For a second topic in our “trading platforms” series, after Top stock trading apps, let’s look into CFD trading platforms. One of the types of online trading, contract for difference (CFD) is a contract that enables one of the parties, seller or buyer, to obtain profit from asset price fluctuation.
Warning: 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. Also some parameters like margin can be volatile according to market trends.You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
8 top CFD trading platforms
“Where do I start?” – is a frequent question from inquisitive minds. CFD trading platforms is the apt option to start, a computer software as a gateway to a trading service, where one can buy/sell financial assets. Such platform typically provides various trading types, including CFDs, for transactions between traders directly, or via intermediary/broker/agent, allowing to trade remotely from anywhere. CFD trading may involve stocks, currencies, commodities, shares, etc., and is always performed in pairs (USD to EUR, Shell to Exxon). We’ve selected seven best CFD trading platforms based on usability, friendliness towards novices, reasonable commissions and other factors.
Account minimum: $200 | Max.leverage 1:30 | Avg.CFD margin: 30%
#1 social trading platform by eToro Group Limited, founded in 2007 in Cyprus (with offices in England and Israel). Positioned as innovative web platform for trading, eToro stands out from other CFD trading platforms due to social trading possibilities, a.k.a. mirror trading or copy trading – meaning that users may simply follow the actions of trusted brokers and do the same investments. This made it quite popular in 140 countries, having reached over 3 million accounts.
- Social trading + investment platform, 2 in 1
- CopyTrader feature – copy trades and deals
- CopyFunds feature – copy markets (asset groups following trading strategies) and copy top trader funds
- Ability to view transactions of any member for the whole period
- Stop loss – set a minimum amount of money on account
- 24/7 market hours
- eToro Economic Calendar – to see events that may impact trades
- Trading Academy – page with webinars, courses, blog
Note, that you can withdraw as little as $50, though a minimum withdrawal fee is $5. There is also a $10 inactivity fee, if you have not logged into account for 12 months. eToro complies with multiple regulations and bodies, takes the issue of cybersecurity seriously and is helpful to customers 24/5. In terms of contracts for difference, check out how CFDs on eToro work. Also, be aware of $25 withdrawal fee on every deal.
- Quick account opening
- Reasonable fees and commissions
- User-friendly interface, multiple languages
- High non-trading commissions
- Less trading assets in comparison to other platforms
- Inactivity fee
Account minimum: $100 | Max.leverage 1:300 (for non-EU citizens) | Avg.CFD margin: ~3.33%
Plus500 Ltd it’s a experienced platform with headquarter in Isreal, and offices in the UK, Australia and Cypros. Although not available in Canada and the USA, Plus500 is a highly popular trading platform (over 5M downloads from the Play Store). Account deposit is at $100 minimum for debit/credit cards, $500 for bank transfers. CFDs for trading include stocks, forex, indices, commodities, and even cryptocurrencies. S&P500, Euro/Pound, Euro/Dollar, gold, oil… you got it.
- Negative balance protection (guaranteed stop loss)
- Price and real-time market alerts
- Cryptocurrency CFDs – IOTA, Bitcoin, Litecoin, Ethereum
- Free demo account without limitations
- Economic calendar with relevant and real-time events
- Risk management settings – e.g. limits to close at certain profit/loss, trailing stop
- 24/7 online support
What makes Plus500 one of the most attractive CFD trading platforms is a zero fee (yes, zero) for multiple actions, i.e. deposits, open/close trades, live CFD prices. What users pay is a spread for opening a position (bid). Additional fees may incur for overnight trading, stop order, account inactivity. Also, note that when logging into account on two devices, one of those will be disconnected.
- Keeping customer costs in real bank account
- Simple workflow, quick sign up online
- Multiple languages, round-the-clock support
- No MT4 connectivity
- Inactivity $10 fee after 3 months
- Numerous customer complaints about scams
Warning. 76.4% of retail CFD accounts lose money when trading with Plus500.
Account minimum: $20 | Max.leverage 1:200 | Avg.CFD margin: N/A
Capital.com was founded in 2016 with the idea to launch a trading app standing out of competition. The result was a massive trading platform, utilizing AI (SmartFeed) among many technical tools. SmartFeed technology carefully tracks traders activities and behavior to help identify trends, good deals, etc. In addition to encrypting the user data, Capital partners with RBS and Raiffeisen, one of the biggest banks, to store client funds.
- Markets: 2000 shares, 21 indices, 29 cryptocurrencies, 135 Forex pairs
- No fees for deposits, withdrawals, real-time quotes, opening/closing trades and more
- Web and mobile trading application
- Over 70 technical indicators, plus charts, price alerts, etc.
With zero commission for a variety of trades, Capital.com clearly makes one of the leading CFD platforms currently. It also goes the extra mile in explaining and educating about intricacies of contract-for-difference trading. You’ll find guides on leverage, long and short positions, profiting from rising and falling markets, hedging, etc.
- $20 account minimum fund
- Advanced AI technology at work
- 24/7 withdrawal policy
- Unclear average CFD margins
- High leverage ratio could lead to big loss
Account minimum: $250 | Max.leverage 1:200 | Avg.CFD margin: 5%
A proprietary, and primarily a web platform (with desktop and mobile applications too), supporting MT4, ProRealTime and L2 Dealer. The charts are quite advanced and flexible, e.g. with the option to set alerts on a specific indicator, and there are 22 indicators in total. Minimum deposit for live accounts is $250, while we can use a demo account first, requiring no amount at all. Sum up all these factors and we have IG as another contender for a best Fx and CFD trading platform.
- Access to thousands of 24-hour share CFD markets
- Split charts – view the same positions on multiple timeframes at the same time
- Operational in 16 countries
- Under FTSE 250 regulation
- Automated trading options and “smart settings” (save deals and values)
- Risk protection – to avoid negative equity, partial or full closing of positions
- Cryptocurrency trading – Bitcoin, Ether, Litecoin, Ripple
- Works on Chrome, Safari, Mozilla, Edge, IE (IG recommends Chrome)
On the web, IG is streaming news from Reuters and offers frequent research materials via Economic Calendar. Additionally, there is IG Community portal, where traders can discuss nuances among themselves or with IG staff. The platform allows social trading, a.k.a. mirror trading, however it isn’t an autonomous social trading platform.
- Simple account signup, fast verification
- Qualitative trading platforms and tools
- Helpful and reliable customer service
- Not supporting MT5
- Social trading only partial
- Inactivity fee
Account minimum: $0 | Max.leverage 1:500 | Avg.CFD margin: 4%
A global top-tier trading entity with 40+ years on market, IB Group now provides powerful trading software platform, TWS (Trader Workstation). It’s a place where investors can trade stocks, options, futures, bonds and funds on 125 markets within single account. Interactive Brokers is an online trading place with HQ in Connecticut, USA. Products include web portal (IBKR WebTrader), desktop app, mobile platform (IBKR Mobile for iOS and Android devices), IBot, API. There is “zero” minimum deposit policy to start off trading, although no account activity may lead to certain fee.
- Universal account – view/trade multiple assets, trade CFDs in one window
- Reports – including real-time trade alerts, margin information, cost analysis, etc.
- Smart Routing technology to calculate a CFD reference price (the exchange-quote price for a specific share)
- Transparent quotes – IB charges an honest commission on spreads and price movement, without requotes
- FX Trader – with streaming quotes, indicators, volumes, pending trades, etc.
- IBot – a personal helper for quick information on stocks, account balance, etc.
- Portfolio Analyst – reporting and management tool with 200+ benchmarks
- Offline installer of TWS software
Over 60 order types are accessible in TWS, from basic to complex algorithms for CFD trading. Commissions are lower than other platforms offer – depending on the index, starting rates are within 0.005% – 0.01% range. The platform also has risk management and monitoring tools for assets, and offers coherent real-time data for active traders to be able to react quickly.
- Powerful and all-round trading software
- Excellent for market and portfolio analysis
- Low fees, transparent commissions
- TWS will be difficult and time-consuming to start with
- Small or inactive accounts may get maintenance fee
- Regional restrictions in CFD trading
Account minimum: $250 | Max.leverage 1:10 | Avg.CFD margin: 3.33%
A leading European trading company, X-Trade Brokers, or just XTB, established in Poland in 2002. Beside CFD, FX, ETF, and own xStation 5 platform, it also has access to conventional MT4, and it is available as a web service, mobile app and desktop app. With $250 initial account deposit customers get access to 1,500 global markets. Nice bright design, fast speeds, excellent 24/7 support service, API and all the rest defines XTB as the cutting-edge service for professional traders and brokers.
- XStation 5 for desktop, tablet, mobile (Android) and smartwatch
- Trading calculator feature – to preview potential profits and losses
- Stop loss guarantee / negative balance protection
- Free market comments from brokers in audio format
- Equity screening to discover trading opportunities
- Advanced technical indicators, e.g. Fibonacci Retracement
- Stock CFDs (1,500 equities) and ETF CFDs (60 units)
- Leverage on CFDs up to 1:10
- Live performance stats
- Free mobile alerts
With vast number of investment products, indices, commodities, etc. available to trade or invest in, they seem to have it all, however XTB seems to be lacking in spread betting. Demo or live account, immediately after signing up, you will get a phone call to help and guide along the way.
Lots of functions are simple drag-and-drop, there’s a lot of analytical tools, screeners, heatmaps and indicators. Also, constant news feed and daily technical analysis and expert op-eds. Popular EUR/USD spread as of Q2 2019 was 0.00007 pips. There’s also a round turn commission of 0.16%.
- Free educational materials online
- Multiple interface languages
- Customer support via email, chat, phone
- XTB was fined in 2018 for asymmetric price slippage
- Unavailable in many countries
- Basic order types only
Account minimum: $1 | Max.leverage 1:50 | Avg.CFD margin: 10%
Founded in 1997, Oanda is one of the best CFD trading platforms both for advance and casual users. It offers trading tools for European, Asian and African countries, Canada and Australia. Oanda is available in web, desktop, mobile versions, as well as provides an API (for purposes of real-time trading, automation, etc.). Demo accounts without any limits, plus educational videos, webinars, Q&A sessions.
- 80 indicators
- Connectivity to MetaTrader4, NinjaTrader, MotiveWave, MultiCharts
- MT4 open order indicator – to analyze market trends
- Historical spreads – min/max/avg spread data for set periods
- Price signals – set price up/down limits, or as simple moving average
- Trading performance portal – visualizations of profits, losses, risk/reward ratio, etc.
- Algo Labs site – for users to create own apps
- FXTrade mobile trading platform (Android, iOS)
There are certain considerations about Oanda as well. Accounts do not have protection against negative balance/slippage, average spreads do not reflect fixed time periods, in the EU the platform operates in a “broker” mode. Average CFD margin is 10% (see margin rules for more).
- Ability to open an account for just $1
- Wide array of currency pairs, asset classes
- API, mobile trading and more sophisticated tools
- Might be difficult for beginners
- Accounts with no slippage protection
- No CFDs for cryptocurrencies
Account minimum: $5,000 | Max.leverage 1:100 | Avg.CFD margin: 1%
A Swiss online bank, Dukascopy Bank, provides web and mobile trading services, including CFD, foreign exchange, etc., banking services, technological solutions. It is under the regulation of Swiss supervisory body FINMA. Desktop trading platform, titled JForex 3, contains hundreds of indicators, news feed, historical testing. Through it or MT4 traders can implement automated and algorithmic strategies. Both demo and live accounts, although CFD trading is available only for regular live accounts. The minimum deposit for account is probably the highest among all CFD trading platforms – $5,000.
- Markets: oil, gas, copper, 5 soft commodities, 18 indices, 2 bonds, liquid stock CFDs
- 24 trading hours for most instruments
- Equal prices and trading rights for all clients (marketplace model)
- Funding by credit card, deposits in 23 currencies
- Deposit protection by a bank up to 100,000 CHF
- MetaTrader 4 accounts support, 1:100 default leverage
- Swiss Forex marketplace – SWFX – a proprietary service by Dukascopy
- Fix API – to integrate, get real-time data and notifications, submit orders, etc.
- Help – wiki, tutorials, webinars, seminars
CFD prices are in correlation with SWFX marketplace price technology, and every client may impact a price by own bids and offers. Commissions are clearly defined, yet to calculate average spreads, one has to study daily/monthly/quarterly SWFX performance data. There are also additional account management fees, volume commissions, outgoing transfers fees, withdrawal fees, etc.
- JForex proprietary platform by a real Swiss bank
- Extensive research and analytic materials
- Good customer support 24/6
- Large initial deposit
- High commissions for low deposit traders
|CFD trading platforms: Main features|
|Demo account||Min.deposit||Min.fee||Total pairs||Max.leverage||Mobile app||API|
As a bottom line, we are compelled to say that the choice of CFD platform depends on factors, such as broker expertise level, personal or business investment requirements, user interface preferences, markets and commission rates. That’s why there are more trading platforms beyond our list above, that are popular too. For instance, Poems by Phillip Capital is in demand in Asia-Pacific region, Muslim countries seem to prefer Orex by ADSS Securities. eToro fits well for beginners, while City Index and LCG Trader are favored by skillful investors.
Financial pundits predict further increase of CFD transactions in 2019-2020. CFD has its pros (access to global markets, lower margin rates, reasonable commissions and fees) and cons (high leverage, big risks of losing money), and therefore require a great deal of knowledge, trading experience and persistence.
P.S. Honorable mentions: AMarkets, City Index, LCG Trader, Orex, Poems, SaxoTrader, FxPro.
P.S.#2. You can trade CFD through Metatrader 4, Metatrader 5. Read a comparison of MT4 vs MT5.
Read next: 8 best stock trading platforms.
Disclaimer. All data for the article has been gathered from the official websites of aforementioned companies as of 01/07/2019. It may not be 100% accurate at the moment you are reading this review, other or extra fees may apply for trading activities. All trading platforms/apps/software are not affiliated to each other, and are solely responsible for their products. Any type of trading carries a substantial risk of loss.
What is CFD?
CFD is an intricate financial instrument, which is quite popular in countries like the UK, Austria, Switzerland, France, Germany, Russia, Singapore, Norway, etc., although not allowed in the USA, India. Its has compelling benefits, e.g. being a derivative tool – so no ownership of assets is required; huge leverage rates – allowing to operate with costs much higher than initial deposit; less strict limitations for trading. Overall, there’s a lot to learn if you want to start trading differences.
In trading, a contract for difference (CFD) is an agreement between a seller and a buyer on the asset value difference between the time of opening and closing a position. It offers traders an opportunity to profit from price fluctuations without owning an underlying asset.
How does CFD work?
Consider two positive scenarios to see how contract for difference works.
- Leverage 1:1
- You buy a Tesla CFD contract for $180
- After 2 months, the contract is worth $240
- You close the deal with a profit of $60
- Leverage 1:10
- You buy an AMD CFD contract for $28
- After 4 days, the contract is worth $34
- You close the deal with a profit of $60
Leverage in trading may increase profit substantially, however do not forget it also has the opposite effect – a risk of losing the investment, if forecast is incorrect. In the worst-case scenario, you might even end up with a negative balance.
It is good though, due to competition, most brokers/platforms provide protection against negative balance. We recommend to apply a leverage of 1:10 maximum, as well as always have additional funds on a balance sheet, so that your contract does not close automatically before stock/contract growth.
What is a CFD trading platform?
CFD trading platforms are computer programs such as AMarkets (SaaS model), that serve as a trading platform. They provide access to various trading types, to conduct transactions between traders directly or via an intermediary. CFD trading may involve stocks, currencies, commodities, shares, etc., and is always performed in pairs (USD to EUR, Shell to Exxon).
By far the most popular platforms (a.k.a. brokers) are MetaTrader 4 and MetaTrader 5, check out MT4 vs MT5 comparison by the way. These CFD platforms really have all the necessary functionality, but the list does not end on MetaTrader.
cTrader is a platform for experienced traders, with unconventional tools for trading strategies. With access both to MetaTrader and cTrader, the latter offers customers more favorable terms on fees and commissions.
Some brokers offer personal trading platforms, for example Interactive Brokers with its IB Trader Workstation (TWS). It is designed for active traders and investors who work with several products. It contains all modern algorithms, a library of layouts, modules, assets.
These mentioned CFD broker platforms, along with XTB, Oanda, etc.are among leaders today. Yet, there are dozens of others to explore and choose the most suitable one. Check online tutorials, documentation and reviews for details.
CFD trading strategies
The two most popular trading methods are short- and long-position, and sometimes “intertrading” in-between.
- Long position – purchase amid rising prices on the market. An exchange trading participant buys an asset in anticipation of value growth in the future. With short-term forecasting skills, or monthly/annual forecasts, or through technical analysis, a trader makes profit in the end, even when price fluctuations are insignificant.
- Short position – purchase in a downturn. This strategy is appropriate when, when a trader predicts a decline asset price. Thus, an asset is sold on condition of possible future purchase at the lowest price. If forecast was wrong, and asset price rises, traders would lose an amount equal to deviation between asset value at opening and closing of a transaction. If a forecast turns out to be correct, the bidder makes a profit. Such method makes it possible to bid on the shortest possible intervals, even within a minute.
CFD commissions and fees
Commissions, fees, hidden fees, additional paid services, margins, spreads and more – all this you are going to encounter on trading platforms. Many CFD brokers may offer a choice of appropriate fees for your trading strategy.
Optionally, there may be a guaranteed stop loss (for an additional fee) or other additional services and tools. Account inactivity, in many cases with CFD trading platforms, will be charged too. Therefore, we’d advise to carefully study all fees and commissions before choosing a platform.
Let’s highlight one concrete example of what we may be dealing with. Take XTB “Pro” account, which we chose after consulting with Broker Chooser portal, helping to calculate fees of real CFDs as of 1 week sale. The condition was an asset purchased at $2,000, and 5:1 leverage. At the exit, when buying Apple Stock CFDs the commission is $18.1, when buying Vodafone CFDs – $24.4.
Under “Standard” account, a trader would only pay higher spreads, and no other fees. You can get acquainted in detail with the table of XTB fees and commissions for this particular broker.
How to calculate CFD fees?
There is no single formula for all CFD platforms/brokers, because one may earns on spreads, while another has additional commissions and fees. Many brokers provide their own formulas and even calculators for deducting fees. For example, in AMarkets standard plan no fees, but in Amarkets ECN plan is a 2.5$ commission per 1 lot.
Minimum deposit and withdrawal
In order to start trading CFDs, you first need to open an account with a broker. Typically, you need to place between $0 to $10,000, depending on the broker. In light of competition, the initial deposit has been lowered to $0-250 in most cases.
For deposit, Visa or MasterCard credit card, bank transfer, PayPal, and in some cases cryptocurrency, will do. In general, this process does not differ much from buying a product online, only here you may need to verify your identity.
Withdrawal of funds occurs upon request, often to a credit card or a bank account. The amount, method and timing for withdrawal can also vary from broker to broker, so study their conditions beforehand.
CFD pros & cons
Benefits of CFD trading:
- Higher leverage. Unlike traditional trading, the contract for difference has a higher leverage and is subject to regulation. In some cases, the leverage reaches 1:500 ration, which allows the investor to get more potential profit with less capital, but it is also worth remembering that this could increase the loss. Thus, CFDs are great for a small investor.
- Global market access. Today, all CFD platforms provide access to all major global markets, with round-the-clock activity.
- No shorting rules or borrowing stock. Some markets install rules that prohibit shorting, require traders to borrow the instrument before selling short, or margin requirements for short and long positions. CFD instruments, on the other hand, allow shorting any time without borrowing costs because traders do not own assets.
- No daily trading requirements. Unlike markets requiring a minimum amount of capital for daily trading or limiting daily transactions, CFD market is not bound this way, account holders can conduct day trading as they wish.
- Variety of trading opportunities. Brokers offer CFDs on stocks, indices, currencies and commodity contracts, any of which could be a decent alternative to exchanges.
- Execution without fees. The same types of orders as with traditional trading are offered, including stops, limits and conditional orders, e.g. “One Cancels the Other” and “If Done”. Some CFD platforms offer guaranteed stops that charge a service fee. Brokers earn money through spreads, and many of them do not charge any commissions or fees at all.
- Ability to earn money both via rising or falling prices.
- Weak regulation. CFD industry is not strictly regulated, broker reputation and proficiency is based largely on trust rather than government regulation.
- The risks. CFD trading is volatile and requires close monitoring. There are liquidity and margin risks that need to be maintained. If you cannot cover the cost reduction, a provider may close your position and you will have to cover the loss. Overall, risk of leverage exposes you to greater potential profit, as well as large potential loss. Although stop loss limits are available from many CFD providers, they cannot fully guarantee no loss.
- Spreads and commissions. Spread on entry and exit, basically, eliminates the possibility of profit from small transactions. Spread also reduces winning trades in relation to base price. Some brokers add hidden fees too.
Q: How to trade CFDs?
A: To start trading, you need to determine the market, determine the position size and open a deal, monitor your position and adhere to your exit strategy.
Q: What is CFD leverage/trade leverage?
A: Leverage is the corresponding ratio of trader's funds to the size of broker's credit. In other words, leverage is a borrowed capital to increase the potential returns.
Q: Is CFD trading safe?
A: Even with financial literacy and a relevant trading strategy, there is always a risk of losing your capital.
Q: Why is CFD banned in the USA?
A: CFDs are derivatives, they are traded OTC (over-the-counter), meaning they are not traded through regulated exchanges. They were also banned in the USA because the majority of traders were constantly losing on CFDs.
Q: How to buy CFDs?
A: Decide which market you want to trade on, click Buy if you think the price will increase in value, select your trade size and choose how many CFDs you want to trade.
Q: What is a CFD margin?
A: Margin is the amount of money required as a “good deposit” to open a position.
Q: How do CFD brokers make money?
A: The first transparent way in which CFD brokers make money is through spreads quoted on each market. Also brokers/platforms charge a commission in form of percentage on the size of a transaction.
Q: What does CFD pairs mean?
A: Pairs trading is the action of buying one instrument and simultaneously selling another. It is called “pairs trading” because you are, essentially, trading a pair of CFDs.
Q: What is a CFD spread?
A: In CFD trading, a spread is the difference between the purchase price and the selling price quoted for an instrument. The buy price quoted will always be higher than the sell price quoted.
Q: What are the best CFD brokers?
A: You can choose a broker/platform from our list in accordance with your trading strategy, fees and other preferences.
Q: Is CFD same as Forex?
A: No. The main difference between CFD trading and Forex trading is that CFD involves different types of contracts than Fx (indices, energy, and metals, etc.) whereas Forex is pure currency trading.
Q: CFD vs stock trading
A: CFD trading mimics share trading with the exception that in a contract for difference, you actually do not own the asset, unlike company shares.
Q: CFD vs options
A: Options deliver a number of benefits to CFDs and might be a part of risk management. Options have a “real world” value beyond that of the CFD, although they are more complicated. So, for experienced traders in certain situations, options may well represent a better reward-to-risk ratio than CFD trading.
Q: CFD vs ETF
A: As a CFD trading alternative, ETFs are better for those seeking a passive investment. Yet, CFD trading allows to access a bigger range of markets using a broker account only.