Risk Warning: Your Capital is at Risk.
Contents
Finding the Right Online CFD Broker
Your online CFD trading experience will be significantly shaped by the broker and trading platform you choose.
Our recommended CFD brokers offer thousands of assets to trade – from gold, crude oil, and forex, to cryptocurrencies and world events.
We've scrutinized hundreds of brokers and selected over a dozen excellent ones to recommend to you.
Our Favorite CFD Brokers
Our proprietary trust score is calculated based on regulation, structure, client fund handling, risk management, and length of operation. We revisit our assessments in order to notify our readers in the event action is taken against these brokers by regulatory agencies.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 73.0%-89.0% 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.
IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.
Brokers We Recommend
Below we provide a short overview of our top recommended brokers. Be sure to read our in-depth reviews of these brokers to discover which ones might fit your goals best.
Plus500
One of the leading global contract for difference (CFD) brokerage firms, Plus500 provides a streamlined platform, excellent mobile trading experience, and superb risk management tools.
- Risk management tools – Negative balance protection, trailing stops, stop-limit orders, and stop-loss orders.
- Thousands of asset classes including indices futures, commodities futures, forex, cryptocurrencies, stocks, ETFs, and options.
- Free demo account – Free for life and no verification process required.
- Customer support – Available 24/7 in over 30 languages via email and live chat.
Plus500 operates in more than 60 countries, but the broker doesn't offer accounts to US residents.
Read our full Plus500 review.
City Index
City Index's parent company has been established for over 30 years. Today, this brokerage offers customers the ability to trade CFDs and forex as well as perform spreadbetting on high-speed platforms.
- More than 12,000 markets across commodities, shares, indices, and forex.
- Multiple platforms – HTML5 Web Trader platform, proprietary desktop platform, iOS and Android mobile apps, and the MetaTrader 4 platform.
- Customer support 24/5 via live chat, email, and phone — available in many languages.
- Serves over 180 countries.
- Demo accounts – Unlimited access, a boon for those who want to test-drive new strategies or gain practice trading in new markets.
Read the full City Index review.
easyMarkets
As an online market maker, easyMarkets offers customers CFD trading on forex, metals, agricultural commodities, energy, indices, stocks, and cryptocurrencies.
- easyMarkets is known for its dealCancellation tool that can be used to undo losses within 1, 3, or 6 hours.
- Trading platforms: Web trader, iOS or Android apps, or the MetaTrader 4 platform.
- Available in more than 150 countries and provides multilingual support 24/5 via email, phone, fax, and live chat.
Read our complete easyMarkets review.
eToro
eToro was founded in 2006 and offers CFDs on commodities, stocks, indices, cryptocurrency, and ETFs.
- CopyTrader – First online broker to establish a social trading platform that allows anyone to copy the successful strategies of leading traders on its platform.
- Cryptocurrency exchange – Buy and sell cryptocurrencies, trade cryptocurrency pairs, or trade cryptocurrency-fiat forex.
- Demo account – Unlimited access for as long as you like.
- Customer support – Access 24/5 in several languages.
- Operates in more than 60 countries.
Traders in the US who cannot trade CFDs can take advantage of eToro's cryptocurrency buying and exchange platform available in US 40+ states.
Read the full eToro review.
HYCM
HYCM is an award-winning online trading platform with over 40 years' experience in the business. With HYCM, you can trade CFDs on forex, indices, hard and soft commodities, stocks, ETFs, and cryptocurrencies.
- Trading platforms: HYCM supports popular MetaTrader platforms (MT4 and MT5) and their mobile (iOS and Android) counterparts.
- A free demo account is available, too — for life.
- This broker's services are available in over 200 countries and territories.
- 24/5 customer support is available five days a week in multiple languages across live chat, email, fax, and phone.
Read the full HYCM review.
Markets.com
Markets.com offers retail customers CFD products on a variety of asset classes including bonds, commodities, cryptocurrencies, forex, indices, ETFs, and stocks (both shares and “blends”).
- Known for its impressive menu of financial products and its innovative trading platform.
- Sophisticated and proprietary technical analysis features.
- 24/5 customer support via email or live chat.
- Operates in dozens of countries across the globe.
- Playtech PLC, a publicly-traded software company, owns Markets.com.
Read the full Markets.com review.
AvaTrade
AvaTrade provides traders with access to forex and CFD trading on bonds, stocks, treasuries, indices, ETFs, commodities, and cryptocurrencies.
- Trading platforms include MT4 and MT5 as well as iOS and Android mobile apps.
- Social trading – You can automatically copy the trades of successful forex traders on the platform.
- Spreadbetting – For traders in the UK and Ireland.
- Islamic accounts are also available.
- 24/5 customer service via email, live chat, or phone.
- Demo account lasts 21 days.
- AvaTrade operates in more than 150 countries. The platform is available in a variety of languages.
Read the full AvaTrade review.
XM.com
With over 1.5 million customers worldwide, XM.com markets itself as a “big, fair and human broker.” You can trade CFDs on forex, precious metals, stocks, indices, and energy.
- Leverage is available up to 888:1.
- Trading platforms – MT4 or MT5 platforms (PC or Mac) and mobile apps for Android and iOS.
- 24/5 customer support via live chat, phone, and email in 29 different languages.
- Educational webinars 6 days a week.
- The platform is available in over 200 countries.
Read the full XM review.
What Are CFDs?
A CFD (contract for difference) is a financial derivative that allows traders to speculate on price movements of an underlying asset — such as gold or crude oil — without owning that asset.
This means that the trader can enter into a contract at a lower cost than would be required in traditional forms of trading.
No securities exchanges are involved in CFD trades. Instead, the trader enters into the contract with an online CFD broker.
The contract is an agreement between the trader and the broker to exchange the difference in value of the underlying asset between the time the contract opens and when it closes.
Profit or loss is based on the price change of the asset during the contract period of the trade.
CFD brokers offer leveraged trading. This means you can control large amounts of the underlying asset with modest-sized trades.
Exercise caution when trading with leverage: while it can increase profits it can also increase losses.
Step-by-Step: How to Choose an Online Broker
Now we'll walk you through each step to choosing the perfect online broker for your needs.
1. Make Sure the Broker Is Regulated
The most important consideration in choosing an online broker is whether it’s regulated by a credible governmental agency with real enforcement powers.
A regulated broker must adhere to the rules established by the agencies that govern it.
These rules usually include important customer safeguards such as:
- Segregating customer trading funds in separate accounts
- Submitting regular audits to regulators and
- Maintaining adequate capitalization.
Regulated brokers register with government agencies that issue them licenses.
If the broker firms fail to adhere to the regulators’ standards, the regulators can revoke their licenses.
Many regulatory agencies use fees from licenses to fund compensation schemes for traders. These schemes enable customers to recover funds in the event that a brokerage firm becomes insolvent.
For more information about regulators in your own country, see our in-depth regulators page.
The Dangers of Unregulated Brokers
An investor who opens an account with an unregulated broker is taking serious, unnecessary risks.
- An unregulated broker doesn’t answer to any authorities and, therefore, can do whatever it wants with customer funds.
- Since these firms operate online, it can be almost impossible to track them down if they defraud customers.
Reputable Brokerages Are Licensed
Traders should beware of claims of regulation by bogus agencies.
Prior to opening an account, traders should check a brokerage firm’s website for the licenses and registrations held by it.
Reputable brokerage firms will provide the license numbers so traders can verify their authenticity with regulators.
2. Ensure the Broker Is Available in Your Country
Brokers vary in terms of the countries they serve and the types of financial instruments they offer. Not all financial instruments are legal to trade in all countries.
For example:
- CFDs, which originated in London, are popular in Europe but not legal to trade in the United States.
3. Pick a Trading Instrument
In 2020, derivatives traders have a remarkable array of assets to trade on.
Forex
You can trade currency pairs or derivatives on currency pairs.
- Forex.com offers traditional currency pair trading.
- You can trade CFDs on forex with brokers like Plus500,
Cryptocurrencies
As with forex, many of our recommended brokers offer either CFDs on cryptocurrencies or direct trading of cryptocurrencies.
For example, eToro's cryptocurrency trading (available in most US states) allows you to:
- Buy and sell cryptocurrencies without a digital wallet
- Trade cryptocurrency pairs (eg, BTC/XLM, Bitcoin/Stellar)
- Trade cryptocurrency-fiat currency pairs (eg, XRP/AUD, Ripple/Australian dollar).
Commodities
You can trade almost any commodity imaginable online. Your choices include:
- Metals, like silver, gold, and copper
- Energy commodities including oil and natural gas
- Agricultural commodities such as wheat, cocoa, and live cattle.
Plus500 and Markets.com are among the brokers offering CFDs on commodity futures.
Indices Futures
Online brokers provide a variety of stock indices to trade on via derivatives such as CFDs, spreads, or options.
These indices include Germany's DAX, Japan's Nikkei, the UK's FTSE 100, and the S&P 500 in the US.
Each index has a corresponding futures market. Therefore you can trade on DAX futures, FTSE 100 futures, and so on.
You can also buy or sell CFD options on indices through Plus500.
Stocks and ETFs
You can trade derivatives of stocks and ETFs (Exchange Traded Funds). Plus500 and eToro offer CFDs on shares of major stocks like Tesla (TSLA), Facebook (FB), and Amazon (AMZN).
Other Markets
Some brokers provide events or bonds as the underlying asset to trade on.
For example:
- With Nadex you can trade options on Nonfarm Payrolls and Weekly Jobless Claims.
- Markets.com allows its users to trade on “Trade War Winners” and “Trade War Losers,” which are proprietary groups of assets.
- You can trade on bonds with Markets.com and CityIndex.com.
4. Determine Your Leverage Tolerance
Brokers also vary according to whether they offer leverage and how much. Local regulations (such as ESMA in the EU) also affect the amount of leverage that you are allowed to trade with.
For more about leverage, check our commodity trading guide.
5. Check Out the Support and Educational Materials
Consider the available support channels (eg, phone, email, live chat) and hours. Do they cover your time zone?
Also review the broker's site for the type of educational materials available for traders at your level.
6. Test-Drive Trading Platforms
The best trading platforms offer a streamlined experience. They are fast-loading, offer real-time charting and quotes, and provide a variety of technical analysis tools.
Some also incorporate:
- Copy trading: the ability to mimic the trades of others on the platform
- Economic calendars
- Financial news feeds
- Drawing tools, so you can highlight areas of your technical analyses.
Proprietary, MT4, and MT5
Most brokers offer the popular MT4 (MetaTrader 4) or MT5 (MetaTrader 5) platforms, which are designed for forex trading.
You can also trade CFDs on MT4 and MT5.
Some brokers (like eToro and Plus500) offer their own proprietary trading platforms. These may be available as a web-based platform or also as a downloadable desktop app.
Mobile Trading
A key consideration is the quality of the mobile trading app.
- Is it easy to execute trades on the go?
- Is the app fast?
- Is the app available for your phone's mobile operating system (eg, iOS, Android, etc)?
- Does the brokerage regularly update and improve the mobile platform?
7. Fund Your Account and Start Trading
After you've tried out a few brokers with a demo account, you only have one more step to go before you can start trading: funding your account.
Keep in mind:
- Deposit sources – Most brokers accept wire transfers and credit card funding. However, if you wish to transfer money to your account another way (eg, PayPal or Neteller), make sure the broker you like supports your preferred method.
- Account minimums – Brokers typically require a certain level of funding to be available in your account at all times to cover losses. Be sure to check our reviews: we note the broker's minimum account requirements so you'll have the information handy.
Now you're ready to start researching and trading CFDs!
How We Rate Brokers
Earlier in this article we mentioned that our proprietary trust score is calculated based on regulation, structure, client fund handling, risk management, and length of operation.
We revisit our assessments periodically in order to notify our readers in the event action is taken against these brokers by regulatory agencies.
When we review brokers, we consider the following areas.
| Topic | Questions We Answer | |
|---|---|---|
| #1 | Reputation | What awards, accolades and publicity has the firm received from the trading community? |
| #2 | History | When was the firm founded? What were the major milestones in its history? |
| #3 | Operating Territories | Which countries does the broker serve? |
| #4 | Safety | Which agencies regulate the broker? How do these agencies help protect customers? |
| #5 | Products | What are the specific financial products traders can trade on the platform? |
| #6 | Accounts | What types of trading accounts are available? What are the features of each type of account? |
| #7 | Fees | What spreads, fees and commissions does the broker charge its customers? |
| #8 | Deposits | What is the minimum deposit required to open an account? What methods can traders use to fund their accounts? What deposit and withdrawal restrictions, if any, does the broker impose on its customers? |
| #9 | Platform | What are the most important features of the trading platform? What does the platform look like? What educational materials (e.g., videos, reports and tutorials) does the broker provide to traders? Does the broker provide demo accounts and, if so, are there restrictions on using these accounts? |
| #10 | Promotions | Does the broker offer promotions such as signup bonuses for new account holders? |
There is no one online broker that’s the best fit for every trader.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 73.0%-89.0% 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.
FAQs
Below we answer some commonly asked questions about online brokers and CFD trading.
Are CFDs legal in the US?
No, trading CFDs is illegal for US citizens and residents. Additionally, most CFD brokers don't accept US citizens or US residents as clients. CFDs are illegal in the US because they are an over-the-counter (OTC) trading product. OTC trading products aren't listed on regulated exchanges like the New York Stock Exchange (NYSE), bypassing US regulatory bodies.
Thus, for US citizens to trade CFDs, the US Congress would have to change regulatory law.
Is CFD trading safe?
No, CFD trading — indeed any form of trading — is not “safe.” Trading involves complex risks, that is, factors affecting price movements of assets that retail traders are unaware of or that are unpredictable. Most retail CFD accounts lose money. Only experienced traders should consider trading CFDs.
Is eToro a CFD broker?
Yes, eToro is a CFD broker (though not in the US). eToro offers CFD trading on commodities futures, currencies, indices futures, and stocks. They also offer cryptocurrency trading and cryptocurrency-fiat currency trading. In addition, account holders can buy and sell cryptocurrency on eToro without a digital wallet.
eToro is fully regulated by CySEC, FCA and ASIC.
What is the difference between CFD trading and forex trading?
CFD trading and forex (FX) trading differ in terms of the underlying assets you are trading on and the nature of the contracts. When you are trading in the foreign exchange (forex) market, you are trading currency pairs only. CFD contracts are available on a wide range of asset classes, including forex, commodities, indices, stocks, ETFs, and events.
Unlike CFDs, forex trading offers the opportunity to benefit from interest rates associated with currencies and it is legal in the US.
You can also trade spot metals in the forex market because they are considered a form of currency. For example, you can trade gold, silver, platinum, or palladium against fiat currencies. You can also trade metal pairs, such as gold vs. silver (XAU/XAG).
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 73.0%-89.0% 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.
Credits: Originally written by Lawrence Pines. Major updates in June 2020 by Sherrie Gossett with contributions from the Commodity.com editorial team.