How Can You Choose the Best CFD Broker

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Contents

Best CFD Brokers Comparison

To complete a CFD broker comparison core features need to be analysed including spreads which start at 0.1 pips, commissions which start at $3.50 per 100k traded, the CFD trading platform, range of markets from stocks, currency to crypto and CFD broker leverage which can range from 50:1 to 500:1.

By Justin Grossbard / Updated: Wednesday, April 08th, 2020

Broker Reviewed

Regulations and Licenses

Brokerage

Markets and Instruments

Trading Platforms + Tools

Overall

1) Pepperstone

Pepperstone is an Australian CFD provider that was founded in Melbourne, 2020

What makes Pepperstone so good?

Pepperstone aims to provide solution traders experience with online trading when it comes to delays in trading execution, excessive wide spreads and poor customer support.

How does Pepperstone achieve these features?

  • Best in class technology for low latency. 10 optical fibre connection directly you to servers at Equinix data centres near New York and UK trading exchanges.
  • No dealing desk trading for low-cost spreads. This is done through Electronic Communication Networks (ECN), aggregating one of the largest collections tier-1 banks for best spreads and endless market depth through wide source of dark pools for liquidity.
  • Award-winning customer service (Investment trends). The customer service team are traders themselves so can relate to your trading issues.

Key Features

  • Choose from the most popular trading platforms for brokers and trader including MetaTrader 4 (MT4) , MetaTrader 5 and cTrader on a wide range of operating systems such as Windows, Mac, Ios and Android operating systems.
  • Best in industry leverage of 500:1
  • Specialise in FX trading.
  • Narrowest spreads using No dealing desk and Electronic Communication Network (ECN) trading
  • Low slippage through superior trading execution speeds. Edge infrastructure including fibre optic cables and Equinix servers means blazing-fast execution.
  • Commission and Commission free accounts to fit your trading needs
  • Award-winning Customer service from the support team that consists of experienced traders
  • Huge choice of funding methods with no fees
  • Choice of 6 difference social trading tools (ZuluTrade, DupliTrade, MetaTrader4 Signals, RoboX, MyFxBook)

Who is Pepperstone for?

We consider Pepperstone to be one of the best CFD brokers. We recommend the broker for intermediate to expert forex traders who desire super-fast execution with ECN online trading for low spreads.

2) easyMarkets

Established in 2001, easyMarkets are based in Cyprus with local offices in Sydney, Australia.

Whats makes easyMarkets so good?

easyMarkets business philosophy is to be Simple, Honest and Transparent when it comes to CFD trading. These are great values traders should look for when choosing a broker as it means you can trade with confidence.

What makes easyMarkets so distinctive in the online brokerage industry is that they aim to reduce your level of risk when investing. easyMarkets include a number of ‘inclusive’ risk management tools other brokers either charge a premium for or (in most cases) don’t offer.

How does easyMarkets achieve these features?

  • Simple or painless trading by designing their platform to be super easy to use.
  • Open or transparency by being open about easyMarkets being a market maker. Being a market maker means easyMarkets are able to continue trading and honour their quotes regardless of extreme market volatility.
  • Honesty about their costs. easyMarkets never adjust trading conditions or quotes even when there is extreme price movement. This means their fixed spreads will remain fixed and no slippage will remain guaranteed.
  • ‘easyTrade’ that since launching 2020 allows trading with high leverage, no margin requirements and featuring $0 spreads with the ability to choose the maximum risk and duration of the trade.
  • dealCancellation that when activated gives traders a 1 hour period to cancel their order when price direction moves against a trader with only a small fee based on the volatility of the market.

Key Features:

  • Free risk management tools backed by guarantees. Guaranteed stop loss (GSLO) and guaranteed negative balance protection to help protect your investments.
  • Innovative tools to further protect your investments. These include Deal Cancellation that allows you to cancel within 60 minutes if the price movement is unfavourable, freeze rate and inside viewer that gives greater insight into market sentiment.
  • Cost transparency through fixed spreads and no commissions
  • Choice of easyMarkets platform or MetaTrader 4 (MT4) which are available on iOS and Android Mobile and Win and Mac platforms
  • 200+ markets including the option to buy and sell cryptocurrencies
  • Large range of account funding options all which have no fees

Who do we recommend easyMarkets for?

We are big fans of easyMarkets because they offer the best risk management tools of all brokers. Most of these tools are inclusive in your spreads which adds to their appeal. If you are new to trading, a risk-averse trader or trading in a very volatile market then easyMarkets can help you manage your trading risks.

3) AxiTrader

Is an Australian CFD trading broker that commenced in Sydney in 2007

What makes AxiTrader so good?

AxiTrader was founded by traders. therefore they understand exactly what you will want to experience as a trader. In particular, AxiTrader believes these features to be 24-hour customer service, tight spreads and speedy execution with only minimal slippage or as AxiTrader phrase it “integrity, service, execution”.

How does AxiTrader achieve these features?

  • Tight spreads and liquidity by sourcing and pooling from multiple destinations in Forex Market. These include top tier banks and smaller banks and brokerages.
  • Speedy execution by using servers hosted by Equinix at their NY4 Data Center which is near New York MetaTrader centre.
  • 24-hour Customer service throughout the working week commencing 10 pm Sunday and dedicated account manager to help you their trading processes.
  • Recognised as award-winning in Customer Service and trustworthiness by AtozForex.com, Investment Trends and UK Forex Awards.

Key Features

  • MetaTrader 4(MT4) trading platform specialist. AxiTrader only offers one platform, this means they can put all their energies into helping you get the best out of the platform.
  • NexGen adds on for MetaTrader 4. AxiTrader offer complimentary advanced trading management tools through the MT4 platform.
  • MetaTrader expert advisors, scalping and hedging
  • MetaTrader 4 Trading signals so you can copy from all the best traders throughout the trading world.
  • MetaTrader 4 Multi Account Manager – if you have more than one trading account then you can manage them all from the one trade terminal.
  • Free access PsyQuation Premium. This is one of the most advanced data analytics platforms on the market. This program is like a personal trading coach. It works by using algorithms to analyse your trading style and help you improve your trading skills. With this tool, you also get more comprehensive indicators, trade signals, and forecasting.
  • Choice of commission account (Pro Account) and non-commission (Standard Account)
  • No fees for deposits and withdrawals.

Who do we recommend AxiTrader for

If you are looking for a broker to help you get the most out of the MetaTrader 4 platform then AxiTrader makes a great choice. With MT4 you get a wealth of features than can enhance your trading experience.

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4) GO Markets

Go Markets was founded in Sydney in 2006 as a provider of online CFD trading services. It has the distinction of being the first broker in Australia to offer MetaTrader 4.

What makes Go Markets so good?

Go Markets are always striving to provide the best possible trading experience to their clients by proving customer service that is reliable, prices that are transparent, trading execution with low latency and stable platforms.

How does Go Markets achieve this?

  • Friendly customer support that is available 24/5. Customer service teams can help with MetaTrader support, general customer support, funding your accounts and opening accounts. Toll-free contact is available along with multilingual support.
  • Low latency execution through trading servers based in London
  • Transparency through a commission-based pricing structure. The commission is AUD$3 is less than the standard $3.50.
  • Choice of MetaTrader 4 and 5 trading CFD trading platforms. These platforms are the most popular platform throughout the world by both broker and traders and are known for their stability and reliability.

Key features

  • Choice of MetaTrader 4 and MetaTrader 5 trading platforms
  • MetaTrader 4 Genesis for professional-level trading tools
  • $200 initial deposit for a standard account with no commission
  • $500 minimum deposit for “GO Pro” account with industry low commission
  • Expert Traders and smart tools such as Autochartist and Trading central for better trading.
  • 100:1 leverage default and maximum 500:1 leverage possible

Why we recommend GO Markets

This broker is a great option if using the GO Markets PLUS account. Go Markets have the lowest commission of all brokers and also offer great spreads.

5) Plus500

Plus500 was founded in 2008 in Israel with offices in Sydney, Australia, UK, Singapore and Cyprus acting as subsidiaries.

What makes Plus500 so good?

Plus500 commenced trading with its own custom made trading platform from the very start. The Plus500 platform is a well-respected platform compared to others found in our forex capital trading review. It enables traders to trade on movements on a wide range of CFDs.

How do Plus500 achieve this?

  • Innovation: The Plus500 trading platform has features that are not available in MetaTrader such as Guaranteed Stop Loss Orders.
  • High ratings: The Plus500 trading platform is a highly rated CFD trading platform on Google Play and Apple App Store.
  • A leader in mobile innovation: the platform is one of the best for mobiles and tablets.
  • The platform offers a wide range of CFDs such as shares, ETFs, options, indices and commodities and cryptocurrencies

Key Features

  • Their own trading platform
  • A range of Plus500 trading CFDs including cryptocurrency.
  • Good range of risk management tools including Guaranteed Stop, Trailing Stops and Close at Profit or Loss.
  • Real-time alerts with email, SMS or push notifications. These can be price alerts, price change alerts and traders sentiments alerts.
  • Leverage of 300:1

Why we recommend Plus500 Markets

Plus500’s strength is its unique forex trading platform. If you need a platform that works really well on mobile, tablets or small screens then PLUS500 have a great product for you.

‘Your capital is at risk.’

6) IC Markets

IC Markets was founded in 2007 which its headquarters in Sydney.

IC Markets offer what they call ‘True ECN’ trading for all of its account. What this means is you have access to the lowest spreads, fastest trading execution and trading technology for all account types IC Markets offer.

How do IC Markets achieve this?

  • Tight Spreads: IC Markets offer Electronic Communication Network (ECN) which means orders are filled at market conditions directly through the liquidity pool, there are none of the requotes one has with dealing desks.
  • ECN style pricing for all accounts: Whether you choose a commission or non-commission account you will have access to ECN style pricing.
  • Tight Spreads through deep liquidity: IC offer up to 50 different liquidity providers which are made up of tier-1 banks and non-banks such as dark pools. Depth of market means more volume and therefore more aggressive pricing.
  • Best trading quality: IC Markets trading technology will find the best price through its liquidity providers regardless of the number of LOTs you trade.
  • Low Latency: IC Markets offer average execution speed of under 40ms which means low risk of slippage.
  • Trust and Transparent: IC True ECN means no dealing desk, no price manipulations and no restrictions.

Key features:

  • ECN pricing for all accounts
  • Choice of the most popular trading platforms on the market. MT4, MT5 and cTrader.
  • Advanced trading tools for MT4 such as one-click trading, spread monitor and advanced order types.
  • Customer Service team with experience in forex industry which means they can help you with all your trading needs 24/5.
  • Expert Traders, scalping, hedging are all available.
  • Flexible Leverage of up to 500:1
  • Good range of CFDs to trade with.

Why you should choose IC Markets

We consider IC Markets on the best forex brokers. We recommend the broker to intermediate and advanced traders who want access to ECN style trading which means low spreads with fast execution for low spreads.

7) ThinkMarkets

This broker has headquarters in Melbourne and London It was founded in 2020.

What makes ThinkMarkets so good?

ThinkMarkets goal is to provide quick and easy access to a wide range of markets through their own in-house platform. With this access, they promise tight spreads, fast order execution and great customer service.

How does ThinkMarkets achieve this?

  • Low pricing through Electronic Communication Network trading
  • Fast order execution through Equinix data centres
  • Free of charge dedicated account manager for great customer service
  • Multi-lingual customer support available
  • Great customer service includes its FX university which consists of training guides, videos and webinars.

Key Features

  • Choice of commission and no commission account
  • MetaTrader 4 or their own in-house platform Trade Interceptor
  • 24/6 Customer support
  • EAs (Automated trading), scalping and hedging
  • Leverage of 500:1 for forex and 200:1 for CFDs
  • No fees for deposits and withdrawals
  • Social trading with MyFXBook

Why we recommend ThinkMarkets

ThinkMarkets are great when it comes to customer services. They offer support 6 days a week while most of our broker reviews on this page only offer customer support 5 days a week. In addition to this, they have good education tools and technical analysis tools.

8) IG Markets

IG Markets is one of the oldest broking companies (1974) in the Online broking industry. It is based in the UK.

What makes IG Markets so good?

IG Markets specialise in helping you trade across different asset classes. They are particularly known for forex and stock trading. Their objective is to help clients trade CFDs with leverage and learn more about CFDs definition. IG offers good spreads for a market maker with their CFD accounts and likes to give their client choices when trading.

How does IG achieve this?

  • Huge range of markets to trade: IG allow you to choose from over 16,000 markets.
  • Choice of unique CFDs to trade: In addition to the usual CFDs, the client can choose interest rates, options, ETFs and ETPs, IPOs and bonds.
  • Choice of 6 different trading platforms: You can choose the platform that fits your trading needs.
  • Low market maker prices by matching their prices to top global banks and exchanges. There is no dealing desk or requoting.
  • Option of low prices with Direct Market Access or DMA. With DMA, you have transparency in your trading as you can see prices of other orders on the market. The visibility means you can place your own order as you know the true market price.
  • Extensive tools for customer service: IG have a forum which allows the IG community to help each other out when help is needed.

Key Features

  • Competitive market prices
  • IG promise not to fill your order worse than what your request (it may still be rejected). Tools like partial fills and points through current can help you your orders when limited liquidity is available.
  • Risk management features available such as guaranteed stops and limited risk accounts.
  • Choose from their own platforms (L2 Dealer, ProRealTime, MT4, IG Platforms).
  • Good trading education tools including an app for mobile (IG Academy)

Why we recommend IG

IG has one of the largest portfolios of all CFD traders. If you are looking for an all in one broker that has no commissions and risk management tools available then IG might be the broker for you.

9) FP Markets

First Prudential Markets or FP markets is an Australian based investment broker with offices in Sydney. It was listed on the Australian Securities Exchange in 2007.

What makes FP Markets so good?

FP Markets claim they can give you “The Ultimate Trading Experience”. FP Markets goal is to be a full-service broker which means you can trade a full suite of trading derivatives on the global market. The broker was the first in the world to have exchange-traded Contracts for Difference product in its listing (ASX CFDs).

Not only do FP Markets offer a full suite of products they are also consistently good in all other features a trader should look for when trading such as price, speed, product range, customer support and market analysis.

How do FP Markets achieve this?

  • Full suite product range to 10,000+ financial instruments including Equities, Indices, Commodities, Bitcoin and Futures.
  • Low cost with Direct Market Access or DMA and ECN style spreads.
  • Fast trading speeds through data centres in London (LD5) and New York (NY4) and fibre optics.
  • Award-Winning Customer Service with Investment Trends including a personal account manager.
  • Market Analysis through daily market reports, research libraries and economic calendars.

Key features

  • Choice of platforms: MT4, MT5 and IRESS
  • FP Markets own custom trading Platform IRESS which offers:
    • Transparent pricing through DMA.
    • Custom trading alerts and news.
    • Advanced charting.
    • Complex order types
  • Trading on International Markets
  • Range of markets such as 50+ currency pairs
  • Leverage of 500:1
  • low starting deposit of $100 to start trading

Why we recommend FP

If your looking for a broker that allows you to trade on international markets across a range of CFDs then FP might be a good broker for you. The broker does everything consistently well without being the best in anyone.

10) CMC Markets

CMC Markets are a UK online broker that was founded in 1989. It has an office in Sydney.

What makes CMC Markets so good?

CMC Markets goal is to provide you with the ultimate trading experience. The broker achieves this a number of ways such as by offering value for money with its prices and services, its own intuitive trading platform and wide range of trading opportunities.

CMC is known as share traders or stock traders but offers other asset classes also making it a great CFD trading account. With CMC you can access a huge range of ASX stocks and international stocks, in addition, your ability to trade CFDs of other types.

How does CMC achieve this?

  • Competitive pricing as a market maker through 100% automatic execution and no dealing desk.
  • Their own award-winning platform which includes its own native apps, professional charting and trading tools.
  • Guaranteed stop-loss orders to protect your losses for high-risk trades.
  • Trading opportunities with access to over 10,000 CFD markets. Making them one of the best CFD brokers.

Key features

  • A leader in CFD trading: these include share trading such as ASX stocks and contract for difference such as index CFDs.
  • The market-leading margin of 0.20%
  • Has its own trading platform that is built to meet the needs of its clients.
  • Offers MetaTrader 4
  • No commissions in spreads.
  • Guaranteed Stops for risk management

Who we recommend CMC

CMC are great brokers if you’re looking a CFD trader that offer a large range of CFDs. CMC is a great broker if your into stock exchange trading.

CFDs In 2020 Statistics

Just last year (2020) there was an increase in trading volume of 13.7% when it comes to exchange-traded derivatives. Breaking the trading volume by categories based on FIA figures:

  • Energy Trading Rose 13.6% driven by overseas interest from China, India and Russia. In the USA the benchmark WTI Brent Oil trading was actually down. The overall energy sector remains the most popular with 2.54 billion contracts .
  • Agricultural Trading Rose 18.7% driven primarily through China with the overall market at 1.77 billion contracts .
  • Non-Previous Metals Fell 5.5% which was the only main category to see falls in 2020 and is a total of 1.44 billion contracts .
  • Precious Metals Rose 82.5% through increased interest in China, Turkey and India exchanges with 852.3 million contracts.

Below shows the FIA volume data by investment group over the past decade to provide an insight into the popularity of class of contract for difference trading.

The ‘Top 10’ CFD Brokers List

CFD Broker CFD Trading Platform Leverage CFD Instruments
Pepperstone MT4, MT5, cTrader 500:1 Forex, Index CFDs, Share CFDs, Commodities, Crypto
easyMarkets Web Platform, Vanilla Options Platform, MT4 200:1 CFDs on forex, forwards, crypto, indices, commodities, shares, metals and options
AxiTrader MT4 500:1 Forex, Commodities, Equity CFDs, Bitcoin CFDs
GO Markets MT4, MT5 100:1 Forex, Share CFDs, Indices, Metals, Commodities
Plus500 Plus500 Platform 300:1 Forex CFDs, Index CFDs, Share CFDs, Commodities CFDs, Crypto CFDs, EFTs CFDs
IC Markets MT4, MT5, cTrader 500:1 Forex, Index CFDs, Share CFDs, Commodities, Crypto, Bonds, Futures
ThinkMarkets MT4, MT5 500:1 Forex, Metals, Share CFDs, Indices, Commodities
IG Markets IG, MT4, L2 Dealer 200:1 Forex, Index CFDs, Share CFDs, Commodities, Crypto, EFTs
FP Markets MT4, MT5, IRESS 500:1 Forex, Equities, Commodities,
Indices
CMC Markets CMC Platform 500:1 Forex, Index CFDs, Share CFDs, Commodities, Crypto, Treasuries

Published by Justin Grossbard

Wednesday, April 08th, 2020

5 Steps For Choosing The Best CFD Broker Australia

A Comprehensive Framework For Choosing The Best CFD Broker

Often choosing a broker can be confusing to say the least. In fact, knowing even where to start can be a challenge in itself. Fear not, to help you with this conundrum so you can choose the best CFD broker for your trading style, we’ve developed a 5 step guideline.

Before we begin though, it is important you understand the importance of choosing a good broker that suits your specific needs. This decision can be one of the most critical investment decisions you make for your trading business, as the costs of trading can greatly affect your profitability as a trader.

Step 1. Identify Your Specific Needs

Your choice in brokers will largely depend on the type of trader you are. It is therefore essential that you determine what your personal trading style is and what your specific needs are prior to making your first trade. Are you an intra-day trader who needs fast execution of trades and order depth information? Or maybe you’re a longer-term trader who needs historical price information?

Once you’ve narrowed down your initial broker search by deciding your needs, your next step is to then evaluate what level of service you require. Your options range from full-service brokers, discount brokers and online brokers.
  • Full service brokers offer an extensive range of personalised services to their clients (research, advice, tax info etc), however, this level of service comes at a premium price.
  • Discount brokers, on the other hand, perform buy and sell orders at a reduced commission rate but provide minimal or no investment advice.
  • Online brokers generally provide the cheapest services. All interaction is conducted online and adopts a more “do it yourself” type of trading approach.
For those new to trading, you’ll often be encouraged to conduct your initial trades through a full-service broker. However, this may prove to be unrealistic for the majority of beginners as the excessive fees associated with this type of brokerage may not be financially feasible.

Step 2. Establish Which Trading Tools You Require

Now that you’ve established what your specific trading requirements are, the next step is to determine which trading tools you need to help you with your trading activities. There are an array of trading tools available, so for new traders this can become quite overwhelming.

Firstly, evaluate whether you’ll use fundamental analysis or technical analysis (or both). Both offer aВ wide range of trading resources.

If you use technical analysis, check that a broker’s charting program suits you and includes indicators you’d like to use. Also decide if you want to use conditional orders like stop-loss orders, guaranteed stop-loss orders and limit orders, and make sure they are provided.

If you are unsure of the tools that you will need, research what is most commonly used for your style of trading and then check they are offered by the CFD brokers you are considering.

Step 3. What Are The Trading Costs Involved?

Once you’ve established what you need from your broker, you need to investigate what that broker charges in terms of trading costs (commission fees, spread costs, ASX exchange fees, overnight financing charges, inactivity fees etc.).

As you can see, there are a range of trading costs that a broker may charge, however,В these will largely depend on the level of service being provided. It is crucial to evaluate the trading costs involved as they will impact heavily on your bottom line.

Please ensure your CFD broker ticks all your boxes before opening an account with them. Ask the following;
  • Who has the tightest spreads?
  • Who has the lowest commission fees?
  • What are their leverage rates?
  • Are there additional hidden fees?
  • Can you afford the minimum deposit required to open an account?

Reducing your trading costs is a key factor in successful trading. Read our How to Tell if Your CFD Broker is Ripping You OffВ to find out how!

Step 4. Trade Execution

The execution of your trade is another crucial element. In fast-moving markets, the timing of your trade execution plays an integral role. In trading environments such as these, immediate execution with no slippage may be a necessary requirement for you.

By ensuring that your trades are executed at the same time that they are initiated, you will have less fluctuation between the expected price and the actual price the trade is executed at, as well as any changes between spreads.

Step 5. How Safe Are Your Funds?

In the event that your broker was to go into liquidation or bankruptcy, no matter how unlikely that scenario may be, how safe would your funds be? What are the safety precautions and measurements currently in place to ensure your funds are kept safe? What are the minimum requirements? Are they exceeding these?

Don’t just assume that every broker out there is squeaky clean. It’s definitely worth your while to research this information. If you aren’t able to find the answers to these questions on the CFD broker’s website then give them a call.

Look for a broker where client funds are held in a segregated client accounts with a reputable bank and are not used for hedging purposes, meeting the trading obligations of other customers or any other business dealings.

Deposited funds are held by TradeDirect365 in a segregated client account with a top-tier Australian bank (Westpac Bank). These funds areВ NOTВ used for hedging purposes, meeting the trading obligations of other customers or any other business dealings. If you would like to know more, visit ourВ Client Money PolicyВ for additional information.

Choosing Your Broker: The Bottom Line

Once you complete these steps, you should have a pretty clear idea of the specific features you require from a broker and as a result know whether a broker is a good fit or not.

If you’re looking for a full-service broker, you would expect to receive customised service with in-depth advice and efficient management of your investments, but you would also expect to pay a premium price. On the other hand, if your specific needs best align with an online broker, then you would expect to have competitively-priced commissions, low fees and tight spreads, but with minimal investment advice.

One of the most important factors in online trading is choosing the best CFD broker to suit your trading style and your specific needs. Identifying your trading needs will be realised during the development stage of your trading plan. This will allow you to understand what you require from a broker, what level of service suits your needs and the fees & commissions you would expect to pay. Understand what you are looking for in a broker, and research accordingly. Also, read the fine print!

Top 10 CFD Brokers – April 2020

Find the best CFD Broker for you & Start trading instantly!

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Understanding CFD Trading

CFDs are traded between traders and providers. Every provider has their own terms so there are no standard contract terms. However, many CFD providers share similarities in their contract terms. A CFD begins by opening a trade on a specific instrument – this establishes a position in that financial instrument and there is no expiration date. When the position is closed, the difference between the closing price and opening price is paid. This is either a profit or a loss. The CFD may charge fees including commission, big-offer spread, account management and overnight financing.
While CFDs do not expire, positions that are open overnight are rolled over. This means that any profit or loss is realized and is credited to the trader. CFDs are traded with margin and traders must keep a minimum margin level at all times. A common feature in CFD trading is that loss, profit and margin requirements are constantly calculated in real time and can be seen by traders. If the amount of funds in the trader’s account decreases to a level that is below the minimum margin level then margin calls may be made.

How to choose a CFD broker?

A CFD (Contract for Difference) is a derivative trading instrument. With CFDs, you simply speculate on the price movements of financial assets. There are multiple markets to trade including indices, equities, currency pairs, commodities and bonds.

Choose regulated cfd brokers

Unregulated CFD brokers are dicey propositions. Avoid them and choose online trading brokerages that have full licensing and regulation. CySEC (Cyprus Securities and Exchange Commission) is a popular regulatory authority.

  • Trading Platforms

CFD trading is conducted online. Traders have a preference for high quality trading platforms such as MetaTrader 4, WebTrader, mobile trading options for Android and iOS, as well as proprietary trading platforms tailored to the broker in question.

  • Available account options

Ideally, you want access to multiple account options. Each trader requires a unique set of options including minimum and maximum deposits, personalised support, educational resources, and exclusive trading opportunities. Competitive spreads, leverage and range of payment processing options are important for CFD trading.

  • Educational tools for CFD trading

The best CFD traders are the ones who understand market dynamics. CFD brokers can perform an invaluable service by providing their clients with access to the finest charting tools, market updates, economic calendars, expert financial insights, signal indicators, webinars and a comprehensive FAQ database.

Are You Looking for a New and Exciting Way of Investing Your Hard-Earned Cash? Read our Introduction to Online CFD Trading

Once upon a time, the only sensible option for the average investor was to stick his or her hard-earned cash into a savings account with one of the big name banks. However, more recently, the return on savings held in a savings account has become almost non-existent. The general public began to look around for new forms of investment. And the financial world, realizing there was a niche that needed to be filled, decided to open up new forms of investment. It became possible for the ordinary person to invest in stocks and shares. And more recently, it has become an increasingly popular option for people to invest in foreign currencies. However, there is another way you can invest your money and many find it quite exciting. CFDs or Contracts for Difference is a new way of trading the derivative markets and the influx of top CFD trading brokers have made it a relatively easy option for you too.

What does CFD mean?

As we’ve already mentioned, CFD stands for Contracts for Difference. But what does that actually mean? A CFD is an agreement between a buyer and seller, and it is a way of trading on financial markets without actually owning the underlying asset you are trading. CFDs are also leveraged derivative products, which means they can be traded on margin. In other words, you can control larger positions but only need to invest small amounts. This is also known as trading on margin, and you only need to put down a small percentage of the cost of the trade in order to open your position. Generally, this ranges between 0.1% and 1%. So, how does that benefit you as a CFD trader? It means you have much greater flexibility and have the option to spread your investments over a number of trades, and also in a range of markets. These could be:

  • Foreign currencies
  • Indices, for example, the FTSE 100
  • Gold and silver or other commodities
  • Company stocks and shares

However, at this point, we should also point out that trading on margin, or using leverage, also puts you at risk of significant losses. Because as you all know, any investment has the potential to go up and also down. Don’t worry if there are some terms you don’t quite understand because we will be providing a helpful glossary.

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What is CFD trading and how does it work?

First, we should point out you won’t be able to participate in this form of investment without help and assistance from the best CFD trading brokers. There are plenty to choose from and we will help you find one to suit you. There will be a CFD broker comparison, as well as a CFD broker list and we’ll also be reviewing some of the big names in the industry. But enough of what’s coming up and time to get back to the questions. CFD trading is when you commit to buy or sell a financial instrument, at a specified time in the future. CFDs can be a long-term or short-term investment and can be in any of the markets we’ve already mentioned. CFD trading doesn’t require you to buy or sell the underlying asset, whether it’s a physical share, commodity or currency pair. Instead, you buy or sell a certain number of units, depending on whether you think the price of the asset is going to go up or down. CFD dealing allows you to trade on future market prices, and it doesn’t matter whether you think the market prices are going to go up or down. You get the choice of going short, in other words, selling, which will give you an opportunity to profit from falling prices. Or you can choose to go long (buy) if you consider market prices are more likely to rise.

You can’t trade CFDs on your own – You need a CFD provider

Much like Forex trading, and trading in stocks and shares, to participate in the world of CFD market trading you will need to find top rated CFD brokers to work with. Opening an account with one of the best CFD brokers will allow you to participate in CFD trading without having to own the assets, or committing huge amounts of cash. There are a number of CFD providers to choose from, and they tend to fall into one of two categories. CFD brokers can be either market makers, DMA (Direct Market Access) providers, or a combination of both. Top CFD brokers who operate as market makers may also provide the service of traditional spread betting. This means you are trading against the CFD provider and the prices they display. The amount of commission you have to pay and the capital requirements are generally lower, but there is the issue of conflict of interest. CFD trading brokers who provide a direct market access service will send your orders direct to the order book. A DMA provider generally charges higher rates of commission and will require you invest larger amounts. Whichever type of CFD broker you choose you will have to take into account a number of different features and each broker will be different. There will be different commission rates, a variety of trading conditions, and a range of assets and markets you will be able to participate in. It will be up to you to decide which features are most important because it is very unlikely you will be able to find the best CFD trading brokers who can tick all your boxes. It may even be more beneficial and rewarding to open accounts with a number of the top CFD brokers so you can get a better mix of the features you desire. So, what kind of features should you be looking for?

What you should be looking for in a good CFD broker

There are a number of points you should be considering when comparing CFD brokers. These include:

  • Is the broker licensed and regulated? Is the CFD broker licensed to operate and provide CFD trading services in the country where it is based? You should choose a licensed and regulated broker because this will mean your investment is better protected.
  • What margin levels are required? All CFD trading accounts are really margin accounts so it will be sensible to check what the levels are and whether there are any rules to follow.
  • What trading platform does the broker use? You will need to know whether the trading platform is reliable and if it offers a good selection of charts and tools to help with your trading decisions. It would also be useful to know whether the platform is mobile friendly.
  • Are the commission charges reasonable? CFD trades incur commission charges and the top CFD trading brokers will make you pay a certain amount, but invariably it will be different, depending on which brokers you choose. There are also a number of CFD dealing brokers who will build charges into the spread. It’s important you appreciate what these are as they will have an impact on your profits.
  • Is the broker a market maker or DMA? You’ll need to consider what you’re looking for in a broker. Are you looking for lower capital requirements and lower interest charges?
  • Are you prepared to accept the risk of a broker trading against you? If the answer to these questions is yes then you want to look for a market maker. If you would prefer the broker sends your orders to the order book but may also charge you higher rates of commissions and require larger amounts of capital, then you should consider DMA CFD brokers.
  • What assets are available for trading? Do you want to only trade CFD forex? Would you like to be able to trade in a range of markets? Are there any restrictions in your country of residence that limit what you can trade? These are important questions you need to ask yourself when picking the best CFD brokers.
  • Is there access to both domestic and international markets? There will be some brokers that only offer access to domestic markets and some that offer a mixture of the two. Which is the best? Both have merits. You’ll be in a better position if you are based in the same country as your broker to trade in domestic assets. Because, for example, a broker located in the UK is bound to be well-versed in the UK stock market and know more about UK stock trading. Traders who are working with a broker located in another country may be better served with a mix of both international and domestic markets.
  • What trading resources are available? Successful CFD trading requires careful analysis of the markets. And this will require a good selection of charts and research resources. You need to be sure any broker you choose is offering as many as possible.
  • Are there ways in which you can reduce your risk? There are risks involved with CFD trading, as with any form of investment, and it is vital these risks are kept to a minimum. Check whether the CFD provider offers a range of risk management tools, for example, guaranteed stop loss orders. A guaranteed stop loss is a great risk management tool to use as it safeguards your success, and is a way of controlling losses in volatile market conditions.

These are the most important questions to ask when looking for top rated CFD brokers. However, it is not all about finding the best CFD broker, but more about finding the top CFD trading brokers for you. One that ticks as many of your boxes as possible and is the one which suits you best of all. Maybe it’s now time to introduce the CFD glossary, as we’ve already introduced a few CFD trading terms you might be unfamiliar with.

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Common terms used in relation to CFD trading simply explained

  • Ask price – The quoted price a CFD broker or CFD dealer is willing to sell at. In other words, the price you will be expected to pay for an asset. It is also referred to as the offer price.
  • Bid price – The quoted price at which a broker is willing to buy. In other words, the price you can expect if you want to sell an asset.
  • Charts – These are used to plot price movements over a specified period of time. They are an important tool because they allow you to analyze how prices have risen and fallen and thereby forecast what will happen in the future.
  • Close – This refers to ending your exposure on a CFD position. You won’t realize any profit or loss until a position has been closed.
  • Expiry – CFDs have an expiry date and this is when your CFD will be closed and settled automatically. This happens at the end of the contract period.
  • Leverage – Leverage is expressed as a ratio, for example, 10:1. Let’s give you an example. Imagine you want to open a position with a $10,000 value. If leverage is 10:1 you will only need to put down a margin deposit of $1,000.
  • Limit order – This is a target price set on an order and closes your position should the market hit the specified price. With a limit order, you can take your profit on a position automatically, as soon as your target price is reached.
  • Long – When you buy an asset because you expect the price to rise.
  • Margin – This refers to the deposit you pay when you want to open a CFD position. It should equal the amount you are prepared to lose on your position.
  • New order – This is an order that will be opened automatically when an asset hits a specified price level you have set.
  • No Dealing Desk – An NDD CFD broker automatically offsets your trades in the underlying market, and will never stand on the other side of your trade.
  • Open – A position is said to be open when you buy or sell an asset.
  • Pip – This term is used in CFD Forex trading and refers to one unit of the price.
  • Point – This term is used in non-Forex markets and refers to one unit of price.
  • Quote – This is the price offered for any asset and constantly changes as the market price of an asset changes.
  • Requote – If a CFD provider is unable to open your position at the quoted price you will be given a revised price which is known as the requote. One reason this could happen is because the market price is moving very quickly. A number of the top CFD brokers will make a promise of no requotes.
  • Rolling daily – This is when a position stays open from one trading day to another. Unless, of course, you decide to close the position. Holding a position overnight may incur a debit or credit.
  • Rollover – This happens if you decide to extend your position beyond its expiry date. It will actually involve closing the old position and opening a new one for a revised period of time.
  • Settlement – This refers to the profit or loss realized on individual positions.
  • Short – When you sell an asset because you are expecting the price to fall it is known as going short.
  • Slippage – During periods of high volatility and when prices are moving excessively, your broker may not be able to execute your stop-loss order exactly, and this is called slippage.
  • Spread betting – This involves betting on the movements of financial markets and is another form of margin trading.
  • Stop-loss – This is an important risk management tool and involves automatically closing a position when the price reaches a preset level.
  • Trailing stop – This is a certain kind of stop-loss order and allows you to lock in your profit on successful positions. The stop-loss moves automatically in set increments when the asset is moving in your favor. But when the asset price moves against you it closes the position just like a normal stop-loss order.

So, there you have it. Some of the CFD trading jargon simply explained. How about we continue by looking at why CFD trading has become so popular.

CFD trading has received an explosion of interest in recent years

Trading in Contracts for Difference has become a very popular form of investment for a growing number of people. And those people come from some very varied walks of life. To cope with the increasing interest there has also been an explosion in brokers offering Contracts for Difference. But what are the advantages of CFDs for the average person?

  • Higher return on investment – By betting on margin, CFD trading lets you open positions of much higher value than your initial investment. The underlying asset doesn’t have to be purchased – CFDs are merely contracts between a buyer and seller relating to the value of an underlying asset. You will never need to have access to the actual exchange.
  • No taxes in the form of stamp duty – Because you never actually purchase the asset there is no stamp duty levied on your trades.
  • You get a bonus in the form of a dividend – A CFD mirrors the value of its underlying asset which means you get to receive all the benefits of owning stock. And if you hold a long CFD position when a company is making a payout you receive a dividend the same as a stockholder.
  • You get to earn interest – When you have money tied up in a short position CFD you get to earn interest.
  • You can make money when prices are falling – With CFDs, there is the opportunity to make money even when prices are falling, providing you predict the market movement correctly.
  • Limit losses with a guaranteed stop loss – Trading in the markets is a very risky business and it is possible to lose huge amounts of money if you don’t take the necessary precautions. One way of doing this is by using a guaranteed stop loss. Many of the best CFD trading brokers provide this option and it guarantees a position will be automatically closed once it reaches a reset price. Which in turn ensures no further losses are incurred.
  • 24-hour trading – During the normal trading week, CFD trading can take place around the clock, even when the underlying assets market is closed. Which makes it a perfect form of investment for those who already have a full-time job.
  • Wide choice of assets – Trading CFDs allows you to participate in a range of different markets. These include indices, commodities, currencies, stocks, treasuries, and sectors.
  • CFDs have no expiry date – Contracts for Difference can last as long as you want them to. The only way to end them is to close out the contract and settle the difference.

All sounds pretty appealing, but what about the downside? There aren’t too many disadvantages to worry about, but in the interests of providing all the relevant information, we should spend a few minutes sharing them with you.

  • CFD trading is a very risky form of investment – We wouldn’t be doing you any kind of favor if we let you believe CFD trading is a safe and sound form of investment. The risk comes with trading on a margin which leaves you wide open and at risk of losing far more than your initial investment. Consider the example we’ve mentioned before where the margin requirement was just 10% of the investment. This makes it perfectly possible for you to lose ten times what you originally put down.
  • CFDs can incur interest charges – When you trade on a margin your broker is effectively giving you a loan, and like any other lender you should expect to pay interest. This is one of the reasons many CFD traders choose to invest in the short term rather than paying interest on positions held open overnight.
  • Guaranteed stop losses can be expensive – We’ve already mentioned that guaranteed stop losses can be seen as an advantage because they can be used to limit your risk. However, they can also be considered a disadvantage because they can be expensive and have a limited life.

So, do the disadvantages outweigh the advantages. It seems that for many people the answer is obviously no. We really can’t comment as it is more of a personal thing and everyone will consider the pros and cons in different ways. The important thing is that we have given you both sides of the story so you are in a much better position to decide for yourself. If you’ve weighed up the information we’ve provided so far and still want to continue it’s time for us to help with some tips and hints.

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CFDs explained – Tips and tricks to help you become a better trader

Do you know the golden rules of CFD trading? Are you confident you have what it takes to be a successful CFD trader? Are you worried whether there are any pitfalls you should avoid? Keep reading because we’re about to share our top 10 rules you should follow:

Trade using logic not emotion – Using your gut feeling when making trading decisions is a sure fire way to lose in the long run. It may bring you a few profitable trades but this will be more a case of luck rather than judgment. It’s very unlikely you’ll make consistent profits if you use only your gut feelings. Having a set of trading rules and following them consistently is the only real way to be successful.

Let profits run and don’t be afraid to cut your losses – Cashing in too early or clinging to the hope of a losing trade changing direction are probably the biggest reasons traders lose money. The only result is going to be a series of small wins but an equal number of catastrophic losses.

Use fundamental and technical analysis – Using a combination of both types of analysis will stand you in a better position to become successful. As opposed to employing one or the other method. A good rule of thumb to follow is to use fundamental analysis to prompt the trade and technical analysis to influence your timing.

Don’t be tempted to gamble it all on one single trade – Betting 50% or 100% of your trading capital on one single trade makes you a gambler. The sensible way to trade is to never risk more than 2% of your available capital on one single trade. This will ensure you don’t wipe out your trading account with one bad trade.

Timing is everything – Don’t be too quick to jump in and enter a trade too early. You might be right in predicting the long-term direction of the market, but this could still end up in you making a loss. The better approach is to wait for a trigger and at the very least one confirmation signal before entering a trade. And will ensure you don’t enter too early.

Be flexible and consider diversification – Your aim should be to have a diversified portfolio, even if you never risk more than 2% of your trading capital on one single trade. Try and diversify across a range of instruments and markets if possible.

Don’t add to losing trades – An important skill to learn is distinguishing between range bound and trending markets. This will mean you don’t make the mistake of adding to a losing trade because you’re expecting the price to turn around. One technique to use which will help this is to use trend lines.

Be wise in your use of stop loss – We’ve already mentioned that using a guaranteed stop loss is one way you can reduce the likelihood of a substantial loss. Not using a stop loss has the potential to wipe you out completely. However, be careful not to trade with a stop loss set too tight as this also has the potential to lead to a wipeout, although it will be a very gradual one. Leave enough space for the market to ‘breath’. In other words, leave space for the normal rise and fall in prices before the market heads in a certain direction.

You’ve all got weaknesses so it’s important never to forget them – Greed and fear are two negative emotions which regularly trip traders up. Are you the kind of trader who can keep these emotions in check? Or would you be better looking for a way to limit this problem? You will be far more successful if you can learn to keep these emotions in check and not give in to them. One way to do this is by developing a trading plan and money management rules.

Do you understand risk versus reward – There is an inevitable trade-off between risk and reward and your success depends on understanding this. Never be tempted to enter a trade where the reward potential is bigger than the risk potential. An example of this is when you go long before the expected turning point in a range bound market. The expected profit, in this case, would be much smaller than the downward risk derived from the trade.

Make sure you use a well-defined trading strategy – We’ll be looking at CFD trading strategies in more detail a little later on. The important thing to say here is that it is important to have one and stick with it.

A good way to start your CFD trading experience is to open a demo account

If you like what you’ve been reading and CFD trading is sparking your interest there is an excellent way to test the waters before trading for real. Most of the top CFD trading brokers offer the choice of a demo account, alongside live account options. Demo accounts aren’t for everyone but we would highly recommend you take this important first step. It is the perfect environment for you to get to grips with the various trading platforms as well as help you develop your trading strategy.

How a CFD demo account can improve your trading success

Opening a demo account will give you plenty of opportunities to explore the different CFD trading platforms available, as well as try out various online CFD trading brokers before risking your own money. A demo account is designed to act as a replica of a live trading account, allowing you to trade live markets, and apply commissions and leverage costs like a real money account. The only difference is you will be trading with virtual money and any profit or loss will be for illustrative purposes only. But it will enable you to get a feel for the platform interface and help you understand how to place orders, set stops, and understand how to interpret live market data. Without a demo trading account, your initial mistakes could work out to be very costly. Demo accounts also help you to trade on real markets and try out different strategies and put them into practice. And you don’t need to just open one demo account. A much better option is to open a few so you can get a broader feel for the markets, the different brokers and what they have to offer. Only by experiencing a variety of options will you be able to make an informed choice. However, we should point out a common mistake that traders make when opening a demo account. A common trap that many traders fall into is to take unrealistic risks or make decisions based on nothing more than a whim. Decisions they would never have made if they were trading with their own capital. To get the best from a demo account you have to treat it as real. This is the only way to get a reliable indication of whether your theory will work in practice. How about we finish up with a short history lesson. We think there will be a few of you interested in where CFD trading comes from.

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