Contributor, Benzinga
February 18, 2022

Want to jump straight to the answer? The best forex broker for most people is definitely FOREX.com or CedarFX.

Financial engineering has created many exotic instruments with the potential of generating considerable returns. However, one should always bear in mind the high risk involved with such operations. A contract for difference (CFD) is one example. You can speculate on the future price moves of assets, such as stocks, indices, forex, bonds, cryptocurrencies and commodities if you find the best CFD broker for you.

The Best CFD Brokers

Take a look at our list of the best CFD Brokers.

1. Capital.com

When you use Capital.com, you can trade CFDs on the NASDAQ 100, gold, oil, Tesla and about 6500 other assets or markets. When Capital.com, you get:

  • Tight spreads
  • No commissions
  • Fast order execution
  • High privacy and security standards
  • Educational tools
  • Current news items

As you look into investing in CFDs, you can do more than throwing your money into the markets and waiting for a result. You can make informed decisions and grow your portfolio naturally.

The firm is regulated by:

  • Financial Conduct Authority
  • The Australian Securities and Investments Commission
  • The Cyprus Securities and Exchange Commission
  • National Bank of the Republic of Belarus

With an easy-to-use interface and intuitive, AI-powered platform, you benefit from Capital.com learning about your trading habits and informing you of best practices that can help you grow your portfolio.

  • Capital.com
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    79.17% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

2. Plus500

Plus500 is a specialist CFD broker and offers CFD trading for stocks, forex, commodities, ETFs, options, indices and cryptocurrencies. It offers a portfolio of over 2,000 instruments.

Plus500 is authorized and regulated by the following regulatory agencies:

  • U.K.’s Financial Conduct Authority (FCA)
  • The  Australian Securities and Investments Commission (ASIC)
  • The  Financial Market Authority (FMA) in New Zealand
  • The Financial Sector Conduct Authority (FSCA) in South Africa
  • The Monetary Authority of Singapore (MAS)
  • Plus500CY Ltd authorized & regulated by CySEC (#250/14).

Plus500 allows funding through wire transfer, Visa/Mastercard, Skrill and PayPal. The platform also offers a demo account. Withdrawal and deposit can be managed from the “Funds Management” tab on the platform, and then input details regarding the mode of withdrawal or deposit.

The firm offers customer support in 32 languages. It has a webpage dedicated to answers for some FAQs, and there is an online form for entering questions that are not answered by the FAQ section. The firm also has a 24/7 online support team.

Plus500 has a proprietary web trading platform called WebTrader as well as iPhone/iPad, Android and Windows apps.

The firm does not charge a commission but makes money from spreads. It charges an overnight funding fee and a $10 inactivity fee. Plus500 will charge a currency conversion fee of up to 0.7% for all trades on instruments you hold in a currency that is different from your account's currency. They offer leverage of up to 1:30 for retail accounts and up to 1:300 for a professional account. Note: professional accounts don't have ICF rights. Negative balance protection is available for both account types following EU requirements.

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72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

3. eToro

eToro is one of the most unique platforms in the world, providing users with the opportunity to invest in crypto, stocks and ETFs. In addition to these investment, CFDs are available. CFDs on commodities, currencies and indices are available, ensuring as much diversification as possible.

eToro makes the trading experience that much simpler by offering:

  • Investing in full stocks or fractionals for as little as $10
  • Engaging with real and experienced investors who can share strategy tips
  • Combine your crypto, stock, CFD and other investments in one portfolio
  • View detailed charts, indicators and analyses
  • eToro Stocks
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    Benzinga is compensated if you access certain of the products or services offered by eToro USA LLC and/or eToro USA Securities Inc. Any testimonials contained in this communication may not be representative of the experience of other eToro customers and such testimonials are not guarantees of future performance or success.

4. FOREX.com

The highly regulated firm FOREX.com offers 220 CFDs across major asset classes through its FOREX.com brand. That information, plus a quick test-drive of FOREX.com’s platforms means it’s all you need to confirm that you’re in good hands. Exceptional platform speed and performance drives the FOREX.com experience, and you’ll get CFD trading on stocks, commodities and indexes.

No matter what you trade, you’ll gain access to FOREX.com’s Advanced Trading Platform, the renowned MetaTrader 4 platform as well as a web-based platform and mobile trading option. All accessibility options ensure that you won’t miss a thing.

To fund your account, the minimum initial deposit required is at least 50 of your selected base currency. However, FOREX.com recommends you deposit at least 2,500 to allow you more flexibility and better risk management when trading your account.

Forex markets are open 24 hours a day, Sunday to Friday. FOREX.com makes itself available 24/5 during open market hours. Note that FOREX.com only offers CFDs only in FCA and CIMa regulated regions.

  • Forex.com
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    $100
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5. Interactive Brokers

Clients can add quotes to the exchange book in the same way they would trading stocks because IBKR immediately matches all CFD orders with a hedge-order so that a non-marketable CFD order creates a matching non-marketable order for the underlying share on the exchange. Additional benefits include:

  • Transparent, Low Commissions and Financing Rates
  • Margin Efficiency
  • Efficient CFD Reference Pricing
  • Trade CFDs Alongside the Underlying Shares

Commissions start at 0.05% on all share CFDs, with lower rates available for active traders. Overnight financing charges start at benchmark +/-1.5%, with lower spreads available for larger balances.

  • IBKR International
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6. FXTM

Launched in 2011, FXTM offers CFDs on shares, indexes and commodities. It’s regulated by the International Financial Services Commission of Belize and has offices in China, India, Indonesia, Malaysia, Nigeria, South Korea and Thailand.

FXTM’s platform includes the web trading platform Webtrader, as well as MetaTrader 4 and MetaTrader 5 web platforms. Its platform provides tools such as economic calendar, market analysis videos, quarterly market outlook and educational videos.

Chat support is available through Live Chat, Viber, Telegram and Facebook Messenger. A call-back option is also available. Customer support departments can be contacted 24/5 from Monday through Friday from 11 to 16 hours on Saturdays and from 12 to 20 hours on Sundays.

The Micro Account has a minimum deposit of just $50 and the ECN Advantage account and ECN Advantage Plus account both come with a minimum deposit of $500.

  • FXTM Review
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Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Regional restrictions: FXTM brand does not provide services to residents of the USA, Mauritius, Japan, Canada, Haiti, Suriname, the Democratic Republic of Korea, Puerto Rico, Brazil, the Occupied Area of Cyprus and Hong Kong. Find out more in the Regulations section of our FAQs.

7. IFC Markets

IFC Markets brings you a unique take on CFD trading. With IFC Markets, you can invest in:

  • Continuous index CFDs
  • Stock CFDs
  • Cryptocurrency CFDs
  • Continuous CFDs on commodities
  • CFDs on commodity futures
  • CFDs on ETF
  • CFDs on crypto futures

With IFC Markets, you benefit from the 15 years of experience the platform brings to the table. Clients from over 80 countries can establish an account, trade on several platforms and diversify their investments as much as possible.

Crypto CFDs are available for Bitcoin and Ethereum, with more coming in the near future. You can also avail yourself of 1:8 leverage, low minimums and low spreads.

Best-suited for intraday, mid-day and small-volume traders, you can use MetaTrader 4 or MetaTrader 5, NetTrade X to trade or try the GeWorko Portfolio Quoting Method to build synthetic assets.

  • IFC Markets
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    Standard Accounts: $1,000
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IFC Markets is not available in the U.S. or Russia.

What’s Contract for Differences Trading?

A CFD is a contract executed between two parties, a buyer and a seller, which means that the seller pays the buyer the difference between the current value of an asset and its value when the contract is due. There isn’t any physical exchange of assets (which could be a physical share, currency pair or commodity) between the buyer and the seller, and neither party can claim physical ownership of the asset. CFD trading is illegal in the U.S., although European brokers allow CFD trading in U.S. assets.

Make Decisions and Trade

To trade CFDs, first decide on which underlying asset you want to trade. CFD instruments could be shares, treasuries, currency pairs, commodities and stock indices such as the U.K. 100, which aggregates the price movements of all the stocks listed on the FTSE 100.

Then, open a position and then enter details such as whether you want to buy or sell the CFD, the amount intended for investment, leverage and other considerations.

Leverage is available for a margin account. Leverage refers to a loan extended by a broker, and the securities and cash in your trading account serve as collateral. It allows you to enter into a larger deal than what your account funding permits.

You and the CFD broker then enter into a contractual agreement which covers details such as the opening price for the position, fees involved, etc.

Determine Profit/Loss

If the position closes in a profit, the broker is liable to pay the trader. If it closes in a loss, the brokerage charges the trader the difference. Assume you wish to go long on a CFD based on the shares of XYZ company, currently priced at $400, on the premise that the shares are undervalued and will likely go up. You now need to log into your brokerage account, which provides for CFD trading, and place an order for, say 100 XYZ CFD.

If the value of the shares rises by $10, in line with your expectations, you gain $1,000 (100 x $10). On the other hand, if the value falls by $10, you owe your broker $1,000. Due to the leverage allowed, a trader needs to pay only $4,000 if the margin requirement is 10%. In the first case when you made the right bet. Your profit percent will be $1,000/$4,000 *100 = 25%.

In the second case, your loss percent will be $1,000/$4,000*100, which will be 25%. Meanwhile, if you had chosen to invest in the shares trading in a stock market, your loss percentage would have been 1,000/40,000*100, or 2.5%.

What to Look for in a CFD Broker

As you zero in on the right CFD broker, it’s important to consider a slew of factors, including regulation, costs, tradable asset classes and the trading platforms available.

Regulation

Regulation ensures the safety of your funds from internal company fraud or financial setbacks. Make sure the broker you’re considering is regulated by the regulatory agency of that particular location. For example, in the U.K., the Financial Conduct Authority (FCA) is the regulatory agency and in Australia, it is the Australian Securities Commission (ASC).

Cost of Trading

CFD trading involves costs such as spread, holding costs and commission and possibly more, depending on the broker you choose.

  • The spread is the difference between the buy and sell price. You enter a buy trade using the buy price quoted and exit using the sell price. The narrower the spread, the less the price needs to move in your favor before you start to make a profit, or if the price moves against you, a loss.
  • At the end of each trading day, positions open in your account may be subject to a charge called a holding cost, and you’ll also pay a separate commission charge when you trade CFDs.

Also, how complicated is it to deposit and withdraw funds? The more funding options your broker offers, the better.

Broad Tradable Asset Classes and Markets

Broad tradable asset classes and markets give you wider choice availability. Some underlying assets you can trade include stocks, indexes, commodities, currencies, cryptocurrencies and ETFs.

Easy-to-Use Platform

Look for a trading platform that offers intuitive trading software, fast execution, good trading tools and order management system. You may lose out on profits if the user interface is poor and navigation is difficult. The platform should be secure and also give you the flexibility to place different types of orders.

Final Thoughts

There’s no one-size-fits-all broker for traders with different experience levels, risk-return and asset class preferences. For starters, regulation could be a key issue, especially because derivative instruments such as CFDs are risky. Because of the volatility involved, a fairly decent trading platform and demo account are invaluable. It pays to do some research before you decide which CFD broker is best for you.


Get a Forex Pro on Your Side

FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets plus spot metals with low pricing and fast, quality execution on every trade. 

You can also tap into:

  • EUR/USD as low as 0.2 with fixed $5 commissions per 100,000
  • Powerful, purpose-built currency trading platforms
  • Monthly cash rebates of up to $9 per million dollars traded with FOREX.com’s Active Trader Program

Learn more about FOREX.com’s low pricing and how you can get started trading with FOREX.com.