CFD Brokers and Trading Tips For UK Investors – Reviews and Top List

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Contents

CFD Brokers

The top CFD Brokers in the UK give traders access to a financial instrument called “Contract For Difference”, or CFD for short. Here we list key details from hand picked brokers along with full reviews, to help you find the best broker for CFD Trading.

We highlight some of the key areas where CFD brokers differ from one another, and how a trader might compare them. The needs and trading style of each trader will be different, so there is no single broker that will represent the “best” choice for all traders. Read on to find out which broker suits you best.

What is a CFD Broker?

Top UK CFD Brokers

Review Margin Demo MT4 Regulated Rating
0.4% 95%
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0.45% 90%
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» Visit
0.5% 88%
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» Visit
87%
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» Visit
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» Visit

How to Compare Brokers

  1. Spread / Commission
  2. Leverage
  3. Trading Platform
  4. Deposit and Withdrawal options
  5. Additional features
  6. Support
  7. Education
  8. Regulation
  9. Mobile App

We cover each section in detail below.

Spread or Commission

The spread or commission fundamentally impacts every trader. It is effectively the ‘cost’ of making the trade. It is therefore a very significant value to compare one broker to another. There are complications however.

The spread will differ broker to broker – but also asset to asset. So a broker may have the smallest spread for Forex pairs, but the largest for indices. Depending on what assets a trader wanted to invest in, the broker might be the cheapest choice – or the most expensive.

So when comparing brokers based on the spread, ensure you are checking the spread on the assets you will be trading most.

Margin (or Leverage)

The margin is the percentage of the overall trade value that a trader must deposit (and commit) in order to open a trade. So a £1,000 trade on the GBP/USD currency pair may only require a deposit of £50. The position however, has exposed the trader to £1,000 worth of risk (the risk of losing the entire investment is extremely small, but that is the value of the position) – hence the warning attached to CFD trading “losses can exceed your initial deposit“. Margin is also referred to as ‘leverage’. Where this is the case, the leverage is often illustrated in terms of multiples – so 200:1 would indicate leverage of 200 times the deposit. The equivalent margin would be 0.5%. So when comparing brokers, a low margin requires smaller deposits. This will be important to some traders, but less so to others.

Trading platform

The actual trading platform is often not considered before a trader makes a broker choice. That however, could be a mistake. Yes, most platforms will have similar functions – but as with anything, the usability and look and feel will be a matter of personal preference. It is very important to be trading on a platform that is familiar and easy to use.

It is not uncommon for traders to miss prices, or worse, make mistakes trading, because the trading platform did not suit them for whatever reason. The ‘Cancel‘ button might be blindingly obvious to some, but if you are the trader that ended up entering a trade by mistake, you might wish you had based a broker choice on the simplicity of the trading platform. All of the platforms listed here offer demo accounts – try before you buy.

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Deposit and Withdrawal options

Perhaps not a trader’s first thought – but if moving money in and out of trading accounts has been problematic for you in the past, it is worth checking that the methods you want to use to fund and withdraw from your account are available with each broker.

Features (Charts, Technical Analysis, Research)

If you plan to research your trades on the same trading platform where you ultimately trade, you want to ensure you have the best research tools available there. Charting standards do differ significantly.

Some brokers offer outstanding charting facilities, with a range of technical analysis tools that will satisfy even the most ardent technical analysis experts. The latest news is also available within the trading area, so research can be done from one place.

Other platforms seem to assume traders will have already researched their trades elsewhere, and offer pretty basic charts and little in the way of analysis tools. If this is important to you, ensure your potential broker satisfies this need.

Support and Education

Many brokers will offer educational material to their clients. These might include ebooks, webinars or even one to one training where the client requests it. Again, this might be important to some traders but not to others. It is worth noting that brokers make money when traders trade – so most educational materials will encourage lots of trading. Over trading is a common issue for many people, so is worth bearing in mind.

The available support from a broker may be reassuring for some – others may not envisage ever using it. Potential new clients who do like to know they can contact a broker might like to establish the availability and contact methods for the support desk. Most firms offer a high standard of support.

Other factors

Some other things that enable people to compare CFD brokers might include the quality and availability of a mobile trading application. As ever, trading on the move will be important to many traders – others will be happy to not use a mobile app.

Regulation should be a key criteria for any broker. Only regulated CFD brokers are included on these pages, all are regulated by the Financial Conduct Authority, with the exception of Markets.com (Markets.com is operated by Safecap Investments Limited, Safecap is a regulated investment services firm authorised by CySec). This is less of a comparison factor than a prerequisite.

Bonuses might also be a factor in a broker decision. The short term nature of these offers however, should mean they rank well down in the order of importance. Taking a worse spread in order to get a larger bonus makes no sense – but any trader who is likely to be successful will already know that.

Our reviews cover all of the factors required to compare CFD brokers, and as mentioned previously, all of the CFD brokers listed on our pages provide demo accounts. So traders can take their time, read the detailed review, and try out the platforms themselves before making a choice. Once you have all the information, you can then decide the best CFD broker for you.

How to find the best cfd brokers

  • Consider your own trading methods. The trades, assets and frequency.
  • Shortlist the cfd brokers that suit that trading pattern
  • Consider demo accounts. Compare the trading platforms shortlisted.
  • Identify the best choices for you.
  • Deposit and trade

Remember: Traders can use multiple brokers, and use those with the best terms for specific trades or assets.

How do cfd brokers make money?

What is CFD trading?

Best CFD Brokers – Commission comparison

Click on each broker name to compare firms – We have compared spread, commission and margin rates on like for like assets:

Markets.com

  • Asset – Margin / Spread
  • FTSE UK100 – 1 pt (var) / 0.5%
  • Wall Street – 2 pt / 0.5%
  • GBP/USD – 0.2 pips / 0.5%
  • UK Shares – 0.5% / 0.5%
Rating Payout Min Deposit Bonus Regulated
» Visit
Var £100

Yes Payout: Var Min Deposit: £100 Bonus: Regulated:

Yes

What is CFD trading and is it right for you?

Take a look at several of the most popular trading platforms (Markets.com and ETX Capital to name just a couple), and you’ll see that binary options are not the only trading vehicle on offer. CFD trading (Contracts for Difference) is widely available. It shares certain similarities with the binary option model – but there are important differences to be aware of, too.

So is CFD trading something you should be looking at? Read on to find out…

What is a Contract for Difference?

With a CFD, the ‘Contract’ is between the broker and the individual trader, and the ‘Difference’ refers to the difference between the value of the underlying asset at the time the contract is entered into (the strike price) and its value after the contract is closed. It is essentially an agreement to exchange the difference in these two values.

What is a CFD?

So a CFD is a derivative product: the trader does not actually take ownership of the underlying asset. Brokers create CFDs in relation to a wide range of individual equities, indices, commodities and forex; the price is determined by market conditions and the timeframe of the contract typically ranges from an hour to a week.

The contract features a ‘buy’ and a ‘sell’ price, with an ability for traders to go long (buy) if they believe market prices will rise, or go short (sell) if they believe market prices will fall.

If the market moves in line with the trade, profits from the contract will rise in line with that movement. Conversely if the market moves against the trade, losses increase.

Differences between CFD trading and binary options

Both CFDs and binary options enable traders to benefit from small movements in the prices of underlying assets over a short period of time. Both are useful tools for putting your market knowledge to work and taking short term positions.

But there are two important differences to bear in mind:

  • A CFD is a linearly leveraged financial product. A binary option is a fixed odds instrument; you either earn the stated return or else lose your invested stake depending on whether the market moves in or out of your favour. What’s more, your profits (or losses) do not increase in line with how far the market moves in either direction. With a CFD, by contrast, profits and losses increase in direct relationship to market performance. The leveraged nature of CFDs mean, therefore, that your losses can exceed your initial investment.
  • A CFD does not have a fixed maturity date. A binary option has a fixed maturity (which could be anything from 60 seconds from when it was entered into up to a day or longer). With some exceptions (depending on the broker’s preferred way of operating and the type of underlying asset), most CFDs do not have an expiration date. When you judge that it’s the right time for you to close a position, this is done by placing a trade of the same value in the opposite direction.

How and why CFD trading can be useful

Take a position in a falling or rising market
In this regard, CFDs perform a similar function to binary options. With the opportunity to go short or long, you have the potential to generate profits no matter what the market conditions (providing, of course, your predictions on direction of movement are correct).

Hedge your wider investment portfolio
Where you are invested in physical shares, your hope and expectation is obviously that they will increase in value. But where there is a very real risk of those shares leaking value, CFDs can play a useful hedging role. So if you hold stocks in a certain company, short selling CFDs based on the same shares can be a useful way of making a profit from any short-term downtrend. In turn, this can partially or wholly offset any loss from the portfolio. This security measure can be an especially useful strategy to adopt in volatile markets.

Tax efficiency
While share dealing attracts stamp duty liability, the same does not apply to a CFD trade. Depending on your circumstances, any losses incurred may also be used to offset against your capital gains tax (CGT) liabilities.

Risks associated with CFDs

Leverage and margins
To open a CFD position, it is necessary to deposit an amount in your brokerage account, known as a margin. This ‘position margin’ tends to depend on the size of your position and the type of underlying asset. The good thing about this is the ability to deposit a percentage of the full value of the position, which means your money linked to the position is not tied up in one transaction and can be used for other investments.

The downside is that it is possible not just to lose your initial deposit but also be required to make further payments.

CFD Trading – leverage risk

Keeping track of transactions
Failure to ensure you have enough funds in your account to cover total margin requirements could mean that some or all of your positions are closed out. Managing multiple CFD trades requires you to constantly monitor your account, depositing additional funds where necessary.

Is CFD trading for you?

CFDs offer a dynamic and sophisticated way of trading – although the possibility of losing more than your initial stake mean that it isn’t for everyone.

When looking for a platform, it’s important to opt for a format that you are comfortable with; one that allows you to keep control of your trades and one with a competitive spread – i.e. a narrow difference between buy and sell prices.

Get the full lowdown on trading platforms and find out more about specific brokers who offer CFD trading services.

Differences Between CFD Trading and Forex

In many ways, Forex trading and cfd trading are the same thing. In both cases, the underlying asset is not owned by the trader. Both forms of trading offer a way for traders to speculate on the price on an asset. When trading foreign exchange – that asset is a currency. So an FX trade is still a ‘Contract For Difference’, it is just being used specifically on a forex pair.

The main differences are in the detail of the trade. Forex pairs are generally traded in a “lot size”. Traders can choose the number of lots to trade and therefore trade the volume they need. With cfd trades, there are no such lots. This is the case, simply because a currency rate is not an ‘asset’ with a value. It is an exchange rate of two different assets. This is why a lot size is used. The only other difference is in the assets being traded. A forex trade is obviously based on a currency pair. CFDs can be traded on a range of assets – including, but not limited to – foreign exchange.

So the differences are small. Whether a broker labels themselves as a ‘Forex broker’ or a ‘CFD Broker’, really comes down too the assets they offer to trade. Forex specialists will generally enjoy tighter Forex spreads, but even that is not always the case.

Compare CFD Brokers

Compare the best UK CFD brokers authorised and regulated by the FCA. Choose a CFD broker that offers the most markets, best pricing and client security.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Featured brokers appear first. Learn about how brokers are ranked.

Featured CFD Broker What can you trade via CFDs? What are the CFD trading costs? CEO Interview More Info
IG clients can trade a range of over 17,000 CFD markets Trade CFDs on interest rates, bonds, sectors, forex, indices, global shares, commodities and cryptocurrencies Opening an account is free, and charges are competitive. Trade spreads from 0.6 points on key FX pairs like EUR/USD, 1 point on major indices like the Germany 30 and FTSE 100, and 0.3 points on Spot Gold. Trade contracts for difference (CFDs) and access over 9,500 instruments with competitive spreads. Trade CFDs on forex, indices, cryptocurrencies, commodities, shares and treasuries. Trade CFDs on major forex pairs from 0.7 points and popular indices from 1 point. When trading UK shares a commission is charged from 0.1% or 2 cents per unit for US. 150+ instruments across FX, indices, equities, cryptos, energy and commodities, and more, across three, free powerful platforms During liquid times, CFD spreads can go as low as 0 pips on the EURUSD on the Pepeprstone Razor account Read Tamas Szabo CEO Interview Visit Pepperstone

CFD Trading with City Index gives you access to over 4000 global markets including Indices, Shares, FX, Commodities and Bonds. Fixed and variable CFD spreads from 0.5 points with benchmark UK financing is LIBOR +/-2.5% Coming Soon Visit City Index

What is CFD trading?

If you want to be a better CFD trader, start by reading our handy bitesize guides:

Watch our “What is CFD trading” video interview with CMC Markets

We’re talking with Ryan O’Dougherty from CMC Markets about CFD (Contract for Difference) trading, what CFDs are, who they’re for, what you can trade, what are the main risks, the main benefits, and also, some top trading mistakes and how to avoid them. Or read the interview transcript here.

How to compare CFD trading brokers?

If you’re looking for a new or your first CFD (contracts for differences) trading broker there are a few key points to compare when deciding who to open an account with. Firstly, you need to look at price. Some CFD brokers charge commission whereas others included the costs in the CFD spread.

Normally, it’s only DMA (direct market access) CFD brokers that charge commission but use our CFD broker comparison tables to check. Secondly, are they regulated by the FCA (Financial Conduct Authority)? All CFD trading brokers listed in our comparison are regulated by the FCA. You can check whether a broker is regulated by the FCA in the UK by checking the FCA register.

Only fully FCA authorised and regulated brokers offer client funds protection under the FSCS. From the 1st September 2020, this protection extends to;

  • limiting leverage to between 30:1 and 2:1 by collecting minimum margin as a percentage of the overall exposure that the CFD provides.
  • Close out a customer’s position when their funds fall to 50% of the margin needed to maintain their open positions on a CFD account.
  • Provide protections that guarantee a client cannot lose more than the total funds in their CFD account.
  • Stop offering monetary and non-monetary inducements to encourage trading.
  • Provide a standardised risk warning, which requires firms to tell potential customers the percentage of their retail client accounts that make losses.

Thirdly, how good is there online trading platform? When comparing CFD trading brokers the best way to choose a broker that is right for you is to open a CFD trading demo account to really get a feel for a platform and to understand what you like and dislike about each broker.

You won’t need to risk your own money with a demo account, but it will give you an idea of how the platform works, what kind of resources the broker offers and insights in to the data behind the platform, albeit with limited functionality. Read how to compare CFD brokers here

How do CFDs Work?

Trading CFDs is a form of high risk, high reward speculation on the financial markets. You can trade shares, Forex, commodities, fixed income and indices like the FTSE, DAX, Down and S&P. CFDs are a leveraged OTC (over the counter) product so you don’t actually own the underlying asset – just receive a profit and loss based on the difference between the price at which you open and close a trade.

What does CFD trading mean?

Firstly, it means that you are not buying or selling an actual asset. You are entering into a contract for the difference between the closing and opening price of a trade based on how many contracts you buy. The amount of contracts usually mirrors the same amount in the underlying market. Read more on what CFD (Contracts for Difference) trading is and how it works here

How to compare CFD trading platforms?

Our comparison makes it quicker and easier to choose a CFD trading platform. You can compare spreads, pips and the markets offered all in one place. However, as well as using our comparison trying out each broker through a demo account is also a good way to familiarise yourselves with what each offers and find out which you prefer. Demo accounts allow you to quickly try each CFD trading platform and save you risking any real money. Read more on the best way to compare CFD trading platforms here

Why to trade CFDs

CFDs are one of the most cost-effective ways to speculate on the financial markets. They provide many advantages over traditional investing – but of course with these advantages come disadvantages. You can make big money, but you can also lose big if you don’t know what you are doing and don’t use a well respected CFD broker.

Our definitive CFD brokers list of FCA regulated broker

Trading CFDs is risky, not just because CFD’s by nature are a high risk investment product. But also because CFD brokers can go into administration. To reduce the risks of your broker going bust, it’s important to only use FCA regulated brokers to make your trades.

Fortunately, all of the brokers included in our comparison are companies that are regulated by the FCA in the UK and accounts from companies that we are familiar with and have had experience using.

Good Money Guide is one of the most trusted places to compare brokers side by side and read both expert and customer reviews.

Where can you find CFD brokers in the USA?

Unfortunately, you can’t trade CFDs in the US. Plus to make it even worse if you are a US citizen or resident you can’t trade CFDs with a UK broker. UK and US regulations prohibit US clients trading with overseas brokers. But if you are a UK or European trader you can trade US stocks on CFDs with a UK CFD broker. You can however compare US CFD stock brokers where you can usually trade on margin.

Which are the best CFD brokers in the UK?

If you’re looking for the best CFD brokers in the UK then you’ve come to the right place. Our CFD broker comparison tables display only UK CFD brokers that are regulated by the FCA and that we consider to have good reputations. We don’t include brokers on Good Money Guide that are not properly regulated or have bad reputations within the industry.

What are STP CFD brokers?

STP means (Straight Through Processing) which means when you put an order in it goes into the market the broker buys or sells on your behalf. The alternative is where a broker matches up with other traders or does not hedge your positions at all. In the grand scheme of trading, it does not matter whether your broker is STP or uses a B-Book. You make money if you call the market right. You can’t blame the broker if your trades are not profitable.

Where can you trade CFDs with a stockbroker?

CFD stock brokers are really a good example of why CFDs are a useful tool. CFDs enable stockbrokers to give their clients direct market access (you can compare DMA brokers here) meaning they get better prices, can work orders inside the price and work algo orders like daily VWAP (volume weighted average price) price matching.

What’s the best way to compare CFD platforms?

Simple, use our CFD broker comparison tables to check out the key features of CFD brokers in the UK. There are two ways to compare costs on a CFD platform. The first is to see how far the prices are from the actual underlying market spread. The second is to see what commission is charged. If a commission is charged the prices you will see on the CFD platform for comparison will be the actual bid-offer spread. The commission will be a percentage from the bid-offer price.

CFD trading for big money and high net worth (HNW) large traders

If you are a big CFD or spread betting trader (and by that we mean £50k upwards) you need a broker that is going to give you a bit more than just the top ten traded forex pairs and a few commodities.

Our spread betting comparison tables compare all the spread betting accounts in the UK, and a quick glance will show that they are all pretty much the same. However, if you are an experienced trader with big pockets and want to trade in a tax efficient way, there are brokers out there that go the extra mile to ensure that the more sophisticated traders get an edge.

If you are a big spread betting customer and want a broker that gives you more we’ve summarised some of the best accounts for larger traders.

What are the Best CFD brokers for high net worth individuals and large traders

  • Of course, IG offers CFDs and tops this list as they offer CFD trading too.
  • Saxo Capital Markets is another decent CFD broker for HNWs as you can trade DMA, buy physical shares, bonds, and trade all sorts of exotic derivative products. They also have decent brokers for phone trading if you want to work VWAP or other algo orders that may otherwise move the market if you did them yourself.
  • Compare other brokers for CFD trading here

The importance of brokerage account diversification for larger traders

No matter what size your account balance you should be a responsible trader and diversify. This doesn’t just apply to your portfolio, but also to your financial service providers.

History has shown us that spread betting brokers can go bust quickly (Alpari, January, 19th 2020). It is sensible to spread your business around a few of the top spread betting brokers so that if there are rumbles or rumours you can close and reopen your positions at another broker quickly.

The last thing you want to happen is to have all your positions with a defunct broker and the auditors taking weeks to close them out (cough cough MF Global). A sensible solution to mitigating this issue is to have a secondary account on standby so that if you foresee any future problems with your broker you stop using them sharpish.

As most accounts are opened online it can take as little as 20 minutes or as much as two days to get a new account ready. Make sure you trade for the best, but are prepared for the worst and have secondary accounts that you are familiar with on stand by in case you need to make a switch.

Comparing top MT4 CFD Brokers – where and how to do it?

If you want to compare top MT4 CFD brokers you can see our MT4 CFD broker comparison table. We highlight the key aspects of trading MT4 with a CFD broker, which ones are the best, how they should be regulated and how many markets are on offer. We only include FCA regulated MT4 CFD brokers in the comparison table.

How to compare Forex CFD brokers

Forex CFD brokers tend to focus on Forex, but will also offer trading in major indices, commodities, fixed income and some top stocks in the UK, US, Europe and Asia. If you want to compare Forex CFD brokers you can view our Forex CFD brokers comparison table.

If you are looking to compare brokers who offer CFD trading on specific currency pairs then check our EURGBP comparison and used GBPUSD for a CFD account to trade cable.

CFD trading Strategies that can help you make money

If you want to be a profitable CFD trader you need to follow some golden rules of CFD trading. It’s not difficult to make profitable trades, but what is difficult is ensuring that you make more profits on your winning trades than you make losses on your losing trades. It’s a well know fact that even the best traders in the world only get it right half the time. It’s how they manage their CFD positions that sets them apart and makes them better traders. You can find out more about the best CFD trading strategies here

Here are five quick CFD trading tips

  1. Don’t trade with more than you can afford to lose
  2. Run your profitable trades
  3. Cut your losing trades quickly
  4. Use stop losses to minimise risk
  5. Combine technical and fundamental analysis before trading

CFD stocks brokers versus index and FX

FX and index only CFD brokers tend to be smaller and less established than CFD brokers that offer a broad range of share and stock trading. Going with an established broker that offers FD stocks trading gives you more flexibility over what you can trade.

CFDs versus Spread Betting

Spread betting and CFDs are fairly similar in some respects but totally different in others. Find out the major differences between CFD brokers and spread betting brokers and see which is right for you. Whatever product you trade though always read CFD broker reviews to ensure that any broker you choose is regulated by the FCA and have their head office based in London.

Trading stocks and shares on CFDs

The key advantage of trading stocks on CFDs is that you don’t have to pay stamp duty to the government. Also, unlike spread betting you can still get DMA. DMA enables you to get into the order book for trading at the best possible prices. The best equity CFD brokers will offer access to the global markets, but this is generally only for the larger brokers – smaller CFD brokers tend to only offer FX, commodity, index and fixed income prices.

DMA (Direct Market Access) CFD brokers

DMA CFD brokers are really only suitable for clients trading with over £100k on account or for hedge funds. Being able to get inside the bid/offer spread is great, but in reality, it doesn’t make a difference, unless you are working really big orders on limits or a high frequency trader. If you need to trade CFDs on DMA make sure you understand that missing a price because you are trying to nick an extra 0.25p could be a costly error. If you’re a professional trader you should only be dealing with a DMA CFD broker.

Advisory CFD brokers

CFDs are a very high risk product and it’s important that clients understand the risks involved before opening an account. Over the years the FCA has clapped down on advisory CFD brokers providing advice and hard core sales tactics used by CFD brokers to get clients to trade more. This website is all about execution only CFD brokers – that means CFD brokers that do not provide advice or recommend trades. Here is how to find a CFD stock broker

Best CFD brokers for trading Forex

FX CFDs are one of the most popular asset classes in the world. The foreign exchange market trades well over $4 trillion in volume everyday and a large percentage of that is from client speculating on short term price movements by trading Forex on CFDs. Take a look at our FX CFD comparison tables to see the best CFD brokers for trading Forex.

Index trading on CFDs – where and when to get the best access

The FTSE, Down, Dax and S&P are the major indices that are traded via CFDs at the moment. They offer great liquidity, news flow and are open 24 hours a day. As the underlying stock markets open and close the indices become more volatile so there is plenty of excitement and opportunity to be had from first thing in the morning until well in to the night. Spreads are tight and the intra-day range can be well charted. The top CFD brokers for index trading offer low initial margins on indices providing good leverage for trading on margin.

Reduce your trading costs with a CFD broker rebate program

The more CFDs you trade the lower your trading costs should be. Some brokers charge a commission and others add the commission into the prices they quote. If your broker is charging commission they may offer a reduction in rates if you deal a certain amount. However, for CFD brokers that price in commission to the spread they offer high volume traders a monthly rebate once they trade above a certain amount.

Top ten CFD brokers in the UK

If you’re looking for your first CFD broker, or want to diversify your risk, by spreading your trading around a few brokers take a look at our top ten CFD brokers section. It provides all the key information on the top ten CFD brokers in the UK, spreads, bonuses, when they were founded – we also show the pros and cons of using each broker. To be in the top ten all brokers must be UK based and regulated by the FCA.

CFD broker reviews – what CFD broker is best?

Choosing a CFD broker is a matter of personal preference. It can be based on anything from colour scheme to how friendly or efficient you find their customer support to the background information they offer. If you want to read reviews of the major CFD brokers in the industry our broker reviews for top CFD brokers can help;

CFD research and technical analysis

Most good CFD brokers provide some kind of research and analysis on the markets for their customers. But generally the better the broker the better the research, tools and analysis. It costs a lot of money to hire analysts and provide data to clients and some of it (if you know how to use it) can be exceptionally useful. Technical analysis provides a good overview of the markets based on charts and historical data

  • Fundamental analysis users company financial releases to evaluate the health of a share price
  • Economic data and calendars show when important announcements are due that could result in a price move.

Compare CFD Brokers and Trading Accounts

CFD Trading is the buying and selling of “Contracts For Difference” – referred to as “CFDs”. They allow traders to speculate on price movements of an asset – both going up, or down (long or short). Often offered with leverage (or ‘on margin’), they give UK traders the ability to speculate on stocks, forex, commodities or indices. As the underlying asset is not owned by the trader, no stamp duty is applicable to CFDs. Read our full guide here!

In this article, we will:

  • Define a CFD and help you understand CFD Trading. You can watch a video.
  • Show an example of a trade, with a short tutorial on how to trade.
  • Show advantages and disadvantages of this form of trading.
  • Explain how to find the best broker account, platform or software for you.
  • Offer some “Beginners Tips” to help analysis and trading strategy

CFD Brokers List

What is a CFD?

A CFD is a contract between broker and trader to pay the difference in price, between the strike price and the price at the close of the trade, of an underlying asset.

Contracts For Difference Defined

CFD Defined: A Contract For Difference (or CFD) is a contract between a broker and an individual trader. It is a form of derivative. The difference refers to the value of the underlying asset at the time the contract is agreed (the strike price) and the value after the trade ends. It is essentially an agreement to exchange the difference in these two values.

The underlying asset is not brought and sold, but the contract allows traders to speculate on price movements of that asset. When trading stocks, no dividend is directly payable, but many brokers will still pass on the dividend. This balances any drop in value once a stock goes ex-dividend.

The trader does not own the underlying asset at any stage. Brokers create CFDs in a wide range of individual equities, indices, commodities and forex. The price is determined by the markets. The length of the contract will vary. Trades may last just a few seconds, up to months or years.

Puts or Calls

CFDs are generally used for shorter time periods (days or weeks) as more traditional investments are seen to offer better value over longer periods.

The contract features a ‘buy’ and a ‘sell’ price (known as the ‘spread’). This offers the chance for traders to go long (buy) if they believe market prices will rise, or go short (sell) if they believe market prices will fall. Buys or sells are also known as “puts” and “calls”.

If the market moves in line with the trade, profits from the contract will rise in line with that movement. Conversely if the market moves against the trade, losses increase. These contracts are often offered with a degree of leverage. This increases potential profits – but also potential losses – and therefore carries much greater risk.

CFD Video Tutorial

An Example Of A CFD Trade

Here is a ‘walk through’ of a Contracts For Difference trade – a brief “CFD Tutorial”:

In our example, we are going to open a trade on Vodafone. The specific screens and layout will differ between brokers, but the fundamental elements will remain:

  • Notice the ‘Sell’ and ‘Buy’ values differ. The gap between values is known as the “spread”. This small percentage is how the broker will derive a profit.
  • In the example we have selected ‘Buy’, and set the trade size to £1. This means for each whole unit the asset price moves, our position will go up by £1 or down by £1.
  • We have also entered a figure in the ‘Stop loss’ box. This is a risk management tool. In the example, our stop loss is set 5 points away from the opening price. This should limit our potential loss to just £5. Stop losses however, are not always guaranteed.
  • The ‘margin required’ (highlighted in red) is the amount of funds needed in the account in order to open the position.
  • Lastly, click the ‘Place Deal’ button to confirm the trade. We now have an ‘open position’ on Vodafone, for £1 per point.

Open Positions

In a similar way to the trading screens, brokers will display open positions in a variety of styles – but always show the same details:

The opening price shows our ‘strike’ price, and the latest price is just that – the current market value. Our stop loss value is shown – as is the current profit/loss. As our trade has only just been opened, we have to ‘make up the spread’. So the position is currently 50p down.

As the spread needs to be covered, almost every trade will open at a small loss – just as it has above. Any “fees” or trading costs are built into this spread. Where a trade is held open overnight, a very small charge will be applied. Even with a trade held open for months, this fee remains tiny, relative to the investment itself.

When we decide to end the trade, we simply click the ‘Close’ button. Alternatively, we can open a new trade, and ‘Sell’ Vodafone for £1 per point. But using the ‘Close’ button is far easier.

There is no time limit or expiry on a cfd.

Our £1 cfd effectively exposed us to £200.85 worth of investment. This is important to remember. While the broker only requires you have £7.55 in the trading account, you are still exposed to risk beyond that. If the Vodafone share price collapsed for any reason, the trade could lose way more than £7 or £8. Losses can exceed deposits. For this reason the stop loss is a vital tool in risk management.

Trading Example – Result

After opening the trade above, we now have an open position – What happens now?

Our trade will now mirror the fortunes of the Vodafone share price. For each penny the stock price rises or falls, our positions will gain, or lose, one pound respectively. So here are some scenarios:

The share price rises.

Assume the spread on Vodafone shares reaches 205.85-206.35. In order to close our ‘Buy’ position opened above, we need to ‘Sell’ the same value of assets. So we will be taking the lower side of the spread – in this case 205.85.

Our original ‘strike’ price was 200.85. If we close the trade at 205.85, the cfd has closed 5 points higher. This means we are due 5 times our trade size – in our example £1 – so:

5 x £1 = £5.

In our example above, we opened at 200.85. Below, you can see the value rose to 203.4 – our profit or loss shows £2.55 profit on this trade as we close it:

The share price falls.

Assume the spread has dropped to 195.85-196.35. We still need to ‘Sell’ (and take the lower side of the spread). So the trade now settles at 195.85. The value has dropped 5 points, meaning we lose 5 times our trade size:

5 x -£1 = -£5.

Notice our stop loss was set at 195.85 above. This means our position would automatically close if the spread reaches that point. This is why the stop loss setting shows -£5 in red. That is the amount the trade will lose if the stop loss is triggered. If the price continues to go down, your trade will not lose any further funds. The caveat to this is that in extreme market conditions, stop losses may not be guaranteed, and may slip.

Remember, the point at which you close the deal is down to you.

Summary

In our example above, we opened a trade which gave us access to a trade value of £200.85 – equivalent to buying 100 Vodafone shares. The same process can be used to trade Gold, the price of oil or foreign currency.

Our example used a very small trade size, but factoring it up is a simple process. You can see then, how leverage can give cfd traders a large portfolio of investments, for a fraction of the outlay of traditional methods. With leverage comes risk however. Traders should note how much leverage and risk they are exposed to, and manage it correctly. Money management is a key element of trading for a living.

Trading CFDs – Key Points:

  • A CFD is a linearly leveraged financial product. Profits and losses increase in direct relationship to market performance whether you buy or sell. The leveraged nature of CFDs mean, therefore, that your losses can exceed your initial investment.
  • A CFD does not have a fixed maturity date. The trader will dictate when the contract expires. When you judge that it’s the right time for you to close a position, this is done by placing a trade of the same value in the opposite direction. Most brokers will however, make a very small charge for positions held overnight. Each charge is miniscule relative to the trade size – but is repeated each night.

CFD Chart

Please note that you can change the symbol tracked in this chart, to any market you prefer trading on, from the FTSE to Bitcoin.

How And Why CFD Trading Can Be Useful

Here we weigh up some of the pros and cons of trading financial markets via cfds. Many readers ask if cfds are “good or bad” – as with any financial product, they will be right for some traders, and not appropriate for others. Hopefully this summary will help decide if they are right for you.

Take a position in a falling or rising market

With the choice to go short or long, you have the potential to generate profits regardless of which way the market is trending. With traditional investment vehicles, it is more complex to profit from falling markets. This is especially true with forex trading.

Hedge your wider investment portfolio

Where you are invested in physical shares, your hope and expectation is obviously that they will increase in value. You may also expect to collect a dividend. But where there is a very real risk of those shares leaking value, CFDs can play a useful hedging role.

So if you hold stocks in a certain company, short selling CFDs based on the same shares can be a useful way of making a profit from any short-term downtrend. In turn, this can partially or wholly offset any loss from the portfolio. This security measure can be an especially useful strategy to adopt in volatile markets.

Tax efficiency

While share dealing attracts stamp duty liability, the same does not apply to a CFD trade. Unless you class yourself as a full time trader, and trading cfds is your ‘occupation’, then income tax is not applicable to any profits or earnings derived from trading.

This does work in reverse as well however, in that any losses can not be claimed back either – but the tax implications are generally positive.

Risks Associated With CFDs

Below are some of the hidden dangers of trading with contracts for difference. Many risks can be reduced by using a practise account before trading;

Leverage and margins

To open a CFD position, it is necessary to deposit an amount in your brokerage account, known as a margin. This ‘position margin’ tends to depend on the size of your position and the type of underlying asset. The good thing about this is the ability to deposit a percentage of the full value of the position, which means your money linked to the position is not tied up in one transaction and can be used for other investments.

The downside is that it is possible not just to lose your initial deposit but also be required to make further payments.

CFD Trading – leverage risk

Keeping track of transactions

Failure to ensure you have enough funds in your account to cover total margin requirements could mean that some or all of your positions are closed out. Managing multiple CFD trades requires you to constantly monitor your account, depositing additional funds where necessary.

A “margin call” is where the broker gets in touch with the trader in order to add funds to the account. This happens where a number of trades have moved against the trader. Failure to add funds will mean certain positions are closed.

Use reputable, regulated brokers

In the UK, there are a great choice of reputable brokers. Fully regulated by the FCA. Traders can use these firms with confidence. Regulation is robust and is there to protect the trader. This does mean however, that brokers will ensure they have strict policies on ID and banking facilities. FCA regulation is probably the best standard, though some brokers will ‘passport’ their own domestic regulator – which allows them to trade in the UK. Beware of unregulated firms – a London address does not guarantee they are regulated by the FCA.

Halal or Haram?

With online trading companies keen to expand their user base, many now offer websites boasting ‘halal’ accounts. There is reason for Muslim traders to tread carefully however. While these accounts are legal, and ensure that no interest or “Riba” is used on the account – they may still be haram.

Much depends on the traders themselves. In Islam, gambling is haram. If a trader is using a trading account to purely speculate, then that would be forbidden. Only the trader can know if they are investing responsibly. This site is not qualified to answer this question categorically, but there are useful forums regarding Halal investing. Those discussions may help individuals decide if trading is right for them.

Is CFD trading for you?

CFDs offer a dynamic and sophisticated way of trading – although the possibility of losing more than your initial stake mean that it isn’t for everyone. The terminology can also sometimes confuse investors more use to other financial tools.

When looking for a platform, it’s important to opt for a format that you are comfortable with; one that allows you to keep control of your trades and one with a competitive spread – i.e. a narrow difference between buy and sell prices. Weighing up the various benefits will come down to personal choice.

Find The Best CFD broker

How should you attempt to compare CFD brokers? And how might you identify the best broker? There are a whole host of regulated and secure brokers offering CFD (Contracts For Difference) trading – but how can you tell if one is “better” than another?

The answer will often need you to ask questions of yourself. The best CFD broker for one trader, will not necessarily be the best choice for another.

Here we cover some key comparison elements from the leading brokers reviewed on this site. Below that, we highlight some of the key areas where CFD brokers differ from one another. We also explain how you might compare them. The needs and trading style of each trader will be different. There is not one broker that will represent the best choice for all traders. Read on to find out which broker suits you best.

What are CFD brokers?

How To Compare CFD Brokers

Here the “Top 10” key comparison features or “rules”, by which you can judge a particular broker;

  1. Spread / Commission
  2. Leverage
  3. Trading Platform
  4. Deposit and Withdrawal options
  5. Additional features
  6. Support
  7. Education
  8. Regulation
  9. Mobile App
  10. Range of Assets
  11. MetaTrader integration

We cover each section in detail below.

Spread or Commission

The spread or commission impacts every trade, and every trader. It is the ‘cost’ of making the trade. It is therefore a very significant value to compare when judging one broker or another.

There are complications however. The spread will differ broker to broker – but also asset to asset. So a broker may have the smallest spread for Forex pairs, but the largest for indices.

Depending on what assets you to invest in, the broker might be the cheapest choice – or the most expensive. So when comparing based on the spread, ensure you are checking the spread on the assets you will be trading most.

Our cfd broker comparison table lists the most popular asset in each category, and the spread for that asset. Remember also, that a demo account is a great way to check spreads – particularly where they are variable.

Margin (or Leverage)

The margin is the percentage of the overall trade value that a trader must deposit (and commit) in order to open a trade.

So a £1,000 trade on the GBP/USD currency pair may only require a deposit of £50. The position however, has exposed the trader to £1,000 worth of risk (the risk of losing the entire investment is extremely small, but that is the value of the position) – hence the warning attached to CFD trading “losses can exceed your initial deposit“. Margin is also referred to as ‘leverage’. Where this is the case, the leverage is often illustrated in terms of multiples – so 200:1 would indicate leverage of 200 times the deposit. The equivalent margin would be 0.5%.

So when comparing brokers, a low margin requires smaller deposits. This will be important to some traders, but less so to others. Note high leverage means higher risk.

Trading platform

The actual trading platform is often not considered before a trader makes a broker choice and opens a live account. That however, could be a mistake. Most platforms will have similar functions – but as with anything, the usability and look and feel will be a matter of personal preference.

It is vital to be trading on a platform that is familiar and easy to use. It is not uncommon for traders to miss prices, or worse, make mistakes trading, because the trading platform did not suit them for whatever reason. The amount of flexibility may also play a role. If the platform can be resized, or reorganised exactly to your needs, trading becomes the only focus.

Deposit and Withdrawal options

Not your first consideration? If moving money in and out of trading accounts has been an issue in the past, it is worth checking. See if the methods you want to use to fund and withdraw from your account are available with each broker.

Features (Charts, Technical Analysis, Research)

If you plan to research your trades on the same trading platform where you ultimately trade, you want to ensure you have the best research tools available there. Charting standards do differ significantly. Some brokers offer outstanding charting facilities. Some deliver a range of technical analysis tools that will satisfy even the most ardent technical analysis experts.

The latest news may also available within the trading area, so research can be done from one place. Other platforms seem to assume traders will have already researched their trades elsewhere, and offer pretty basic charts and little in the way of analysis tools. If this is important to you, ensure your potential broker satisfies this need.

Support and Education

Many brokers will offer educational material to their clients. These might include ebooks, webinars or even one to one training where the client requests it. Again, this might be important to some traders but not to others. Likewise, the range of languages supported by the firm may also be a factor.

It is worth noting that brokers make money when traders trade. This means most educational materials will encourage lots of trading. Over trading is a frequent issue for many traders, particularly beginners. Those just starting out are also those most likely to look for learning tools.

The available support from a broker may be reassuring for some – others may not envisage ever using it. Potential new clients who do like to know they can contact a broker might like to establish the availability and contact methods for the support desk. Most firms offer a high standard of support.

Other factors

Some other things that enable people to compare CFD brokers might include the quality and availability of a mobile trading application. As ever, trading on the move will be important to many traders – others will be happy to not use a mobile app.

It is very rare for brokers to not deliver a free mobile trading app. These run parallel to the main online site. Again, they have mostly been developed to a very high standard. While some firms may have delivered a poor mobile service in the past, they simply cannot survive without one now.

If you have a niche handset or mobile device, it may not be catered for. But mainstream users on iOS, android or Windows apps can be very confident any broker will deliver a very good mobile app to trade on.

Regulation

This should be a key criteria for any broker. The strongest level of regulation for UK traders will be the Financial Conduct Authority (FCA). They regulate the majority of brokers on our pages. There are exceptions, but where this is the case, the alternative regulator must be listed with the FCA via the European passporting system of regulators.

Bonuses

A bonus or promotional code might also be a factor in a broker decision. The short term nature of these offers however, should mean they rank well down in the order of importance. Taking a worse spread in order to get a larger bonus makes no sense – but any trader who is likely to be successful will already know that.

Asset lists

A broader range of tradable assets does not always mean a better broker. However, if trading a specific asset is important – and that asset is not available elsewhere – then it might be a deal breaker. Again, the largest, more established brokers tend to have a bigger range of assets. If you want particular financial instruments or markets, check the broker offers them.

Our reviews cover all of the factors covered above. Generally the CFD brokers listed on our pages provide demo accounts. So traders can take their time, read the detailed review, and try out the platforms themselves before making a choice. Once you have all the information, you can then decide the best CFD broker for you.

Summary Of Broker Comparison Tips

  • Consider your own trading methods. The trades, assets and frequency.
  • Shortlist the cfd brokers that suit that trading pattern
  • Consider demo accounts. Compare the trading platforms shortlisted.
  • Identify the best choices for you.
  • Open an Account, Deposit and trade

Remember: Traders can use multiple CFD brokers, and use those with the best terms for specific trades or assets.

CFD Trading vs Spread Betting

On the surface, cfd trading and spread betting appear the same. There are however, subtle differences that are worth knowing, so that you can use the best investment type.

Both forms of trading allow traders to go long or short, and use leverage. Both are forms of derivative, so the underlying asset is not owned – therefore no stamp duty is applicable. Here are the main difference though:

  • Deal Size. CFDs are normally based on the asset price, so a £10 per point contract on Vodafone for example, will cost less to open than a £1o per point position on the FTSE. The deal size for a CFD will depend on the asset price. With a spread bet, the trader chooses the size of the bet, and the asset price is not relevant.
  • Capital Gains Tax. CFDs are liable for Capital Gains Tax (once over a certain size). Spread betting is not subject to CGT. However, this also means that CFDs losses can be claimed back in any tax return. That is not the case with spread bets. This can make CFDs more attractive when using them to hedge for example.
  • Commission. CFDs on share can attract a commission, with spread bets, this cost is absorbed in the spread. This makes spread betting more attractive when buying smaller amounts of stock.
  • Direct Market Access. CFDs often offer traders direct access to markets and order books for shares and forex. This is not the case with spread bets.
  • Expiry. CFDs do not generally have an expiry. Spread bets on the other hand, will have a fixed expiry or ‘settled’ date at some point. This might be end of day, end of the week or months or years away – but there is a fixed point at which the bet ends.

Given these differences, it is worth considering which investment is the best tool, each and every time you open a position. What is “best”, will often depend on the aim of each trade and it’s size.

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