Best CFD Trading Platform 2023

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. 

List of The Best CFD Brokers 2023

Below we ranked the best brokers for CFDs. We base our analysis on various factors such as fees, security, regulation, trading software, mobile apps, tradeable assets, customer support, and more. This is our selection of the best CFD platforms.

Compare CFD Brokers

Below we compare top-rated CFD brokers.

Compare CFD 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.

What is CFD Trading?

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.

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 speculative. Traders try to predict whether a CFD instrument price changes up or down.

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.

Margin 

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.

Leverage

CFDs are leveraged products. The leverage that a trader has access to shows the amount that a broker will increase the initial investment size. This allows traders to take larger positions than they otherwise could.

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.

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 a CFD Broker?

Regulation

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.

Regulations will also determine what you’re allowed to trade and whether your funds are kept in segregated accounts.

Fees & Commissions

There are many ways that CFD brokers charge their clients to earn money. CFD Brokers charge commissions, swap rates, currency conversion fees, spreads, withdrawal charges, and inactivity 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.

Securities Available

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.

CFD Brokers like IQ Option and eToro have a wide range of securities to trade.

Account Types

Most retail CFD brokers offer different account types to their traders. These accounts differ in terms of their spreads and commissions. With some, higher tiers of accounts have access to more innovative 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. These accounts are typically limited to any account opened with less than a $100,000 deposit, but it changes depending on the platform.

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 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 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.

AvaTrade won numerous awards for excelling in customer care. 

CFD vs Investing

CFDs and investing are two different techniques traders use to speculate on the performance of a particular market.

The main difference between CFD and investing is that with CFDs, at no point does the trader own the speculated security. CFDs are simply contracts that speculate on whether security will trend upwards or downwards over a pre-determined length of time.

Investors own, either in part or in whole, the stock, currency, or commodity they are investing in. This also means that investors can only make money when their investment gains value.

With CFD trading, it is also possible to go short.

CFD vs Spread Betting

CFD trading 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.

Risks of CFD Trading

CFDs carry their share of risks. Many have risk management tools such as stop-losses and alerts. Traders are encouraged to use these tools to protect themselves against major financial losses.

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.

Brokers leverage a trader’s initial margin to secure a larger position.

Traders should be aware that across various platforms, more than two-thirds of traders lose money when trading CFDs. 

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 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.

NDD brokers 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.

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 Brokers 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 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.

FAQ