Best CFD Brokers and Trading Platforms for 2023

CFDs are financial instruments that allow traders to speculate on the rising or falling prices of underlying assets without actually owning the assets themselves. A trader can initiate a contract with a broker to exchange the price difference of an underlying asset at a time in the future. In other words, the trader does not own the asset outright, but signs an agreement with a broker that on a defined date in the future, if the asset in question has lost or gained value in any direction, either the broker pays the trader, or the trader pays the broker. It takes a great deal of skill for the average trader to predict with any reliability how respective currencies, stocks or commodities will change in value over time, making CFD trading a highly risky business.

Yes, CFD trading can be profitable and some investors can reap handsome profits when trading these financial products. However, all this comes at a cost as the oft-leveraged CFDs are very risky instruments. Leverage refers to the loan extended by the broker, which allows the trader to invest a much larger amount of money than they actually own. With over three quarters of retail trading accounts losing money when trading CFDs, these instruments are by no means a guarantee for getting rich over night.

CFDs are high-risk instruments and are, therefore, not recommended for beginners. CFDs are very risky because they are leveraged products. Leverage in this case means that you trade with your own money plus the funds your broker lends you. While you can open much larger positions this way, you can magnify both your profits and your losses. CFDs are widely used by experienced traders with a deep understanding of financial markets and investment strategies. As we had argued earlier in the article, for absolute beginners, it makes more sense to open a CFD trade demo account.

As you narrow the list of CFD brokers from which you want to choose, it is important to consider a number of factors, ranging from regulation, costs and tradable asset classes, to the trading platforms available. A well-regulated broker ensures the safety of your funds from internal company fraud or bankruptcy. Always look out for brokers that are regulated by tier-1 watchdogs, such as the Financial Conduct Authority (FCA) in the UK and the Australian Securities and Investments Commission (ASIC) in Australia. As for costs, it is important to keep an eye on the various costs associated with each CFD trade in order to keep them in check. These include the spread, overnight holding costs, and commissions. When it comes to tradable asset classes and markets, you are advised to pick the broker that can give you the widest choice availability. Some underlying assets you can trade include stocks, indices, commodities, fiat currencies, cryptocurrencies and ETFs. Finally, always look for an easy-to-use trading platform that offers intuitive trading software, fast execution, good trading tools, and an order-management system. Otherwise, and if these important prerequisites do not prevail, you are risking losing out on profits.