overall
- 2. Pepperstone – Best CFD Trading Platform For Forex
- 3. FP Markets – Best ECN Pricing CFD Trading Platform
- 4. AvaTrade – Best CFD Trading App
- 5. Interactive Brokers – Best Market Access CFD Trading Platform
- 6. Plus500
- 7. XTB
- 8. XM
- 9. IQ Option
- 10. Markets.com
- Compare CFD Trading Platforms
- What is CFD Trading?
- How to Pick the best CFD trading platform?
- Bottom Line
- FAQ
List of The Top CFD Brokers 2023
Below we ranked the leading online CFD brokers. We base our analysis on various factors such as fees, security, regulation, trading software, mobile apps, asset classes, customer support, and more.
This is our selection of the best CFD platforms:
- eToro – Best CFD Trading Platform Overall
- Pepperstone – Best CFD Trading Platform for Low Spreads
- FP Markets – Best CFD Trading Platform For Forex Execution
- AvaTrade – Best CFD Trading Platform for Forex
- Interactive Brokers – Best CFD Trading Platform for Market Access
- Plus500 – Great CFD Trading Platform
- XTB – Good CFD Trading Platform
- XM – Best CFD Broker for Education
- IQ Option – Best CFD Trading Platform for Digital Options
- Markets.com
- IG – Well Established CFD Broker
PFI Rating: 4.9/5
1. eToro – Best CFD Trading Platform Overall
eToro was founded in 2007 and is our pick as one of the best CFD trading platforms. They provide brokerage to millions of users and facilitate thousands of transactions every hour. They are the best social and copy trading platforms for beginner CFD traders.
Top-tier regulators like the FCA, CySEC, ASIC, and FSAS regulate eToro. eToro is a reliable CFD broker.
77% of retail investor accounts lose money when trading CFDs with this provider.
They offer CFDs on Stocks, ETFs, Forex, Crypto, Indices, and Commodities. eToro uses advanced risk management features like customizable stop losses and real-time alerts. It is a great CFD stock trading platform that offers zero-commission stock trading on selected stocks.
Key facts:
- eToro offers the most CFD cryptocurrency pairs (46+). Compared to Plus500, eToro offers 206.7% more cryptocurrency pairs and 283.3% more than Pepperstone.
- Regarding CFD forex currency pairs offered, eToro has 30.99% less than Plus500 and 21% less than Pepperstone.
- eToro has 566.7% more Share CFDs than Pepperstone and 110.4% compared to Plus500.
PFI Rating: 4.9/5
2. Pepperstone – Best CFD Trading Platform For Forex
Pepperstone is our top pick as the best CFD trading platform for Forex .
Top-tier financial authorities like the ASIC, CySEC, FCA, SCB, DFSA, BaFin (Federal Financial Supervisory Authority), and CMA regulate Pepperstone.
They offer CFDs on Forex, Shares, Stock Indices, and Crypto CFDs.
Pepperstone is best for low forex fees because they have low or zero spreads and fast execution speeds.
Between 74-89 % of retail investor accounts lose money when trading CFDs.
Further, Pepperstone has competitive commissions and low spreads. They offer both MT4 and MT5, along with social trading and Algorithmic trading.
Key facts:
- Pepperstone offers approximately 26.53% more currency pairs than eToro, but 85% fewer Share CFDs.
- Plus500 offers 14.6% more currency pairs than Pepperstone (71+ pairs for Plus500 compared to 62+ pairs for Pepperstone).
- FxPro has 11.3% more currency pairs, with 69 pairs, while Plus500 offers 14.6% more currency pairs, with 71. On the other hand, Pepperstone has a significantly larger selection of currency pairs than eToro (26.5% more) and ThinkMarkets (34.8% more), which offer 49+ and 46+ currency pairs, respectively.
- Pepperstone has a smaller selection of cryptocurrency CFDs compared to eToro. eToro offers the most with 46+ pairs, offering 283.3% more crypto pairs than Pepperstone.
PFI Rating: 4.9/5
3. FP Markets – Best ECN Pricing CFD Trading Platform
FP Markets is our top pick as the best CFD trading platform offering ECN pricing. FP Markets was founded in 2005 and is great for its electronic communications network (ECN) pricing. ASIC and CySEC regulate it.
They offer CFDs on Foreign Exchange Trading, Metals, Shares, Commodities, Indices, Cryptocurrency, Bonds, and ETFs.
The minimum deposit is $100. FP Markets offers free withdrawals and deposits. They offer ten base currencies.
FP Markets is best for forex CFDs as they offer tight spreads and fast execution speeds. FP Markets excels in terms of its fee and pricing structure. They are one of the few CFD brokers who don’t charge inactivity fees.
Between 74-89 % of retail investor accounts lose money when trading CFDs.
FP Markets offers MT4, MT5, and cTrader trading platforms and Autochartist and Trading Central services. An added bonus is their MAM and PAMM accounts for traditional account management.
FP Markets offers copy trading.
PFI Rating: 4.9/5
4. AvaTrade – Best CFD Trading App
AvaTrade is our pick as the best CFD trading app.
Avatrade was founded in 2006 and is one of the most regulated fixed-spread CFD brokers. Top-tier regulators like the FCA, ASIC, FSCA (Financial Sector Conduct Authority), FRSA, Israel Securities Authority, Financial Services Agency, and Financial Futures Association of Japan regulate Avatrade.
The AvaTrade minimum deposit is $100. Their CFD fees are low.
76% of retail investor accounts lose money when trading CFDs with this provider.
Regarding copy trading tools, AvaTrade offers a proprietary trading platform, AvaSocial, along with DupliTrade and Capitalise.ai.
They offer CFDs on Forex, Stocks, Commodities, FX Options, Cryptocurrencies, Indices, ETFs, and Bonds.
The maximum leverage is set 1:400 on MT4 and MT5, giving access to the integrated Trading Central dashboard.
PFI Rating: 4.9/5
5. Interactive Brokers – Best Market Access CFD Trading Platform
Interactive Brokers is the best CFD trading platform for market access. Interactive Brokers was founded in 1978 and is regulated top tier regulators worldwide. They offer the best CFD market access from this list.
They offer CFDs on Stocks, ETFs, Options, Futures, Currencies, Cryptocurrencies, US Spot Gold, Bonds, Mutual Funds, and Hedge Funds.
On Interactive Brokers' Official Website
They offer a mobile trading app, a desktop trading platform, and a web-based platform which are the best CFD trading platforms in the industry.
Traders can access advanced charting tools on Trader Workstation, live news streams, price quotes, and more.
There is no minimum deposit at Interactive Brokers. They offer one free withdrawal per month.
There are no inactivity fees. Interactive Brokers has one of the lowest and most competitive margin rates in the industry.
CFD trading fees are low. With IBKR CFDs, you get direct market access (DMA Brokers).
PFI Rating: 4.8/5
6. Plus500
Plus500 was founded in 2008 and is regulated by FCA, CySec, MAS, ASIC, FSA, and FMA. Plus500 is a leading global brand when it comes to CFDs.
They offer CFD trading instruments on Shares, Forex, Commodities, Indices, Crypto, Options, and ETF trading.
Plus500 minimum deposit is $100. They offer a demo account. CFD fees are low, and Plus500 charges an inactivity fee.
Their Mobile app is good but lacks customization for advanced users.
86% of retail investor accounts lose money when trading CFDs with this provider.
- Plus500 provides a remarkable 378.6% more Index CFDs than Pepperstone (67+ Index CFDs for Plus500 compared to 14+ Index CFDs for Pepperstone).
- Plus500 offers a significantly larger selection of Share CFDs, with 505.3% more options than Pepperstone (1816+ Share CFDs for Plus500 compared to 300+ Share CFDs for Pepperstone).
7. XTB
XTB was founded in 2002 and is listed on the Warsaw Stock Exchange. This means they disclose their financial data. The FCA, CySEC, and the International Financial Services Commission in Belize regulate XTB.
The minimum deposit is $0.
They charge an inactivity fee of $10/month after 12 months of inactivity.
They offer CFDs on Forex, Indices, Commodities, Stocks, ETF CFDs, and Cryptocurrencies.
Their fee and commission structure is competitive and in line with other retail CFD brokers. They offer commission-free stocks and ETFs for trades up to $100k/month. The stock index CFDs fees are especially low compared to other brokers like eToro or Plus500.
| PROS | CONS |
|---|---|
| Free withdrawals over $10 | Inactivity fees |
| Made for CFD and Forex | |
| Excellent educational tools |
8. XM
XM was founded in 2009 and is a well-regulated CFD broker. CySEC, ASIC, ESMA, and BaFin regulate XM.
The minimum deposit is $5. XM charges an inactivity fee of $15 after one year of inactivity and then $5/month. XM offers competitive tight spreads on major currency pairs.
XM offers outstanding research educational resources. They offer CFDs on Shares, Forex, Commodities, Equity Indices, Precious Metal CFDs, Energies, and Stocks.
| PROS | CONS |
|---|---|
| Social platform allows for copy-trading | Various account types do not feel distinguished from one another |
| Compiles and publishes research and market analysis | Customer support available Monday to Friday |
| $100,000 demo account |
9. IQ Option
IQOPTION LLC with company number 905 LLC 2021 and having its registered address at Hinds Building, Kingstown, St. Vincent and Grenadines. They launched in 2013 and have built a reputation.
Opening an account with IQ Option is simple. The minimum deposit amount is relatively low which is attractive to new traders. Traders can choose between multiple account types to suit their needs.
They offer a free demo account.
| PROS | CONS |
|---|---|
| Lots of CFD trading instruments | Customer service responses are sometimes slow |
| The mobile app is great | |
| Deposits are quick |
RISK WARNING: YOUR CAPITAL MIGHT BE AT RISK
10. Markets.com
Markets.com is a publicly listed CFD brokerage firm regulated in five different jurisdictions. The broker uses their platform – MarketsX. It’s well-designed and easy to use with integrated research tools.
Aside from its MarketsX offering, traders also have access to the popular MT4 and MT5 platforms. However, these platforms have fewer instruments than MarketsX and are also more costly.
| PROS | CONS |
|---|---|
| Web trader is easy to use | Spreads are higher than competitors |
| Over 2000 CFDs are available | Integrated research tools could be expanded |
| Trustworthy and regulated |
11. IG
IG is one of the biggest CFD brokers founded in 1974, offers 19000+ tradeable symbols, and operates a bank.
IG is regulated by many authorities worldwide such as the ASIC, JFSA,CFTC, MAS, FSCA, DFSA, FINMA, BaFin, and FCA. Today, IG is one of the largest CFD brokers.
IG offers CFDs on Forex, Indices, Shares, Cryptocurrencies, Bonds, Options, and Commodities. There is no minimum deposit for bank transfers and a $300 minimum for card payments.
The inactivity fee is $18/month but only after 24 months. Other CFD brokers like AvaTrade, eToro or Plus500 charge an inactivity fee after 3-12 months.
IG offers negative balance protections for traders in the UK, EU and USA. Negative balance protection depends on the account type for retail clients from Australia, Switzerland, South Africa, New Zealand, and Dubai.
| PROS | CONS |
|---|---|
| Exclusive trading platform | Fees on stock and Forex CFDs |
| One of the oldest retail CFD brokers | Account opening is slow |
| They publicly disclose their financial statements |
Compare CFD Trading Platforms
Below we compare top-rated CFD brokers.
| Trading Platform | eToro | Pepperstone | FP Markets | AvaTrade | Interactive Brokers | Plus500 |
|---|---|---|---|---|---|---|
| Founded | 2007 | 2010 | 2005 | 2006 | 1978 | 2008 |
| Regulation | FCA, CySEC, ASIC, FSAS | ASIC, CySEC, FCA, SCB, DFSA, BaFin, CMA | ASIC, CySEC | FCA, ASIC, FSCA, FRSA, Israel Securities Authority, Financial Services Agency, Financial Futures Association of Japan | SEC, CFTC, FCA, NFA | FCA, CySec, MAS, ASIC, FSA, FMA |
| Offering Of Investments | Stocks, ETFs, Forex, Crypto, Indices, Commodities | CFDs on Forex, Crypto, Shares, Indices, Crypto | Forex, Shares, Metals, Commodities, Indices, Cryptocurrency, Bonds, ETFs | Forex, Stocks, Commodities, FXOptions, Cryptocurrencies, Indices, ETFs, Bonds | Stocks, ETFs, Options, Futures, Currencies, Cryptocurrencies, US Spot Gold, Bonds, Mutual Funds, Hedge Funds | Shares, Forex, Commodities, Indices, Crypto, Options, ETFs |
| Minimum Deposit | $50 - $100 | $0 | $100 | $100 | $0 | $100 |
| Demo Account | Yes | Yes | Yes | Yes | Yes | Yes |
| Withdrawal Fee | $5 | $5 | $0 | $0 | 1 Free Withdrawal per Month | $0 |
| Inactivity Fee | $10/month | $0 | $0 | $50/month After 3 Months | No | Yes |
| Deposit Methods | PayPal, Skrill, Neteller, Credit Card, Debit Card, Rapid Transfer,iDEAL, Klarna / Sofort Banking, Bank Transfer, Online Banking - Trustly, POLi | Credit/debit cards, Bank/Wire Transfer, PayPal, Neteller, Skrill, UnionPay | Credit Cards. Debit Cards, Bank Transfer, Ngan Luong, FasaPay, Online Pay, Broker to Broker, Neteller, Skrill, PayTrust, PayPal, Bpay, Poli | Credit and Debit Cards, Wire Transfer, e-payments | Bank Wire, Credit Cards, ACH, Mail a check, Rollover, Online Bill Pay, Trustee-to-Trustee, SEP Contribution | PayPal, Skrill, Credit Card, Debit Card, Bank Transfer |
Compare CFD Trading Platform Fees
While it is hard to compare the fees of CFD brokers, we made the table below to help you. In addition to the regular trading fees, you should be aware of other non-trading costs.
| Trading Fee | eToro | Pepperstone | FP Markets | AvaTrade | Interactive Brokers | Plus500 |
|---|---|---|---|---|---|---|
| EURUSD | Varied Spread | Minimum from 0.0 and 0.17 average spread (Razor Account) Minimum from 0.6 and 0.77 average spread (Standard Account) | from 0.0 - 1.3 (average 0.2 pips) | Spread: 0.9 | Spreads | Spread: 0.01% |
| GBPUSD | Varied Spread | Minimum from 0.0 and 0.59 average spread (Razor Account) Minimum from 0.6 and 1.19 average spread (Standard Account) | from 0.0 - 1.8 (average 0.7 pips) | Spread: 1.5 | Spreads | Spread: 0.02% |
| Apple Fees | $0 | 0 + market spread | Spread | 0.13% | $0 commissions | Spread: 0.74% |
| Tesla Fees | $0 | 0 + market spread | Spread | 0.13% | $0 commissions | Spread: 0.75% |
| Amazon Fees | $0 | 0 + market spread | Spread | 0.13% | $0 commissions | Spread: 0.75% |
| S&P 500 Fees | Varied Spread | min. 0.4 spread | Spread | 0.25 over market | N/A | Spread: 0.02% |
| Options Fee | N/A | N/A | N/A | N/A | N/A | Spread |
| Mutal Fund Fees | N/A | N/A | N/A | N/A | N/A | N/A |
| ETF Fee | $0 | N/A | N/A | 0.13% - 0.15% | $0 commissions | Spread |
What is CFD Trading?
CFDs or contracts for difference are a derivative product available outside of the U.S. CFDs are traded based on the performance of an underlying instrument. An agreement between a trader and their CFD broker concludes after a predetermined length of time. CFDs are complex financial instruments that speculate on price fluctuations. Traders can benefit whether a CFD instrument price goes up or down. CFDs have tax advantages over asset ownership and leverage advantages compared to trading on margin.
CFDs were first traded on the London Stock Exchange in the early 1990s. CFDs were originally utilized by hedge funds and asset managers. The rise of retail CFD accounts has brought access to CFDs to retail traders.
As the price of the underlying asset moves, the trading account has an unrealized loss or unrealized profit. Profits or losses are only realized when the position is closed.
For example, if you buy a CFD on the USD/EUR currency pair and the price moves higher, the unrealized profit is the difference between the buying and selling price minus trading costs.
Regulation surrounding CFDs has been slow to adapt to the growing markets. Some regions, such as the US, Brazil, and Hong Kong, have banned CFD outright.
CFD vs. Investing
CFDs and investing are two different strategies traders use to speculate on the performance of a particular market.
The main difference between CFD and investing is that with CFDs, the trader owns the underlying asset at no point. CFDs are simply contracts that speculate on whether security will trend upwards or downwards over a pre-determined length of time.
For example, when you purchase a stock through your broker's trading platform, your CFD broker holds the stocks, and you don't own the asset.
When investing in real shares, you gain rights such as dividend payouts, voting, and proxy meetings. Some CFD brokers provide dividend payouts to mimic the trading of underlying stocks (real shares).
Investors own, either in part or in whole, the stock, currency, or commodity they are investing in. This also means investors can only make money when their investment gains value.
With CFD trading, it is also possible to short sell.
CFD vs. Spread Betting
CFD trading experience and Spread Betting are similar in many ways. They are both speculative and based on the performance of an underlying instrument. They are also both frequently traded using leverage and margins.
Spread Betting is often done through third-party over-the-counter (OTC) brokerages. The retail brokers on this list do not provide any form of spread betting. Because of their OTC nature, it is possible to place spread bets on company stocks that are not publicly listed.
One of the most significant differences between Spread Betting and CFD is that Spread Betting is not seen as an income and, therefore, is not subject to capital gains taxes. Spread Bets are also not charged fees and commissions.
Spread Betting is viewed more as a form of gambling. Because of this, it is not suitable for Muslim traders.
Countries where you can trade CFDs
Most countries allow CFDs, but there are exceptions.
CFD trading is illegal in the USA, Brazil, Belgium, and Hong Kong.
Residents in these countries can still trade CFDs, but they must use regulated CFD brokers outside their region. This carries significant risks since these tend to have lower levels of security and trust.
What are the Risks of CFD Trading?
Trading securities carries a high degree of risk. CFDs are popular with day traders, as they can use leverage to trade costly assets to buy and sell, they carry risks. CFDs are risky due to leveraged losses, lower industry regulation, liquidity problems, and the margin needed to keep positions open.
As a rule of thumb, never put in more than you are willing to lose. Make sure to size your positions with a small percentage of the trading capital.
Leverage has its benefits, but there are also significant drawbacks. The recent Gamestop-Reddit saga is an excellent case study of the potential harm of trading with leverage.
With CFD Brokers, traders get access to higher leverage than with margin accounts. This allows them to trade big positions with little equity. On the other hand, if a trade goes against a trader, it results in a margin call. Leverage is only for experienced investors.
The low margin requirement is one of the main reasons that CFDs are illegal for U.S. traders. FINRA requires a 25% maintenance margin for stocks. Stock CFD trading with a 1:20 leverage only requires a 5% maintenance margin.
Traders should be aware that more than two-thirds of traders lose money when trading CFDs across various platforms.
What does Margin mean with CFDs?
CFD margin trading is the initial capital traders need in opening a CFD position. Depending on the leverage ratio, marginal capital is increased proportionally to secure a larger market exposure than the initial amount would have allowed. Some CFD brokers will enable a margin of 2% so that you can borrow up to 98% of the position's value. This gives you more buying power than most other traditional trading options.
If a trader speculated the movement of the CFD incorrectly, they might lose more than the marginal investment.
What does Leverage mean with CFDs?
CFDs are leveraged products. The leverage a trader has access to shows the amount a CFD broker will increase the initial investment size. With CFDs the broker offers leverage, a loan, that allows traders to take larger positions with a small initial deposit.
Leveraged trading is the ratio of the increased volume against the initial investment, for example, 100:1. In other words, an initial investment of $100 can be increased to a position at $10,000.
Local regulations set maximum leverage ratios. Some regions, like the EU, are more strict and limit leverage ratios to 30:1.
What are the Benefits and Drawbacks of CFDs?
CFDs are a complicated and volatile market. We’ve compiled a brief list of the pros and cons of CFDs.
If you’re looking for more information, skip to the end of this article, where we’ve compiled an FAQ and other important information on the subject.
Pros
- Leverage
- It’s possible to go long or short.
- Commission on CFD assets tends to be lower than on traditional investments.
Cons
- CFD Brokers charge overnight fees for any contracts held over a trading day.
- Using leverage for CFD increases the potential loss traders may face.
- Traders do not own the underlying instrument.
How to Pick the best CFD trading platform?
Before choosing a CFD broker, you should consider security, regulation, fees and commissions, markets available, account types, trading platforms, customer support, investor protection, and more. The best CFD trading platforms should be outstanding in the following areas:
Regulation
You should always use regulated CFD brokers. Depending on which country it operates in, it will be subject to different types of regulation. Traders must understand the ins and outs of these regulations.
Different regulatory zones may have rules determining maximum leverage amounts.
- UK: FCA (Financial Conduct Authority) regulates CFD Brokers. Leverage and margin limitations.
- EU: Pan-European regulator ESMA (European Securities and Markets Authority). Makes recommendations to the FCA, CySec (Cyprus Securities and Exchange Commission) in Cyprus, and Bafin in Germany.
- Dubai: Central Bank of The UAE and the Dubai Financial Services Authority (DFSA).spre
- Switzerland: Swiss Financial Market Supervisory Authority.
Regulations will determine what you’re allowed to trade, leverage, and whether your funds are kept in segregated accounts.
Can you trust the broker?
You can trust the brokers. Brokers have to undergo audits to be regulated. They have to meet capital requirements, provide negative balance protection, and have segregated accounts. You should always search the regulators website to confirm the broker's status.
Payment Methods
Most brokers allow instant deposits with credit/debit cards. Traditional brokers often allow only bank wire deposits, which means you will have to wait 2-3 days for the funds to arrive.
All providers on this page offer debit/credit card deposits, while some provide e-wallet deposits and withdrawals.
Make sure there are no fees on your chosen payment method. For example, IG charges a 0.5% and 1% fee on MasterCard and Visa credit cards.
Fees & Commissions
Most CFD brokers charge a spread. Some brokers also charge commissions, swap rates, currency conversion fees, spreads, withdrawal charges, and inactivity fees. Compared to traditional assets, CFDs have low fees.
Some CFD brokers, like eToro, don’t charge traders much in commission. Instead, they take a cut of each trade when a position is opened or closed. Others make money by charging monthly subscription fees.
Traders who leave their accounts for months without activity may be charged inactivity fees. They use these fees to encourage users to remain active.
Platforms like FP Markets that don’t charge any inactivity fees are rare.
Overnight financing fees
Overnight financing fee is a fee that a trader pays to hold a CFD position overnight on leveraged trades. In a nutshell, it is an interest payment that covers the cost of borrowed capital. The overnight funding fee is only applied to positions with no expiry date.
Range of Markets
Depending on the CFD trading platform, you can access a different range of CFD Products. Because trading is done based on the performance of the underlying security or instrument, the more traders have access to, the more versatile you can be in your strategy. Wide range of markets gives traders the ability to diversify across multiple asset classes.
CFD Brokers like Plus500 and eToro have a broad asset selection.
What are the Types of CFD Accounts?
Most retail CFD brokers offer different account types to their traders. These accounts differ in terms of their spreads, commissions and trader types. Some CFD accounts like higher tiers have access to more innovative trading tools.
In general, the account types are:
- Micro account – Best for beginner retail traders. Minimum deposits are typically around $50.
- Mini Account – Better for intermediate retail traders. Minimum deposits around $500.
- Standard Account – These are the most popular account types. Minimum deposits start at around $1,000.
- VIP or Premium Account – Used by the higher tiers of institutional investors. Minimum deposits of $20,000 and up. Premium and VIP accounts often have lower spreads and commission, dedicated account manager, premium research and top level trading tools.
When picking a trading platform, find one that has a demo account. This list only includes the ones that give access to demo accounts. For most casual traders, standard accounts will suffice their needs. It is recommended to open a demo account to evaluate the broker's trading platform with virtual funds without risking real trading funds.
Trading Platforms Available
Many use third-party trading platforms to execute trades. MetaTrader 4 and 5 (MT4/MT5) are the most popular platforms.
Your trading platform will change the instruments you can trade on. Your choice of platform will also affect how much you are charged for each trade.
Some, such as IG and Markets.com, have proprietary trading platforms. This means they have set up their platform through which all trades are executed. A CFD broker that uses its platform tends to have lower slippage and a higher degree of accuracy. Smaller platforms may have access to fewer security options.
Customer Support
You should always look for a CFD broker that provides great customer support. Because CFDs international markets are volatile, you never know when you will need quick and competent support.
Look for brokers offering email, live chat, phone, WhatsApp, and Telegram support. A bonus is 24/7 support.
One of the best CFD trading platforms, AvaTrade, won numerous awards for excelling in customer care.
Types of CFD brokers
CFD brokers fall into two categories: Dealing Desk (DD) and No Dealing Desk (NDD).
DD are also known as market makers. In a CFD trade, a DD CFD broker takes the other side of a trader’s position.
DD earns its profits when the trader makes a loss, and vice-versa. Many traders see this as a potential conflict of interest. In the past, brokers have been caught actively working against their client’s trades.
DD are advantageous in that they offer fixed spreads.
No Dealing Desk (NDD) brokers connect clients with liquidity providers. They utilize straight-through processing (STP) to link a trader’s CFD bid to a third-party liquidity provider. Because of this, NDDs are not involved in the trade; they only facilitate it. NDD brokers usually require higher minimum deposits and don't cover liquidity gaps. They can be either STP, ECN or DMA brokers.
Many traders feel more comfortable with NDD since they are not a party in the trade. They have no interest in whether the trader wins or loses.
How do CFD Trading Platforms make money?
CFD Brokers make money in two ways.
Firstly, they charge a commission for trades. They will take a percentage of every trade's opening and closing positions. Although this percentage is small (less than 1%), the volume of trades the CFD broker executes daily makes up for it.
A DD broker will make money off of their clients’ losing trades. Because DD brokers take the opposite position of their clients’ CFD, they have to pay out whenever a client wins. When a client loses, they pay their losses to the broker.
Bottom Line
To summarize, the best CFD Trading platforms are:
- eToro – Best CFD trading Platform Overall
- Pepperstone – Best CFD Trading Platform for Low Spreads
- FP Markets – Best Forex CFD Trading Platform
- AvaTrade – Best CFD Trading App
- Interactive Brokers – Best CFD Trading Platform for Market Access
FAQ
Why are CFDs banned in the US?
The Securities and Exchange Commission (SEC) ruled against OTC stock options owing to their volatility. According to the SEC, the high-risk nature of leveraged CFD trading and the fact that most traders lose money on trades. The CFTC regulates the spot forex cash market, so U.S. clients have to trade with a U.S.-regulated forex broker.
Is CFD Trading Tax-Free?
Unlike spread betting, which is considered a form of gambling, CFD trading is seen as income. Countries have various laws for CFD profits, so you should consult your local tax advisor.
Is CFD Trading Gambling?
CFD trading isn’t considered gambling. Traders with a keen eye on the market can accurately predict the movement of a particular underlying asset. Although it’s not considered gambling, potential traders should know that CFDs are speculative. Even the most obvious predictions can go awry.
Are CFDs safe?
CFDs are considered highly volatile. Traders should be aware that the majority of CFD traders lose money. It is not considered safe.
