Best CFD Brokers

Find the best CFD Brokers

The table below shows the main CFD brokers in the market. We have arranged the brokers in a table to compare the most relevant characteristics of each one:

The characteristics we can know the regulation, the minimum deposit necessary to operate and the type of broker that is each one. In the operative we compare the spreads guiding us only for the euro/$, the commission, the leverage, the currency pairs in which they work, as well as the platform and if they work in crypto currencies or not.

What is a CFD?

Contracts for Difference, CFDs, landed three years ago and have become one of the most popular financial derivatives. Their success can be attributed to the possibility of benefiting from both rising and falling markets, the wide range of markets to which they give access (shares, forex, indices, commodities…) or the fact that it is a leveraged product and therefore the initial outlay to open the operation is only a percentage of its market value.

Regulation of CFD brokers

• CNMV: The Spanish National Securities Market Commission (CNMV).
• FCA: The FCA (Financial Conduct Authority) is the United Kingdom’s financial services regulatory body.
• FSCS: The FSCS (Financial Services Compensation Scheme) is authorised by the United Kingdom.
• Central Bank of Ireland: The Central Bank of Ireland and, as such, part of the European System of Central Banks (ESCB).
• Asic: The Asic (AustralianSecurities and InvestmentCommission), i.e. the Australian Securities and Investment Committee.
• CySEC: The CySEC (Cyprus Securities and Exchange Commission) is responsible for the enforcement of all financial orders and regulations established under Cyprus’ financial regulatory laws.
• FOGAIN: This is the General Investor’s Guarantee Fund, whose purpose is to provide coverage for compensation in the event that any entity is declared bankrupt and published in the CNMV
• SEC: The primary function of the U.S. Securities and Exchange Commission (SEC) is to protect investors and maintain the integrity of the securities markets.
• FINRA: Financial Industry Regulatory Authority (FINRA) of the New York Stock Exchange
• NYSE: New York Stock Exchange
• MFSA: The Malta Financial Services Authority (MFSA) is the sole regulator of financial services in Malta.
• NFA: The National Futures Association (NFA), allows for formal complaints from clients to be directed to the companies it regulates.
• FINMA: FINMA (Swiss Financial Markets Authority) is Switzerland’s financial markets supervisory service and has an impeccable and highly trusted reputation.
• KNF (PFSA): is the financial regulator in Poland

Types of CFD brokers: Market maker, ECN, DMA,…

Among the different types of brokers we differentiate two main groups, the Dealing Desk and the No Dealing Desk.

1. DD: Dealing Desk – They are the brokers who give compensation to our operations, they are the ones who allow us to make purchases and sales. They are called Market Makers.
2. NDD: No Dealing Desk – They are the brokers who are simple intermediaries in the market, they do not give compensation, do not have a money desk and send the operations to the market.

Here we have several sub-types of broker, the STP, Market Market and ECN.

ECN: ECN brokers (Electronic Communication Network) simply give their clients the best prices for buying and selling from the data providers they have contracted. They are good brokers for experienced traders, allowing scaling, hedging, automatic trading operations normally without restrictions.

MARKET MAKER: these are the brokers who give their clients compensation without going through the market, they create their own market where their clients carry out the operations, here is the main problem since a conflict of interest is created between their profit and ours, here we find the famous phrase of the stop sweeps slightly distorting the price.

STP: STP (Straight Through Process) brokers are the brokers who transmit our operations to the liquidity providers (banks, financial institutions, etc). They have no possibility of changing prices. Their benefit is that they charge a small commission or have a very low spread in most cases.

(DMA/STP): DMA brokers provide direct and transparent access to the best bid/ask prices offered by liquidity providers. It accepts all types of trading styles such as scalping, swing trading, etc.

Leverage of CFD brokers

As for the broker’s operations, we define:

• Leverage: Using leverage is a key advantage of CFD trading, but it is necessary to know it well to avoid problems.
  CFDs offer leverage that can be as high as 1:5 in shares. This means that if you use 1:5 leverage on a stock your profits and losses may be as follows:

1. 1% variation in your share CFD: you just increase your capital: +5
2. Variation against the 1% CFD share: -5%, it has lost part of its capital.

Since the latest Esma regulations came into force, CFDs have a leverage limit of up to 30:1 , below we will see the limits broken down by product:

• Maximum leverage on Index CFDs and 20:1 Gold
• Maximum Leverage on 2:1 Cryptosystems CFDs
• Maximum Leverage on Commodity CFDs 10:1
• Maximum Leverage on Stock CFDs 5:1

What platforms do CFD brokers have available?

• Platform: The trading platform is the fundamental working tool for any investor operating in the financial markets via the Internet. It is a software designed to be able to analyse the market, receive the prices of the financial instruments available for investment and open, control and close positions according to the decisions taken by the trader.
  • If you are a beginner trader you can rate trading platforms such as MetaTrader, Sirix WebTrader or a broker’s own platform.
  • If you are a more experienced trader, MetaTrader can still be a good option or you can go to more specific platforms such as cTrader, ProRealTime, Visual Chart.

Strategies for trading CFDs

The two most popular trading methods are the short position and the long position, although trading from an intermediate position is also quite common.

1. Long position. Buying in the middle of a price rise in the market. A participant in the trade buys an asset in anticipation of the growth of its value in the future. Thanks to his short-term forecasting skills, or monthly, annual, or through technical analysis, the trader will make a profit in the end, even if the price fluctuations are insignificant.
2. Short position. Buying in a moment of crisis. This strategy is appropriate when a trader predicts a decline in the price of assets, selling an asset on the condition of a possible future purchase at the lower price. If the prediction is wrong and the price of the assets rises, traders would lose an amount equal to the difference between the value of the assets at the opening and closing of a transaction. If the forecast is correct, the bidder makes a profit. This method allows for bidding at shorter intervals, even of one minute.

Commissions and fees for CFDs

Commissions, fees, hidden fees, additional services payments, margins, spreads and more; you will find all this in the trading platforms. Many CFD brokers can offer a choice of rates appropriate to your trading strategy.

Services such as guaranteed stop loss (for an additional fee) or other additional services and tools are included as an option. Account inactivity will also be charged in most cases. Therefore, we advise you to carefully study all fees and commissions for a platform before making a final choice.

Let’s take XTB’s “Pro” account as an example. The condition was an asset bought at $2,000 with a 5:1 leverage. On exit, when buying Apple stock CFDs the commission is $18.1 while when buying Vodafone CFDs it is $24.4.

With the “Standard” account, the trader would only pay for higher spreads, without having to pay any other fees.

How are CFD commissions calculated?

There is no single formula for CFD brokers, because while one gives you the opportunity to earn on spreads, additional unscheduled fees and commissions can be charged at the same time. Many brokers provide their own formulas and even calculators to deduct commissions. For example, in the standard AMarkets plan there are no fees, but in the ECN plan they charge a commission of $2.5 for 1 lot.

Minimum deposit and withdrawal

To start trading CFDs you must first open an account with a broker. You will usually need to make an initial deposit of between $0 and $10,000, depending on the broker; due to high competition in the industry, these initial deposits have been limited to a maximum of $250 with most brokers.

For the deposit, the credit card Visa or MasterCard, the bank transfer, PayPal, and in some cases the cryptography, will be enough. In general, this process does not differ much from buying a product online, only that here you will need to verify your identity.

The funds are withdrawn by a request from the client/operator, often to a credit card or bank account. The amount, method and opportunities for withdrawal also vary from broker to broker, so study your conditions in advance.

How have we selected the best CFD brokers?

When it comes to CFD trading, we come across hundreds (literally) of brokers struggling to get our attention. Among the many offers, which CFD broker should you choose and why? Our experts have analysed and ranked some of the best CFD brokers based on the following criteria:

Trading and operational platform