Best Brokers for CFD Trading
With over $6 trillion traded every day, the forex market is the largest and most liquid market in the world. The market is open 24 hours a day and five days a week, and you can trade it from anywhere in the world through an online CFD broker. While there are many CFD brokers around, it is important to trade with a trusted broker that charges competitive fees, offers suitable trading conditions for your trading style, and provides the right trading platforms, tools, and research resources.
In this guide, we take a look at the services of various CFD brokers and choose the best in the various categories.
What is a CFD, and who is a CFD broker?
CFD is a short-term for “Contract for Difference.” It is a derivative financial product that represents a contract between the trader and the broker to exchange the difference in the price of an underlying asset between the time a trade is opened and the time it is closed. In the case of forex trading, the underlying is the exchange rate of a currency pair, but it could also be a market index, a commodity (gold, crude oil, etc), a stock, or even cryptocurrency. CFDs make it possible for traders to speculate on the exchange rate without having to deal with the currencies involved.
Usually, the forex market is controlled by major international banks and was available only to big players who can conduct huge transactions with the banks. However, online CFD brokers make the market available to everyone by serving as a middleman between the interbank market and the individual traders. They make it possible for you to trade the price difference without dealing with the currencies involved.
Our choice for the best brokers for CFD trading
We reviewed the services of many CFD brokers, comparing various aspects of their services, such as their regulation status, product offerings, trading fees, trading platforms, customer support, and so on. From our review, these are the best brokers for CFD trading:
Admiral Markets — Overall best, licensed by multiple tier-1 regulators
Fusion Markets — Best for trading fees
HF Markets (HFM) — Best for MetaTrader platforms
eToro — Best for social trading
Global Prime — Best for TradingView platform
AvaTrade — Best for mobile trading app
XM — Best for education and research
FXChoice — Best for customer support
Fineco Bank — Best for stock trading
How CFD brokers work
CFD brokers offer traders access to forex or any other market by offering a contract to exchange the difference in price between the opening and closing prices of a trade. Through this contract, a trader can speculate on the price of the underlying asset without having to deal directly with the asset.
For this, they provide online trading platforms, which could be proprietary or a third-party platform like MT4, through which the trader can access the market of choice and speculate on the prices. In the case of forex pairs, CFD brokers may transmit the spot quotes gotten from their liquidity providers (mostly international banks), but for other assets, they may get the quotes from the exchanges.
How do CFD brokers make money?
CFD brokers make money in so many ways. Primarily, they make money by charging a commission for any transaction they execute for a trader. The commission can be charged separately if the broker gives traders direct quotes from the banks or added to the spread, in which case the broker’s spread would be larger than the raw spreads from the banks.
Other ways brokers make money is by charging non-trading fees, such as inactivity fees and withdrawal fees. Market makers may also take the opposite end of your trades.
Why do I need a broker to trade CFDs?
You need a broker to trade CFDs as they offer you access to the market. Without a broker, you will not have access to the market. As a matter of fact, when trading CFDs, you have a contract with the broker for your speculative trade and do not take possession of the asset you are trading. This is why it is important you trade with a reputable broker that is well regulated.
Can CFD brokers be trusted?
There are many scams in CFD trading. By the nature of CFDs, you depend on the broker honoring the contract to exchange the difference in price when you open and close a trade. Some CFD brokers are market makers, which means that they may take the opposite end of your trade. However, you can trust a CFD broker that is well regulated, especially by tier-1 financial regulators who can supervise their activities and force them to play by the rules.
How are CFD brokers regulated?
CFD brokers are regulated by financial authorities in the countries they operate from. In the UK, for example, the Financial Conduct Authority (FCA) regulates CFD brokers and forces them to comply with their rules at the expense of fines or even jail terms. It is always better to trade with a broker that is regulated by a tier-1 regulator, such as the FCA, CFTC (in the US), ASIC (Australia), IIROC (Canada), CySEC (Cyprus/EU), and so on, than brokers with no regulation.
The difference between dealing-desk brokers and agency brokers
Agency brokers (also known as DMA or ECN brokers) offer their clients direct access to the interbank market quotes so they deal with raw spread. Since their trading fees are not marked up in the spread, they charge trading commissions. Dealing-desk brokers, also known as market makers, not only add their trading fees to the marked-up spread but also take the other side of their clients’ trades.
How to choose the right CFD broker for you
To choose the right CFD broker, the first thing to consider is whether the broker is regulated because that is what can offer you some level of trust. Tier-1 regulation is considered more strict than offshore regulation. If you are concerned about conflicts of interest, you may want to trade with an ECN broker.
Other factors to consider include trading and non-trading fees, the trading platform, and ease of deposit and withdrawals.
Comparing CFD brokers
| Regulation | Execution | Fees | Trading platforms | Available instruments | Minimum deposit | Education resources | |
|---|---|---|---|---|---|---|---|
| Admiral Markets | Yes | Market maker | Spreads Commissions Inactivity fee | MT4 MT5 | Forex Commodities Stocks Indexes Bonds ETFs | $100 | Yes |
| Fusion Markets | Yes | ECN | Spreads Commissions | MT4 MT5 DupliTrade | Forex Commodities Indexes Stocks | $0 | Yes |
| HF Markets (HFM) | Yes | Market maker & ECN | Spreads Commissions Inactivity fee | MT4 MT5 HFM platform | Forex Commodities Indexes Stocks | $100 | Yes |
| eToro | Yes | Market maker | Spreads Commissions Inactivity fee Withdrawal fees | Proprietary platform | Forex Commodities Indexes Stocks ETFs Cryptos | $10 | Yes |
| Global Prime | Yes | ECN | Spreads Commissions | TradingView MT4 | Forex Commodities Indexes Stocks Bonds Cryptos | $200 | Yes |
| AvaTrade | Yes | Market maker | Spreads Commissions Inactivity fee | MT4 MT5 AvaTradeGO AvaOptions | Forex Commodities Indexes Stocks ETFs Bonds Cryptos | $100 | Yes |
| XM | Yes | Market maker & ECN | Spreads Commissions Inactivity fee | MT4 MT5 XM apps | Forex Commodities Indexes Stocks Cryptos | $5 | Yes |
| FXChoice | Yes | Market maker & ECN | Spreads Commissions | MT4 MT5 | Forex Cryptos Commodities Indexes Stocks | $100 | Yes |
| Fineco Bank | Yes | DMA | Spreads Commissions | Proprietary platform | Stocks ETFs Commodities Indexes Forex | $100 | Yes |
Which is the most trusted CFD broker?
The most trusted CFD broker for us is Admiral Markets. The broker is regulated in multiple jurisdictions. It is regulated by several tier-1 regulators, including the FCA, ASIC, and CySEC. It is also regulated in South Africa and other countries where it operates.
The broker with the best trading platform
Most CFD brokers offer the industry standard platforms, MT4 and MT5. But HF Markets (HFM) offers the full suite of the MetaTrader platforms, including the Multiterminal and all the mobile apps. Fineco Bank and eToro offer their proprietary platform. The eToro platform is built specifically for social trading, so it has a robust Copy Trading tool.
In addition to offering the MT4 platform, Global Prime also offers the TradingView platform, which is a highly interactive platform with support for many chart types and automated trading.
The broker with the best mobile trading app
All the brokers offer the trading apps of the MT4 and MT5 platforms. In addition to those, AvaTrade offers its own proprietary AvaTradeGO and AvaOptions platforms with mobile apps, which allow you to trade any instrument, including forex options, on the go. The apps have all the features of the main platform, enabling you to access your trading account, analyze the markets, and place and monitor trades on the go.
The broker with the best education and research resources
XM provides traders with rich educational resources, including forex webinars and seminars, educational videos, platform tutorials, and live education tools. On the aspect of research and market insights, the broker offers a lot of trading tools, including Market Overview, XM Research, Trade Ideas, Technical Summaries, and XM TV.
Which CFD broker has the lowest fees?
Fusion Markets offers the cheapest trading and non-trading fees. The broker’s spreads are directly from the interbank ECN networks, and its commission fees are the cheapest in the market, at $2.25 per lot size per side. The broker does not charge inactivity fees and withdrawal fees.
Which CFD broker requires the least minimum deposit?
With a $0 minimum deposit requirement, Fusion Market is the broker with the least minimum deposit. This does not mean that you can trade without first depositing your trading capital, instead, it means you can start trading with any amount you have. Another broker with a low minimum deposit is XM — $5.
Which broker is best for social trading?
The best broker for social trading is eToro. The broker has a unique copy trading platform that investors can use to assess the traders they want to copy. eToro is structured specifically for social trading with unique tools for providers and investors.
Which broker offers the best customer support?
FXChoice’s customer support team is always available to help traders. They can be easily reached via Live Chat, phone call, email, or a callback request, and the response time is very fast.
Which is the best CFD broker?
The best CFD broker from our review is Admiral Markets. It is not only regulated in multiple jurisdictions but also offers great trading conditions. The broker provides traders with all MT4 and MT5 platforms and tools, including MetaTrader Supreme Edition. It also provides analytics from Trading Central. Although it operates a market-maker model of execution, the broker is well trusted around the globe, as it is regulated in every jurisdiction it operates in.
