Best CFD Trading Platforms
Trading is becoming more popular all the time. As more regular people dip their toes in the stock market, they also start to trade other types of stocks or futures, like ETFs, options, or CFDs. However, CFD trading is one of the most notoriously tricky markets to find a great trading platform for, especially since they aren’t traded in the US.
But the choice of CFD trading platform is actually much more significant than you might think. Some trading platforms offer perks for CFD options that others don’t, literally giving you more variety or better CFD products than their competitors. Others may have better interfaces or have different jurisdictions depending on their countries of origin. Today, let’s take a look at the best CFD trading platforms and see which ones might be right for different traders.
Top CFD Trading Platforms
Designed for both advanced and beginning investors, Interactive Brokers provide you with just about every trading tool adoption you can imagine. They provide a pair of apps for desktop and mobile devices that are remarkably similar and intuitive, and they’re an excellent choice for a multitude of reasons. These include low commission costs, low margin rate, and tools that can grow in complexity as you grow in trading experience. It’s easily the best CFD trading platform overall for long-term use and potential.
- Trading software covers everything you can imagine
- Provides plentiful analytical tools for market choices and your portfolio
- Low these across the board
- zero dollar account minimum
- huge amount of tradable securities
- the trading platform is powerful and user-friendly
- Free and subscription-based research/data offerings
- Maintenance fees do exist if you don’t use your account frequently
- Several regional restrictions
Interactive Brokers allows you to choose between two tiers of service: IKBR, which is the standard service for advanced or experienced traders or IKBR Lite, which is geared toward casual investors or beginners. The latter option provides you with free trades for stocks and exchange-traded funds on any of those assets that are on US exchanges. It has options for 31 countries and 125 markets in total, making it an excellent option for worldwide traders.
IBKR Pro (originally the standard service) benefits from a more advanced trading platform data spread, a wider range of tradable securities, and a very low margin rate. Both versions of the service can trade CFDs and benefit from a low $0 account minimum. Be advised that you’ll have to pay fees if your account is active for a certain amount of time.
Other benefits include real-time trade alerts, cost analysis tools, and being able to control all your CFD and other trading options from a single-window/account. This makes it easy to control your entire portfolio and make big plays in an instant, or just take stock of what you have entirely before making a decision. The platform uses a set of smart routing technologies to calculate CFD reference prices so you can make better deals. Beginners trying to navigate this intricate trading market will love this feature.
All of these tools can be critical when trading CFDs because you might need to move quickly to take advantage of short-term opportunities or escape deals where your risk is a bit higher than your likely reward. With CFD trading, getting real-time information is very important for success.
Other benefits include a robot advisor (called IBot) and a portfolio analyst tool that gives you access to over 200 benchmarks. When you consider the low costs for commissions and other fees, it’s an excellent CFD trading platform through and through.
Forex.com is a widely-trusted trading platform, regulated from the U.S. to Japan to the Cayman Islands. Their CFD options are available to many non-U.S. clients, however, and they’re incredibly affordable. All told, they’re one of the cheapest and best CFD trading platforms for international traders.
- Low stock index CFD fees
- No withdrawal fees
- Easy to set up an account
- Low entrance costs
- Great platform interface
- Easy to customize charts/analytical tools
- Relatively high stock CFD fees and an activity fee
- Takes time to set up account
- Sometimes money takes a while to show up after withdrawal
Forex.com is a great choice if you aren’t interested in using a platform with lots of trading fees. While their stock index CFD fees are low their stock CFD fees are high, though this is common among other trading platforms as well. Be advised that they do levy a $15 monthly fee after a year of inactivity, but this isn’t much and Forex.com is still generally affordable.
Opening an account is pretty easy and fully digital, though it takes two business days to finalize. It requires a low minimum deposit of about $50, making it one of the more accessible CFD trading platforms out there. Three account types are available; two of these have higher spreads and no commission while another has a lower spread and a low commission $2 per lot per trade.
However, more sluggishness shows up when you try to withdraw money from Forex.com into your account. You have to link a bank account to the service rather than sending money to your credit card, and it’ll take another few days for the cash to actually show up.
Still, Forex.com does provide an excellent trading platform that’s fairly customizable in terms of the user interface or what charts you want open on your screen at a time. You can decide which tabs you have open on your screen where they rest, and there are several themes available. Order types ranging from market to stop loss to trailing stops are at your disposal.
Ultimately, Forex.com is a versatile trading platform tool that is easy to get into and easy to use, and its minor downsides don’t overshadow its value overall.
eToro is a premium trading platform founded in 2007 and based in Cyprus. They’re quite popular on the international scale and, while perhaps not being the best choice for general stock trading, are still an excellent option for CFD trading in particular. Their catalog has a lot of CFD variety even if it lacks options elsewhere, and their low initial and general CFD fees mean they’re one of the most affordable and premium (or specialized) CFD trading platforms you can find.
- 24/7 market hours thanks to their wide reach
- Copy-trading/funding tools
- An included economic calendar
- Several training materials like webinars or blogs
- Stop-loss tool to set a minimum amount of money on your account
- Generous inactivity policy
- Easy to open an account quickly
- Significant withdrawal fees for small-time traders
- Fewer asset options, though still allows for good CFD options
One of the big ways that eToro distinguishes itself from the competition is that they have a wide selection of cryptocurrency CFDs. At this time, it can still be difficult for some people to find good CFD options for cryptocurrencies. In addition, eToro is regulated in two tier-1 jurisdictions and one tier-2 jurisdiction; this just means that it’s pretty low risk for both CFD and forex trading.
In total, you get access to around 2000 CFD options including those for cryptocurrencies, though their general product catalog is a little small. However, the CFD product catalog is a bit bigger than what you might originally expect since eToro uses several algorithms to access markets for information and potential CFD options that are technically currently unavailable… but might be soon.
However, eToro is a bit pricier compared to other trading platforms when it comes to CFD spot trading. To make matters a little worse, its market research tools are acceptable but not impressive compared to other offerings. Still, given the fact that their CFD fees, in general, are quite low, they’re still more affordable overall compared to most other options.
Additionally, they’re very user-friendly thanks to their focus on copy/mirror trading tools. New CFD traders can follow the same actions of brokers who know what they’re doing, making the same investments and lowering the likelihood that they’ll make a bad CFD deal and lose a lot of money. One final benefit is that eToro might be one of the better options if you are European or Egyptian, as eToro has trading jurisdiction both in these regions and in tier-1 locations like Australia.
Ultimately, they’re a premium CFD trading service due to their focus on this trading option and specialization toward analytical tools and a limited but effective product catalog.
Click here to open a free account on eToro now!
IG is one of the biggest CFD trading groups in the world. Founded in 1974, they’ve become a huge name in the trading business and feature an extensive trading product catalog, as well as competitive fees. With a top-tier platform and interface, and jurisdiction in most countries (counting six tier-1 in total), it’s one of the highest-quality CFD trading platforms you can find.
- Stop-loss tools
- Lots of CFD options across thousands of markets
- Platforms are very well-developed
- Account signup is quick
- Lots of training materials
- Customer service is great
- Sometimes significant subscription/exchange fees
- No full social trading platform/copy tools
- Significant inactivity fee
Right upon starting with IG, you’ll find that their CFD platform is very intuitive and even somewhat customizable. There’s plenty of educational tools available if you want to succeed more regularly at CFD trading, and browsing your CFD catalog is quick and user-friendly. Because of their CFD focus, IG’s catalog of other trading options is a bit limited.
Their tools are robust and great for CFD research. Most of the charts they have available are flexible and come with their own toolsets; for instance, you can set alerts for specific CFD indicators (among 22 total). IG also provides extensive training materials for its users, including webinars or web classes.
You shouldn’t discount the availability of 24/7 trading options across a variety of markets. IG’s been in the business for a while and uses that history to its advantage. Even now, they’re spreading into the cryptocurrency sphere, currently offering new CFD options for Bitcoin and more.
They also feature relatively high trading fees for stock CFDs. But they’re also consistent, so you know what you’ll be paying for and why. Further, you’ll face a minimum account deposit of around £250. In essence, IG is a bit pricy compared to other options but gives you a high quality of service and CFD variety in exchange.
Being headquartered in London and Warsaw, XTB is one of the best CFD trading platforms for British or Polish users. They’re quick and easy to use and generally charge low fees for any stock index CFD options, although other fees can be a bit high. They also have special accounts for residents of the UK and Ireland alone.
- Lots of educational materials
- Get a guided phone call when you sign up
- Several languages in the interface
- Rewards for trading more frequently
- A great pick for professional traders due to rebates
- Good CFD trading choices
- Limited market jurisdiction
- Available order types are a bit limited
XTB offers Standard and Pro account options, each with its own spread models and execution methods, which determine their commissions and fees. But overall, spreads are pretty competitive and aren’t too exorbitant, and all users get to rely on the platform’s intuitive interface and several active trader discounts. There are five tiers of the discounts tied to your CFD trade volume, allowing you to potentially earn quite a profit based on your activity level.
Active CFD traders also get an additional benefit if they’re a designated “professional”: XTB will rebate use some of your spread as you trade more. In this way, XTB highlights once again that they reward you for trading more.
Minimum deposits are around £250 or so, but the Pro account options have lower spreads and better fees. Their platform gives you access to a vast number of CFD products, and it’s relatively easy to use with drag-and-drop menus and plenty of analytical tools. Their main CFD screener lets you filter lots of fields to sort through around 2000 single stock CFDS, for example. Additional benefits include daily technical analysis reports and op-eds from trained CFD traders.
What’s the Best CFD Trading Platform For You?
Finding the right CFD trading platform for you depends on a lot of factors, but it’ll be harder to figure out if you’re not familiar with CFD trading in the first place.
First, What’s a CFD, Anyway?
A CFD is an acronym for a contract for differences. It’s a contract essentially only used in Europe and offers traders and investors there the option to profit from the price movement of an asset without actually owning it. In other words, two parties can agree to pay the difference of an asset that neither outright owns between the time the contract opens and closes.
It’s important to note that CFD investors only receive revenue based on the price change of the asset and only owe money for the same reason. It’s essentially a form of price speculation.
How Does CFD Trading Work?
Let’s break down this concept into an easy to understand example. If there was a stock with an ask price (open price) of $10, you could open a CFD for 100 shares’ worth of value. This would have a normal value or cost of $1000. However, CFD brokers require low margins, usually around 5%. As a result, a CFD investor can enter a trade for the above shares with only $50.
You then enter the trade and, if the price of the CFD is higher, you end up making money. If it’s lower, you make less.
CFD trading is also distinct from regular stock trading because of the way leverage is applied. Leverage, in the stock trading and economic sense, is best understood as an amount of debt you or another investor can take on to increase buying power.
Normally, stocks require you to buy into trades with low leverage – this actually refers to a low amount of debt you can take on any given deal. For instance, a trade with a 30% leverage would require you to have 30% of the value of the trade in your own equity. High leverage means that more people can buy-in.
Some CFD deals allow you to get margin requirements for as little as 2%; you can borrow up to 98% of the value of a deal to increase your buying power and potentially boost your earnings more than you can with most other traditional trading options.
This being said, higher leverage potential also means a higher potential for failure. If you don’t trade properly or make a poor trade and you ended up taking a CFD with high leverage, you’d owe your lenders a lot more if you did make the profit you predicted.
Thus, the high inherent leverage in CFD stocks lends it to a sort of, “high-risk high reward” trading style.
Many CFD brokers (who you trade through) end up making money on the “spread”. This is the difference between the buying and selling price of the CFD. This happens automatically with most CFD trading interactions; a trader enters a trade, and the account for the CFD immediately produces a small loss equal to the size of the price difference.
What Are the Benefits of CFD Trading?
As mentioned before, CFD trading has much higher leverage than traditional trading, so it’s attractive for those without a lot of capital or riskier traders alike the adrenaline rush of betting a lot. It also makes CFD trading pretty accessible.
Furthermore, CFD trading takes place across a multitude of markets that run essentially 24 hours a day. Intraday trading is, therefore, possible with CFD stocks. Given that CFD trading isn’t very expensive (since most brokers don’t charge high or any fees), it’s easy to get started or addicted to this type of trading.
Finally, CFD trading doesn’t have very high day trading requirements; many accounts only require that you have about $1000 to put down in your account.
What Are the Risks?
Of course, all these positives do come with their own risks. CFD trading isn’t as regulated as most other types of trading, for starters. There’s a reason that it’s banned in America. Therefore, choosing a good broker and CFD trading platform is important if you want to succeed through this trading method.
It’s also very easy to “overexpose yourself” when CFD trading because of margin risks. For instance, having multiple open positions on CFD trades with relatively small margins can add up over time. You may unintentionally take on lots of leverage, which could be disastrous if your trades don’t work out the way you hope they will.
Why are the MT4 and MT5 Platforms So Popular?
Both of these platforms, MetaTrader 4 and 5, are the most popular trading interfaces around.
MT4 is the market standard and used by hundreds of brokers across the world. It provides advanced technology and better security, meaning brokers don’t have to worry about the stability of their trading platform as they open and closed positions. MT4 comes with excellent charting capabilities, top-tier communication tools, and doesn’t require very high resources to run.
MT5 is a little newer than MT4, and it features several improvements over the latter, like a navigator tab to let you move between accounts quickly. But because it’s not as well-cemented in the market, many brokers haven’t yet adopted it. In essence, MT5 just isn’t quite as proven as its older cousin.
How Can You Trade CFDs?
Trading CFDs is essentially done using this simple formula:
- determine a market that you want to trade CFD’s in – this refers to the type of CFDs, like crops, cryptocurrencies, whatever
- determine the position size you want to trade-in
- open a deal using a broker; you’ll put money down and have an open position on a CFD
- monitor the position as time passes
- adhere to an exit strategy; this means closing the deal when you make an acceptable profit or when you lose enough to make withdrawal wise
In this way, CFD trading isn’t all that different from regular stock trading that takes place over the short term.
You can buy or sell CFDs. Buying a CFD at a low price and looking to sell it once the price raises is the simplest example of this type of trade.
Is CFD Trading Safe?
CFD trading is safe in the sense that many trading platforms are somewhat regulated and have enhanced security on the digital front. But CFD trading is inherently riskier than other types of trading because of the amount of leverage involved and the general risk of the stock market. There’s always a risk of losing, no matter how well formulated your strategy is.
What Is a “Stop”?
A stop is a preset order to sell a position when it drops to a certain price regardless of your feelings of the time. This helps minimize your risk and can cut your losses, which is an invaluable tool when you first start out. Limit orders are also offered in conjunction with stops, which instruct your trading platform to close a CFD trade at a price that’s better than the current market level.
What Are Trading Jurisdictions and “Tier” Levels?
Jurisdictions are essentially collections of governments or countries in which trading occurs. These jurisdictions have different tier-based security ratings where lower numbers indicate higher trust or better security. A tier-1 jurisdiction (America) is, for instance, better than a tier-2 one (China).
Our above examples all have at least some business in tier-1 jurisdictions, although as explained America is absent in these regions for CFD trading alone. You can find additional details about which countries they do and do not operate within by contacting their customer service representatives.
Why Can’t You Trade CFDs in the USA?
The USA has a ban on OTC or over-the-counter trades. Being derivatives, CFDs are classified as OTC trades and are thus not allowed. Additionally, the USA disallowed CFDs because most of their traders were losing on them: they were bad for general business!
How to Buy CFDs?
Most CFD trading platforms work the same way. They allow you to choose a market you want to trade in and buy certain CFD trades based on the date of the same platforms provide. You can buy certain amounts of shares based on your current account balance and limits.
What’s a CFD Margin?
This is how much money you need to open a position; think of it like collateral or a set minimum amount of cash you have on hand in order to be “good” for a deal. For instance, a bank may not give out a loan to someone who doesn’t have $1000 in their account. A CFD margin works the same way.
What’s a CFD Broker?
They’re a type of trade broker that specializes in contracts for difference. Most of them make money through the spreads that are quoted on every market, so they technically make a bit of cash every time you enter into a deal with them. Many brokers or platforms will also charge a commission, which is a percentage of the profits based on the size of the transaction.
What’s a CFD Pair?
A CFD pair is simply that: a pair of contracts for difference. You can “pair trade” by buying one instrument and selling another at the same time. It’s basically like trading CFDs of similar value to change your position if you are reading the charts and want to make a strategic alteration to your plan.
What’s a CFD Spread?
A CFD spread is the difference between the purchase and selling prices quoted for an instrument or asset. Buying prices are always higher than selling prices.
What’s the Difference Between CFD Trading and Forex Trading?
Forex trading is essentially pure currency trading. CFD trading covers a much wider array of markets, including energy, metals, indices, and more. Forex trading platforms are often included alongside CFD trading platforms, however.
CFD vs Stock Trading
Stock trading can only occur if at least one of the individuals actually has a share or a small piece of ownership in a company. Stock trading occurs when pieces of that company are exchanged for money or for other stocks. CFD trading is not like this because neither party actually owns a piece of the asset in question.
CFD vs Options
An option in stock market parlance is essentially an agreement that gives a trader a right to buy or trade an asset at a certain price in the future regardless of the price at that point. For instance, a trader with an option for a stock at $5 could buy that stock for $5 the market price was at $10. Thus, options are also contracts but they’re a separate type compared to CFDs.
CFD vs ETF
ETFs (or exchange-traded funds) come with ownership of certain underlying assets like futures, bonds, stocks, or even real assets like bars of gold. They are treated like common stocks. Thus, ETFs are better if someone is looking for a passive investment that is likely to grow reliably over time. CFD trading is more about agile movement and making profits based on market changes or short-term predictions.
What Are Regional Differences When Trading CFDs?
You should be aware of taxation differences that might apply because CFDs can be traded throughout the entire world. Different countries use CFDs as different things; some view them as a type of gambling while others view them as a regular asset. For instance, the UK taxes CFD gains and losses under capital gains tax regulations.
At the end of the day, CFD trading platforms have a big impact on whether you’ll find success in your CFD trading endeavors. Some of them grant you access to different CFD stocks, while others enable you to operate in different countries. Consider your choices carefully to maximize the odds of profit. Have you ever treated with CFDs before? Let us know your experiences in which of these platforms you’d recommend!