Best CFD Brokers and Trading Platforms for 2024

The Best CFD Brokers and Trading Platforms in 2024

With so many choices out there, it's tough to select the right broker. In this case, we've done the work for you. Here is a summary of each broker according to specific criteria, along with their pros and cons. After a stringent research exercise, we present our list of the best CFD brokers and trading apps for 2024:

• ICM - Capital 91.10: Best Deposit and Withdrawal Broker

• Tradeview: 90.00: Trusted broker that offers very low trading costs as well as comprehensive financial literacy materials for its clients.

• XTB - 85.55: Best Customer Service Broker

• IG - 85.45: Best Regulations Broker plus Convenient Platform

• Saxo Bank - 80.09: Excellent Private Trading Platform

• CMC Markets - 80.07: More than 9,000 Assets

• ThinkMarkets - 80.05: Aimed at the Audience of Traders

What are CFDs?

As noted in the introduction, CFDs are tradable instruments that enable you to speculate on the underlying price of securities or assets without actually owning them. You may be wondering what it means to speculate on the underlying price. In simple terms, you are predicting the future value of an asset, and you are so sure of your prediction that you are putting your money on the table as a wager it will happen. Your broker takes your money and places the wager on your behalf. If your prediction comes true, you make money; but if it does not, you lose out. 

A CFD trade is in place after a trader has inked a contract with their broker to buy or sell a particular underlying asset or security at a specific future price, which is different from the current price. By doing so, the trader speculates on price fluctuations that may occur in the “window” of time between when the contract takes effect and when it expires (or when the trade is finally closed).

In sharp contrast to the process of purchasing asset classes such as company stock, where you become the owner of those equity shares, buying a CFD means you never own the underlying asset.

As the price of the underlying asset fluctuates, the CFD trader will experience either an unrealized profit or an unrealized loss. A CFD trader can, therefore, experience one of three scenarios. If the trade is closed while the position is still profitable, a profit will be realized. Likewise, if the trade is unprofitable when closed, the loss becomes realized. Finally, neither a profit or loss will occur if the price remains flat.

In layperson’s language, if a trader buys a CFD on the EUR/USD pair and the contract price moves higher than had been paid for initially, the unrealized profit will be the difference between those two prices, minus of course, any applicable trading costs the broker may charge.

How do CFDs Work?

CFDs are a good option if you are looking for a financial asset to trade in today's retail marketplace. It is a trading method that is supported by most brokers, and you can use them to trade FOREX, stocks, indices, commodities and cryptocurrencies. 

CFDs are a good trading method to use to trade with leverage as you can gain exposure to a larger position than your initial investment. Another reason they can be attractive is because CFDs typically offer lower fees and commissions compared to other forms of trading, such as futures or options. This can help you keep your costs in check.

They are flexible instruments that allow you to open and close positions at any time and use them in conjunction with a variety of trading strategies, such as scalping, day trading, or swing trading. If you are looking for a flexible, accessible and cost-effective way to trade a range of different markets and asset classes, CFDs may be for you.

In Which Countries Can You Trade CFDs?

Pros and Cons of CFD Trading

How are CFDs Different from Stocks?

This is a question that new traders often ask. When you buy stocks through an online broker, your broker holds these shares on your behalf. Being the “shareholder of record,” you gain certain rights and privileges. These range from enjoying voting rights and taking part in proxy company meetings to also becoming eligible to receive potential dividends.

While CFD traders do not enjoy any such rights, in some rare instances CFD brokers may offer traders the ability to receive dividends, akin to the trading of real (underlying) stocks.

Leverage: This is one key area where CFDs operate very differently to trading cash equities (stocks). Indeed, CFD traders can access leverage while in most cases leverage is not available when trading cash stocks. 

Risk: Share CFDs are much riskier than trading in traditional underlying stocks. This is partly because of the leverage often offered to CFD traders and not offered to those investing in traditional stocks. Indeed, CFD traders can see their entire balance wiped out or even go into the negative, in some cases. 

How are CFDs Different from FOREX?

How to Choose the Best CFD Broker?

How to Check the Regulation and Licensing of The Broker?

It is important to choose a CFD broker that is regulated by a reputable financial authority. This ensures that the broker is subject to certain rules and regulations designed to protect traders, such as maintaining sufficient capital and segregating client funds from the broker's own funds. Here are some of the best regulators in the world:

Financial Conduct Authority (FCA): The FCA is the UK's financial regulator and one of the most respected in the world. FCA-regulated brokers are required to meet stringent requirements, including holding sufficient capital, segregating client funds, and providing regular reporting.

Australian Securities and Investments Commission (ASIC): ASIC is the Australian financial regulator and is known for its tough stance on financial misconduct. ASIC-regulated brokers are required to meet similar requirements to FCA-regulated brokers.

Commodity Futures Trading Commission (CFTC): The CFTC is the US derivatives regulator and has a strong focus on protecting retail traders. 

Ensure that a reputable authority regulates your chosen broker. Brokers offering access to CFD trading must be regulated by the same regulators, regardless of the assets they offer, such as FOREX, crypto, commodities, and indices. If you want to read more about some of the best-regarded regulators, read our article on regulation here. Remember that you do not have to use a broker with international regulation if your local broker is regulated by a solid local regulator.

What Trading Platforms, Tools, and Features Should a Broker Offer?

When choosing the perfect trading platform, retail traders should consider an array of features that cater to both novice and seasoned traders alike. In our experience, MT4 has become a staple in the online trading world for its user-friendliness, speed of execution and advanced tools. This platform has been around for many years, first created as a FOREX-only trading platform that has since been expanded to offer other instruments, like stocks, indices, and commodities. In any event, whether you choose a broker with MT4, or your broker uses another platform, these are the elements of which you need to be aware:

• Platform Accessibility is the first consideration. Whether it's web-based or a downloadable application, a top-notch trading platform should offer flexibility in terms of access.

• Customization and User Interface. Traders need to mold the platform according to their preferences, allowing them to set up their trading environment precisely how they want. 

• Technical Analysis Tools. The platform should be equipped with robust technical indicators to aid traders in making informed decisions.

• Risk Management Tools are another pivotal aspect. Trading inherently comes with risks, and a high-quality platform should provide instruments that allow traders to set stop-losses, take-profits, and other crucial order types. 

• For those new to the trading world, Performance and Reliability cannot be overlooked. Beginner traders especially need a platform that operates seamlessly with minimal downtimes or glitches. This ensures a smooth trading journey, allowing them to focus on market movements rather than technical hiccups.

• Finally, the Learning and Support element is essential. The best brokers will offer platforms that are not only intuitive but also come with tutorials, guides, and responsive customer support to assist traders in navigating any challenges they might face.

Deposit and Withdrawals: Broker Comparison

Having access to a broker that streamlines the deposit and withdrawal process is crucial for retail traders. In such a fast-moving environment, financial fluidity is key. Opportunities can rise and fall quickly, requiring traders to act swiftly. A broker with an efficient funding process allows you to capitalize on these opportunities by quickly depositing funds to execute trades or withdrawing profits with minimal delay. Remember, a streamlined process reduces operational stress and enhances the overall trading experience, allowing you to focus more on market analysis and strategy rather than administrative hassles. 

What Customer Service Do You Need from a Broker?

• Accessibility and responsiveness through multiple channels like phone, email, live chat, and social media.
• Knowledgeable support staff with an understanding of trading platforms, market operations, and financial products.
• Account management assistance including deposits, withdrawals, and understanding account statements.
• Technical support related to the trading platform, troubleshooting, and features.
• Educational resources.
• Problem resolution such as trade execution problems.
• Market information and tools to aid in making informed trading decisions.
• Personalized services such as a dedicated account manager.

What Tradable Assets and Instruments Should My Broker Offer?

• FOREX

• Commodities

• CFDs

• Equities or Stocks

• Indices

• Cryptocurrencies

• Bonds

• Options and Futures

How Do Commissions and Fees Impact CFD Traders?

Trading fees can sometimes be hard to understand. Be sure to check how these fees compare with industry standards:
Spreads:
There are two main kinds of spread, one is fixed and the other is variable. Generally, the spread refers to the gap between two prices, such as the bid/ask rate in a currency exchange rate. If you are getting a spread of 1.4 pips for the EUR/USD, you can rest easy that you are getting a good deal at present market rates. The narrower the better, this means that a spread of 1.4 pips is better than a spread of 2 pips. This article explains more about this important concept.
Commission:
A fee charged per trade, usually calculated as a percentage of the trade value.
Rollover Fees:
Charged when you hold a position overnight. This is because they assume the risk of the market changing adversely.
Withdrawal and Deposit Fees:
Fees for transferring funds to and from your broker account.
Subscription or Inactivity Fees:
Some brokers charge a monthly fee or inactivity fee if you don't meet certain trading requirements.
Conversion Fees:
These are for trading in a different currency.
Guaranteed Stop-Loss Fees:
This is for protecting against losses.

To keep track of trading fees, make sure you research different brokers and trading platforms, as well as compare the charges of each platform. Remember that trading fees can have a significant impact on your trading profits, so it's important to choose a platform that offers competitive fees and suits your trading needs.

Can CFD Trading be Profitable?

How Does Leverage & Stop Out Affect Me as a CFD Trader?

Leverage

Different regulators have different guiding policies relative to leverage. Key regulators have implemented specific rules to limit the leverage offered to retail traders as a means of consumer protection.

Here are selected leverage rules for CFDs according to some key regulators:

European Securities and Markets Authority (ESMA)

ESMA caps the leverage for CFDs of major currency pairs in FOREX trading at 30:1. This means that traders need to have a minimum of 5% margin of the total trade value.

CFTC

In the United States, CFD trading isn't permitted for retail traders. However, for related products, like futures, there are specific margin requirements set by exchanges and overseen by the CFTC.

ASIC

ASIC has recently implemented rules capping the leverage for CFDs of major currency pairs for retail traders at 30:1, aligning with ESMA's restrictions.

FCA

The FCA has adopted rules like ESMA, capping leverage for CFDs of major currency pairs at 30:1 for retail traders.

As we can see, responsible regulators closely monitor leverage levels. Leverage is a double-edged sword because you can make a lot of money, but you can just as easily become financially ruined!

Similarly with stop outs, many major regulators offer negative balance protection. This is important as your open positions are automatically closed by the broker due to insufficient margin in the account. This mechanism protects you from accruing negative balances and owing money to the broker.

Stop Out

Is CFD Trading a Good Idea for Beginners?

Which Broker Offers the Most CFDs?

Which CFD Broker Charges the Lowest Fees?

Conclusion

Methodology

The team at Arincen collected more than 120 pieces of data covering more than 100 licensed FOREX companies. Data collection was done in three ways:

1. Companies’ websites.

2. Other websites that have ranked FOREX companies.

3. A survey questionnaire (referred to here as Survey “1”) was sent to the companies invited to participate in the exercise.

We have identified 12 criteria for our assessment, each containing several aspects and carrying its relative weight. These include licensing, deposits and withdrawals, number of assets etc.

Afterwards, we validated the data by:

1. Registering with FOREX companies as a secret shopper and/or as Arincen.

2. Survey number “2,” in which we asked these companies’ customers for important feedback and experience. 

The next step saw us evaluate and rank each company, relying on the hard work of 15 Arincen employees. We were very careful in ensuring the most accurate assessment possible, including taking into account different languages, as well as the various mobile-app operating systems, e.g., Apple, Samsung etc.

To add credibility to our research project, we sent a final and third survey (referred to here as Survey “3”) to enable participating FOREX companies to evaluate our research and whether it accurately reflects the realities on the ground. We were fortunate enough to receive a mark of 9.9 out of 10! We have kept to a minimum the margin of error, which stood at a measly 1%. To learn more about how we came up with the evaluation, please click here.