75-90% of retail traders lose money trading Forex and CFDs. You should consider whether you understand how CFDs and leveraged trading work and if you can afford the high risk of losing your money. We may receive compensation when you click on links to products we review. Please read our advertising disclosure. By using this website you agree to our Terms of Service.

AuthorAuthor: Chris CammackPublished: Jun 26, 2019
EditorEditor: Alison HeyerdahlUpdated: Apr 8, 2024

Last Updated On Apr 8, 2024

Chris Cammack

A low initial investment, the ability to go long or short, and leveraged trading are three reasons why Contract for Difference (CFD) trading has become popular in recent years. CFD trading also allows traders to speculate on the price movements of an underlying asset without actually owning the asset. CFD brokers provide traders with the software needed to trade CFDs and offer them leverage to make a decent profit from a small amount of capital. 

Our guide to CFD trading will explain what CFDs are, how they work, how they are different from traditional investments, and the advantages and disadvantages of trading CFDs.  Our team has thoroughly researched and tested over 180 CFD providers, including their regulation, trading costs, trading platforms, level of customer service, education and market analysis to provide the top CFD brokers for traders of all budgets and preferences.

These are the best CFD brokers in the Philippines for 2024

  • Pepperstone - Best ECN CFD Broker
  • FP Markets - MT4, MT5 & cTrader, 10,000 Stock CFDs
  • XTB - Best Proprietary CFD Trading Platform
  • FBS - CFD Broker with Highest Leverage
  • XM - Best CFD Education
  • AvaTrade - Best Mobile CFD Trading Experience
  • FxPro - Best MT5 CFD Broker
  • Eightcap - Comprehensive CFD Trading with 100 Cryptocurrency Pairs
  • markets.com - Low Costs and 900+ CFDs
  • Fusion Markets - MT4, MT5, cTrader & Low Trading Costs

Best CFD Trading Brokers 2024

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Broker
Broker Score
Official Site
Min. Deposit
Max. Leverage (Forex)
Total CFDs
Share CFDs
Commodity CFDs
Indices
Currency Pairs
Trading Cost (Forex)
Regulators
Trading Desk
Platforms
Support Hours
Compare
Pepperstone
4.61 /5
Read Review
Visit Broker >
89%74- of retail CFD accounts lose money
USD 0
30:1
1275
1000
17
28
100
USD 10
FCA Regulated Brokers
ASIC Regulated Forex Brokers
CySEC Regulated Brokers
Dubai Financial Services Authority
Bundesanstalt für Finanzdienstleistungsaufsicht
Securities Commission of the Bahamas
Capital Markets Authority
NDD
TradingView
24/7
FP Markets
4.40 /5
Read Review
Visit Broker >
79% of retail CFD accounts lose money
AUD 100
30:1
10162
10000
11
17
70
USD 7
ASIC Regulated Forex Brokers
CySEC Regulated Brokers
FSCA Regulated Forex Brokers
Capital Markets Authority
The Seychelles Financial Services Authority
ECN/DMA
IRESS
24/5
XTB
4.39 /5
Read Review
Visit Broker >
78% of retail CFD accounts lose money
USD 0
30:1
5211
1892
26
37
57
USD 7
CySEC Regulated Brokers
FCA Regulated Brokers
Dubai Financial Services Authority
International Financial Services Commission
Komisja Nadzoru Finansowego
Market Maker NDD
xStation5
24/5
FBS
4.33 /5
Read Review
Visit Broker >
76% of retail CFD accounts lose money
USD 5
30:1
254
96
0
12
37
USD 7
CySEC Regulated Brokers
ASIC Regulated Forex Brokers
FSCA Regulated Forex Brokers
International Financial Services Commission
STP
ECN/DMA
24/7
XM
4.45 /5
Read Review
Visit Broker >
75.33% of retail CFD accounts lose money
USD 5
30:1
1554
1300
10
20
57
USD 6
CySEC Regulated Brokers
ASIC Regulated Forex Brokers
Dubai Financial Services Authority
International Financial Services Commission
FSCA Regulated Forex Brokers
Market Maker
24/5
AvaTrade
4.59 /5
Read Review
Visit Broker >
76% of retail CFD accounts lose money
USD 100
30:1
872
625
25
33
55
USD 9
ASIC Regulated Forex Brokers
FSCA Regulated Forex Brokers
CySEC Regulated Brokers
Financial Services Agency
Central Bank of Ireland
Financial Regulatory Services Authority
Market Maker
Avatrade Social
AvaOptions
24/5
FxPro
4.39 /5
Read Review
Visit Broker >
71.58% of retail CFD accounts lose money
USD 100
30:1
2241
2090
0
19
70
USD 14
FCA Regulated Brokers
CySEC Regulated Brokers
FSCA Regulated Forex Brokers
Dubai Financial Services Authority
Securities Commission of the Bahamas
Market Maker NDD
FxProEdge
24/7
Eightcap
4.53 /5
Read Review
Visit Broker >
N/A of retail CFD accounts lose money
AUD 100
500:1
846
660
14
11
55
USD 10
ASIC Regulated Forex Brokers
Securities Commission of the Bahamas
FCA Regulated Brokers
CySEC Regulated Brokers
Market Maker NDD
TradingView
24/5
Markets.com
4.68 /5
Read Review
Visit Broker >
70.3% of retail CFD accounts lose money
USD 100
30:1
1009
765
22
31
56
USD 7
FCA Regulated Brokers
CySEC Regulated Brokers
ASIC Regulated Forex Brokers
FSCA Regulated Forex Brokers
British Virgin Islands Financial Services Commission
Market Maker
markets.com
24/5
Fusion Markets
4.33 /5
Read Review
Visit Broker >
89% of retail CFD accounts lose money
USD 0
30:1
252
110
25
18
85
USD 4.50
ASIC Regulated Forex Brokers
Vanuatu
The Seychelles Financial Services Authority
ECN/DMA
24/7

What is CFD Trading?

CFD trading is the buying and selling of CFDs. CFDs are financial derivatives that allow traders to speculate on the price movements of financial assets such as Forex, stocks, indices, commodities, and more, without actually owning or taking physical delivery of the assets. CFDs are contracts between an individual trader and a broker to pay the price difference of an asset between opening a trading position and closing a trading position. For example, if you think the price of crude oil will rise and open a buy position, but the price falls instead, and you close your position, you will make a loss. CFD traders are not concerned with the value of an asset they are trading, only the difference in price between opening and closing a trading position.

How did we choose the top CFD brokers?

We have an experienced review team dedicated to evaluating CFD brokers, so you don’t have to. Our team of experts meticulously examines each broker in 7 different areas using over 200 individual metrics. We invest hundreds of hours annually researching and scrutinising brokers to ensure that we only recommend the best in the Forex industry.Forex Broker Scoring

Of these seven areas, we always prioritise regulation and costs. These are our priorities because traders want to know that their broker is trustworthy and isn’t overcharging them. Brokers are constantly altering the products they offer, and we keep our reviews updated with the latest data. You can find out more about our in-depth review process here.

Others Also Visit

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Visit
Exness
4.32 /5
Read Review
Visit
IC Markets
4.56 /5
Read Review
Visit
XM
4.45 /5
Read Review
Visit
Pepperstone
4.61 /5
Read Review
Visit
AvaTrade
4.59 /5
Read Review
Visit

Pepperstone – Best ECN CFD Broker

Broker Score
4.614.61 / 5
🏦  Min. DepositUSD 0
🛡️  Regulated By
💵  Trading Cost 
USD 10
⚖️  Max. Leverage30:1
💹  Copy Trading
🖥️  Platforms
💱  Instruments 

Pepperstone is the leading ASIC-regulated ECN/STP Forex and CFD broker with CFD trading on over 1275 instruments, including Forex, indices, shares, commodities, cryptocurrencies, and currency indices. Pepperstone’s two ECN accounts offer market execution with some of the tightest spreads in the industry – the Razor Account has spreads from 0 pips for the EUR/USD and 7 USD commission.

Pepperstone also offers fixed spreads on its indices CFDs, after-hours trading for US shares, and crypto basket trading – indices of the world’s most highly traded cryptocurrencies.

Pepperstone’s award-winning, 24-hour support provides the foundation for its excellent customer service, where personalised assistance is available via several methods. For beginners interested in CFD trading with an ECN broker, Pepperstone also has one of the better education sections offered by a market execution broker.

Pros
  • Well regulated
  • Tight spreads
  • Great platform choice
  • Wide range of assets
Cons
  • Limited market analysis
AlertAccepts Filipino Clients. Average spread EUR/USD 1.00 pips with 0.0 USD commission round turn on the trading account with lowest minimum deposit. Max leverage 30:1. Islamic account available. MT4, MT5 & cTrader platforms supported. Pepperstone is regulated by the FCA, ASIC, CySEC, SCB, CMA, BaFin and the DFSA.

FP Markets – MT4, MT5 & cTrader, 10,000 Stock CFDs

Broker Score
4.404.40 / 5
🏦  Min. DepositAUD 100
🛡️  Regulated By
💵  Trading Cost 
USD 7
⚖️  Max. Leverage30:1
💹  Copy Trading
🖥️  Platforms
💱  Instruments 

FP Markets is an Australian CFD broker offering thousands of CFDs to trade, including 60+ Forex pairs, shares, metals, indices, commodities, and cryptocurrencies (Bitcoin, Etherium, Ripple, Bitcoin Cash and Litecoin). The MT4, MT5 and cTrader platforms are available with ECN pricing, ensuring low spreads and fast execution. But for the full range of FP Market’s CFDs, the IRESS trading platform offers direct exchange access and leverage of 20:1 on 10,000 global stocks.

MT4, MT5 and cTrader trading accounts can be opened with a minimum deposit of 100 AUD. Average spreads on the RAW Account are 0.1 pips (EUR/USD), and commission on this account is 6 USD round turn, making the total trading costs at the low end for the industry. IRESS trading accounts require higher minimum deposits, starting at 1000 AUD for the Standard Account. IRESS trading accounts also attract a brokerage rate, IRESS platform fee and an ASX Live Data fee unless a minimum monthly commission is reached.

FP Markets also offers a range of trading tools including VPS, Autochartist and copy-trading via Myfxbook AutoTrade. For beginners, the Traders Hub gives beginner CFD traders the education they need to get started and includes video tutorials and trading courses.

Pros
  • Trusted since 2005 with top-tier regulation
  • 100 USD minimum deposit amount
  • Supports MT4 MT5 cTrader and TradingView
  • Spreads start at 1.0 pip and narrow to 0 pips with higher trading volumes
  • Welcoming South African traders with specific regulatory compliance
Cons
  • Notably higher withdrawal fees than competitors
  • Stock CFDs are Limited on MT4/MT5 and primarily available through IRESS
  • High leverage up to 500:1
  • posing risks for inexperienced traders
AlertAccepts Filipino Clients. Average spread EUR/USD 0.10 pips on trading account with lowest minimum deposit. Max leverage 30:1. Islamic account available. MT4, MT5 & IRESS platforms supported. FP Markets is regulated by CySEC and ASIC.

XTB – Best Proprietary CFD Trading Platform

Broker Score
4.394.39 / 5
🏦  Min. DepositUSD 0
🛡️  Regulated By
💵  Trading Cost 
USD 7
⚖️  Max. Leverage30:1
💹  Copy Trading
🖥️  Platforms
💱  Instruments 

A well-regulated STP broker, XTB offers trading on multiple assets, including Forex, indices, commodities, stock CFDs, ETFs, and cryptocurrencies.  XTB offers trading on two live accounts with competitive trading conditions, including tight spreads, high leverage, and no minimum deposit requirements. The main draw at XTB is the award-winning xStation 5 trading platform. Intuitive, powerful, and fast, xStation 5 shows XTB sentiment data in the platform and offers powerful charting tools, one-click trading, and real-time performance statistics so traders can identify areas for improvement.

While xStation 5 is a multiple award-winning platform, some traders may be disappointed that XTB recently removed its support for MT4 – severely limiting platform choice. It’s important to note that as xStation 5 is a proprietary platform it can not be used at other brokers, so traders may feel tied to XTB. For beginners, XTB has some of the best Forex education available. Its Trading Academy is structured into topics and experience levels; it is clear and concise and structured like a course. Market analysis is less detailed but will assist new traders looking for trading opportunities.

Pros
  • Well regulated
  • Tight spreads
  • Low minimum deposit
  • Good for beginners
Cons
  • Limited platform choice
AlertAccepts Filipino Clients. Average spread EUR/USD 0.70 pips on the trading account with lowest minimum deposit. Max leverage 30:1. Islamic account available. MT4 & xStation platforms supported. XTB Group is regulated by CySEC, FCA and the IFSC

FBS – CFD Broker with Highest Leverage

Broker Score
4.334.33 / 5
🏦  Min. DepositUSD 5
🛡️  Regulated By
💵  Trading Cost 
USD 7
⚖️  Max. Leverage30:1
💹  Copy Trading
🖥️  Platforms
💱  Instruments 

With very low minimum deposits, very high leverage, two low-risk accounts for beginners, ECN accounts for experienced traders, and excellent education and market analysis, FBS has something for all types of traders. FBS offers trading on a wide range of instruments, including Forex, metals, indices, energies, crypto and stocks on their MT4, MT5 and proprietary FBS Trader platforms. Unusually, leverage on Forex trading is available up to 3000:1, and minimum deposits are as low as 1 USD on the Cent Account. While high leverage can increase risk for traders, it can also greatly increase profitability. FBS also allows all trading strategies, including hedging, scalping and copy trading.

All of FBS’ CFDs are available on the FBS Trader platform, an all-in-one trading platform application that is also available on iOS and Android devices. It also allows traders to track currency exchange rates in real-time using flexible price charts and receive detailed information on various contract types and order volumes. The Android and iOS apps allow traders to view educational videos and to contact customer support, the apps also feature an integrated economic calendar. Traders can also track real-time stats, open/close/edit positions, add stops to open positions and delete working orders.

Pros
  • Tight spreads
  • Low minimum deposit
  • Excellent education
  • Excellent market analysis
Cons
  • Limited range of assets
  • Extreme leverage
AlertAccepts Filipino Clients. Spreads start at 0.70 pips on the EUR/USD on the trading account with lowest minimum deposit. Max leverage 30:1. Islamic account available. MT4 & MT5 platforms supported. FBS is regulated by ASIC, CySEC, the FSCA, and the IFSC.

XM – Best CFD Education

Broker Score
4.454.45 / 5
🏦  Min. DepositUSD 5
🛡️  Regulated By
💵  Trading Cost 
USD 6
⚖️  Max. Leverage1000:1
💹  Copy Trading
🖥️  Platforms
💱  Instruments 

An FCA regulated CFD broker with tight spreads over three simple account types, XM offers trading on Forex, shares, commodities, indices, precious metals, and energies. XM stands out for its educational support and market research. XM’s research team provide frequent market updates across all CFD classes in an easy-to-understand manner, highlighting trading opportunities and technical insight. Webinars are available 7 days a week in 19 languages and educational videos cover basic, intermediate, and advanced trading concepts.

All XM accounts have a max leverage 1:30, negative balance protection, and minimum deposits start from 5 USD. XM also has a strict no-requotes/rejection policy, which means that all trades are always filled at the price expected. Platform support is offered for MT4 and MT5 but MT4 users will only be able to trade Forex, stock indices, precious metals, and energies.

Pros
  • Well regulated
  • Excellent education
  • Free deposits and withdrawals
Cons
  • Limited platform choice
AlertAccepts Filipino Clients. Average spread EUR/USD 0.60 pips on trading account with lowest minimum deposit. Max leverage 1000:1. Islamic account available. MT4 & MT5 platforms supported. XM Group regulated by CySEC, ASIC, and the Belize FSC.

AvaTrade – Best Mobile Trading Experience

Broker Score
4.594.59 / 5
🏦  Min. DepositUSD 100
🛡️  Regulated By
💵  Trading Cost 
USD 9
⚖️  Max. Leverage30:1
💹  Copy Trading
🖥️  Platforms
💱  Instruments 

AvaTrade is an internationally regulated beginner-friendly CFD broker offering trading on Forex, cryptocurrencies, commodities, indices, stocks, bonds, vanilla options, and ETFs. The AvaTradeGO app provides one of the best mobile trading experiences and all 1000+ CFDs instruments offered by AvaTrade are available in the app, as is the AvaProtect tool, which protects traders from losses for a limited time. Other highlights of the app include a market trends monitor, zoom function and seamless synchronisation with AvaTrade’s webtrader.

Avatrade single account features some of the tightest spreads for a commission-free account with a 100 USD minimum deposit – as low as 0.7 pips on the EUR/USD. Maximum leverage is set at 1:400 on MT4 and MT5, which include EA’s, indicators, scalping, hedging, and provides free access to the integrated Trading Central dashboard for both platforms. 

Pros
  • Top-tier regulation and security with licenses from ASIC and CBI among others
  • Accessible trading with a low minimum deposit of 100 USD
  • Award-winning mobile trading with the AvaTradeGO app with social trading features
  • Wide range of assets including unique instruments like vanilla options
  • Educational material to support trader development and strategy enhancement
Cons
  • Market analysis could be more extensive
  • Poor regulatory oversight outside of the UK and EU
  • Avatrade is a Market Maker and operate a dealing desk which might not align with all trading preferences
AlertAccepts Filipino Clients. Average spread EUR/USD 0.90 pips on trading account with lowest minimum deposit. Max leverage 30:1. Islamic account available. MT4 & MT5 platforms supported. AvaTrade Group regulated by ASIC, FSCA, B.V.I FSC & FSA.

FxPro – Best MT5 CFD Broker

Broker Score
4.394.39 / 5
🏦  Min. DepositUSD 100
🛡️  Regulated By
💵  Trading Cost 
USD 14
⚖️  Max. Leverage30:1
💹  Copy Trading
🖥️  Platforms
💱  Instruments 

FxPro is a respected and well-regulated CFD broker, offering NDD execution on MT5, MT4, cTrader and its own browser-based trading platform. The MT5 account offers a 100 USD opening deposit combined with competitive spreads on 70+ Forex pairs, futures, indices, shares, metals, and energies. Most trades are executed in less than 10 milliseconds and only 9% of orders receive negative slippage. These execution statistics are ideal for traders who want to take advantage of MT5’s algorithmic trading capabilities across a range of assets.

The MT5 account at FxPro offers market execution, variable spreads, no requotes and will allow for partial fills for orders that lack liquidity.  The MT5 account is commission-free with spreads sometimes down to 0.6 pips, though traders will find that the average spread on the EUR/USD is closer to 1.2 pips. FxPro offers a range of technical analysis indicators from Trading Central for MT5 as well as a free VPS service. 

Pros
  • Well regulated
  • Great platform choice
  • Tight spreads
Cons
  • Limited education
AlertAccepts Filipino Clients. Average spread EUR/USD 1.40 pips on trading account with lowest minimum deposit. Max leverage 30:1. Islamic account available. MT4, MT5, cTrader and FxPro proprietary trading platform supported. FxPro Group is regulated by FCA, CySEC, FSCA, and the DFSA

Eightcap – Comprehensive CFD Trading with Over 100 Cryptocurrency Pairs

Broker Score
4.534.53 / 5
🏦  Min. DepositAUD 100
🛡️  Regulated By
💵  Trading Cost 
USD 10
⚖️  Max. Leverage500:1
💹  Copy Trading
🖥️  Platforms
💱  Instruments 

EightCap stands out as a prominent broker for CFD trading, offering a diverse range of financial instruments. Filipino traders have access to over 55 currency pairs, 660 share CFDs from major global exchanges, 11 indices, 14 commodities, and a whopping 100 cryptocurrency pairs. This extensive crypto offering is notably one of the largest sets in the industry, making EightCap a go-to choice for crypto enthusiasts.

When it comes to CFDs, EightCap’s offerings are comprehensive. The broker provides CFD trading on major commodities, including energies like Brent Crude Oil and metals such as silver and gold. The selection of share CFDs spans major US, UK, German, and Australian Exchanges, catering to traders with diverse portfolio interests.

However, what truly sets EightCap apart in the CFD domain is its vast cryptocurrency range. With 100 crypto pairs, including popular choices like Bitcoin and Ethereum, as well as lesser-known options like TRON and DASH, traders have an unparalleled variety at their fingertips.

For those in the Philippines looking to dive into the world of CFD trading, EightCap presents a robust platform with a vast array of choices, especially for cryptocurrency enthusiasts.

Pros
  • Great platform choice
  • Excellent education
Cons
  • Limited demo account
  • No swap-free account option
AlertAccepts Filipino clients. Average spread EUR/USD 1.00 pips with 0.0 USD commission round turn on the trading account with lowest minimum deposit. Max leverage 500:1. Islamic account available. MT4 & MT5 platforms supported. Eightcap Markets is regulated by ASIC, the FCA, CySEC, and the SCB.

Markets.com – Low Costs and 900+ CFDs

Broker Score
4.684.68 / 5
🏦  Min. DepositUSD 100
🛡️  Regulated By
💵  Trading Cost 
USD 7
⚖️  Max. Leverage30:1
💹  Copy Trading
🖥️  Platforms
💱  Instruments 

Markets.com is a well-regulated broker founded in 2010, offering trading on an extensive range of financial instruments, including over 56+ Forex pairs and 764 share CFDs. Other instruments include stocks, an impressive amount of cryptocurrencies (e.g. Bitcoin, Ethereum and Ripple) commodities and over 30 major market indices.

The minimum deposit requirement to open an account on MT4, MT5 or Markets.com proprietary platform is 100 USD. It also boasts excellent trading conditions with spreads starting at 0.6 pips on the EUR/USD, and leverage is available up to 1:300.

While Markets.com offers a wide variety of trading tools through its proprietary platform, they, unfortunately, lack support for popular third-party tools such as Autochartist and Trading Central. However, traders will likely be pleased with the comprehensive education section, as well as a wide scope of excellent tools for research and analysis.

Pros
  • Regulation by top-tier authorities
  • Hassle-free withdrawal process without any fees
  • Its proprietary trading platform is praised for its user-friendly interface catering to both beginners and experienced traders
  • Competitive spreads starting from 0.6 pips
Cons
  • The maximum leverage of 300:1 could pose a risk for uninformed traders warranting cautious utilization
AlertAccepts Filipino Clients. Average spread EUR/USD 0.70 pips on trading account with lowest minimum deposit. Max leverage 30:1. Islamic account available. MT4 & MT5 platforms supported. MarketsX is regulated by CySEC, ASIC, and the FSCA.

Fusion Markets – MT4, MT5, cTrader & Low Trading Costs

Broker Score
4.334.33 / 5
🏦  Min. DepositUSD 0
🛡️  Regulated By
💵  Trading Cost 
USD 4.50
⚖️  Max. Leverage30:1
💹  Copy Trading
🖥️  Platforms
💱  Instruments 

Fusion Markets is a well-regulated CFD broker that offers two low-cost CFD trading accounts on the MT5, MT4, and cTrader trading platforms. Traders can choose between 300 CFD instruments, including over 80 Forex pairs, cryptocurrencies, indices, commodities, and stock CFDs.

Fusion Markets accounts have no minimum deposit requirements, and its Zero Account has spreads that start at 0 pips (EUR/USD) in exchange for a commission of 4.5 USD, making it one of the lowest-cost accounts in the industry.  It also offers an excellent range of market analysis materials, has free VPS hosting for clients that trade over 20 lots a month, and various copy trading services. Our only issue with Fusion Markets is that it has no educational materials, making it a poor choice for beginner traders.

Pros
  • Low minimum deposits
  • Tight spreads
  • Excellent market analysis
Cons
  • No in-house platform
  • No education
AlertAccepts Filipino Clients. Average spread EUR/USD 0 pips with 0 USD commission round turn on the trading account with lowest minimum deposit. Max leverage 30:1. Islamic account available. MT4, MT5, cTrader platforms supported. Fusion Markets is regulated by ASIC, FSA (Seychelles), & VFSC.

A Brief History of CFD Trading

CFD trading dates back to the late 1970s and early 1980s when financial derivatives first emerged as a means for traders to speculate on the price movements of financial assets. 

CFDs quickly gained popularity among professional traders because they provide a flexible and cost-effective way to trade a wide range of financial assets. In the following years, the development of online trading platforms made CFD trading accessible to retail traders, and since then, the industry has grown rapidly.

What is the difference between CFD trading and traditional trading?

The main difference between CFD trading and traditional trading is that when you trade a CFD, you are speculating on a market’s price without taking ownership of the underlying asset. With traditional trading, you take ownership of the underlying asset and may receive dividends regularly. 

There are other differences between the two types of trading, with some that give CFD trading an advantage and some that make CFD trading more risky.

What are the benefits of trading CFDs?

CFDs benefit from several features that make them valuable to individual traders:

Accessibility: CFD trading is often more accessible than traditional trading as it requires a smaller initial investment. For example, some CFD brokers have minimum deposit requirements of only 1 USD, which makes it easier for smaller investors to enter the market and start trading.

Leverage: Most CFD trading is leveraged trading, which means that traders only have to put up a small amount of capital to gain exposure to a large trading position. This is accomplished through the use of borrowed funds from the broker. For example, if a broker offers leverage of 20:1, the trader only has to put up 5% of the value of the trading position and can multiply his money 20 times over. Leverage can increase your profits, but it can also significantly increase your losses.

Profit from falling and rising markets: You can use CFDs to speculate that the price of an asset will rise (going “long”) or that it will fall (going “short”). Because CFDs are an agreement to pay the difference in the price of an asset, going short is very simple. You simply open a “sell” position and close it again once the price has fallen enough for you to make a profit.

Convenience: You can trade CFDs in many different assets without taking physical delivery, saving on storage, security and transportation costs. For example, you can trade CFDs in gold online and simply profit from price changes in the commodity without worrying about how you will store it securely.

Flexibility: You can close a position at any time during the trading day. That means you can hold a position for as long as you want, be it seconds, minutes or hours. You can even hold a position overnight, although there will be a charge for doing so. Many brokers also offer various options when it comes to trade size, allowing a wide range of traders to access the market. 

Ability to hedge: Most people are familiar with the term “hedging your bets” and understand that it involves offsetting risks. Well, it means precisely the same thing in the financial world and is derived from the age-old idea of using a hedge – or fence – as a means of protection. In this instance, you can use CFDs to offset your trading positions by balancing trades in case your beliefs about whether those initial positions are likely to rise or fall prove wrong. 

Exposure to a vast range of financial assets: You can use CFDs to gain exposure to thousands of underlying financial instruments worldwide from just one trading platform.

Why is CFD trading risky?

Like any other type of financial trading, CFD trading involves a high degree of risk. Some of the key risks associated with CFD trading include the following:

Market volatility: CFD markets are known for their volatility. Markets are influenced by political and economic events, and sudden shifts in these events can lead to rapid and substantial price movements.

Volatility can widen spread and costs: Severe volatility in markets or a particular product can cause brokers to widen spreads, affecting the prices paid by the trader when entering and exiting positions, potentially negatively impacting trades and increasing losses.

Leverage: CFD traders can use high levels of leverage to gain access to large trading positions, and while this can magnify potential gains, it can also magnify losses.

Constant monitoring: You must always be alert to possible changes in your position. Market volatility and rapid price changes – which could arise outside regular business hours if you are trading international markets – can cause the balance of your account to change quickly. 

Lack of regulation: There are many unregulated CFD brokers in operation, which increases the risk of scams and unethical practices by some market participants.

Liquidity risk: CFD markets can experience periods of low liquidity, resulting in difficulty exiting a trade at an acceptable price.

Lack of ownership: Because you don’t own the underlying asset, you can’t gain from the benefits of ownership, such as the income provided at set periods by shares or bonds (like dividends). 

It’s important for forex traders to educate themselves on the risks involved in CFD trading and to develop a solid risk management plan to help mitigate these risks.

What is the role of a broker in CFD trading?

A CFD trading broker is an intermediary between traders and the financial markets. The primary role of a CFD broker is to provide access to a wide range of financial instruments, such as stocks, indices, commodities, and currencies, that traders can buy or sell using CFDs.

The broker also provides traders with the platform, tools, and resources needed to analyse market trends, place trades, and manage their investments. In addition, brokers offer traders leverage to benefit from larger trading positions with only a small amount of capital. The broker may also provide other services, such as educational resources and customer support.

What CFD financial instruments can I trade?

Below are the most common financial assets you can gain exposure to via CFDs.

Currencies (Forex): Currencies are traded in pairs against each other, such as the US dollar against the euro. There are hundreds of currency pairs available to trade via CFDs. The global market is vast, with around $6.6 trillion traded daily in foreign exchange markets. 

Shares: You can buy CFDs in most major global stocks. Like the forex market, the global share market is vast, so you can choose from a huge number of highly liquid shares. 

Indices: These provide a representation of an overall market. For example, a collection of different stocks are grouped together, and an average price is taken for all of these stocks, creating the price of the index. Well-known examples include the Dow Jones and the S&P 500 in the US. 

Cryptocurrencies: You can trade various popular cryptocurrencies with leverage, from Bitcoin and Ethereum to TRON and NEO. The global cryptocurrency is growing rapidly, but prices are highly volatile, magnifying the potential for large profits and losses. One of the key advantages of cryptocurrency CFDs is that you don’t own the underlying assets, preventing the risk of loss due to a cybersecurity breach.

Commodities: Using CFDs, you can gain exposure to a diverse range of commodities, from oil to gold to copper. Commodities are hugely liquid and are subject to a range of influences, from global supply and demand, to political announcements and the economic cycle. 

BondsEffectively, IOUs issued by governments, companies and other entities, the bond market, also known as the fixed income market, because of the regular set payments these instruments provide, is another of the world’s biggest financial markets. 

Interest rates: You can use CFDs to bet on the future direction of interest rates in a wide range of major global markets. The advantages of interest CFDs include relatively attractive margins of 20% and low spreads compared to other products.

Common CFD Trading Strategies

Once you have signed up with a broker, you should always open a demo account to practice trading on their trading platforms in real market conditions and form a trading strategy.

A trading strategy outlines the rules for entering and exiting a trade and includes creating a risk management plan to prevent high losses.  It is crucial to thoroughly research and test a strategy before using it in live trading. There are many different CFD trading strategies, and traders often use a combination of technical and fundamental analysis to inform their decisions. 

Some common strategies include:

  • Trend following: This strategy involves identifying the direction of the market trend and taking trades in the same direction.
  • Breakout trading: This strategy involves entering a trade when the price of an asset breaks out of a defined range, with the expectation that the price will continue to move in that direction.
  • Swing trading: This strategy involves taking advantage of short-term price movements, typically holding positions for a few days to a week. Swing traders use technical analysis and trend-following indicators to identify and enter trades, with the goal of riding the price swings for maximum gain.
  • Scalping: This high-frequency trading strategy involves taking advantage of small price movements in short time frames, such as a few minutes or seconds.
  • Day trading: Day trading involves opening and closing positions within the trading day.  Many traders think that day trading and scalping are similar, but day traders open and close substantially fewer setups than scalpers.
  • Position trading: This is a longer-term trading strategy that involves holding positions for several weeks or months.

Risk Management Strategies for CFD Trading

Creating a successful risk-management strategy takes time, education, and patience, but there are a few simple ways to minimise your risk:

  • Use low leverage levels: Smaller amounts of leverage applied to each trade affords more breathing room and help traders avoid larger capital loss. A highly leveraged trade can quickly deplete your trading account if the trade goes against you.
  • Setting stop-losses: A stop-loss is an automated order placed with a broker to buy or sell once the CFD instrument reaches a certain price. A stop-loss order limits a trader’s loss on a trade.
  • Diversification: Diversify your portfolio by spreading your trades across different markets, instruments, and timeframes to help reduce your overall risk exposure.
  • Position sizing: It is important to only risk a small percentage of your trading capital on any given trade. This can help reduce the impact of individual losses on your overall portfolio.
  • Staying up-to-date: Keeping abreast of market news and economic events can help you stay ahead of potential market movements and make informed trading decisions.
  • Emotional control: Emotional control is key in trading, as fear and greed can often drive poor decision-making. Stick to your trading plan, and keep calm and focused on making more rational and effective trading decisions.

Forex Risk Disclaimer

Trading Forex and CFDs is not suitable for all investors as it carries a high degree of risk to your capital: 75-90% of retail investors lose money trading these products. Forex and CFD transactions involve high risk due to the following factors: Leverage, market volatility, slippage arising from a lack of liquidity, inadequate trading knowledge or experience, and a lack of regulatory protection. Traders should not deposit any money that is not considered disposable income. Regardless of how much research you have done or how confident you are in your trade, there is always a substantial risk of loss. (Learn more about these risks from the UK’s regulator, the FCA, or the Australian regulator, ASIC).

Our Rating & Review Methodology

Our State of the Market Report and Directory of CFD Brokers to Avoid are the result of extensive research on over 180 Forex brokers. These resources help traders find the best Forex brokers – and steer them away from the worst ones. These resources have been compiled using over 200 data points on each broker and over 3000 hours of research. Our team conducts all research independently: Testing brokers, gathering information from broker representatives and sifting through legal documents. Learn more about how we rank brokers.

Editorial Team

 

Chris Cammack
Head of Content

Chris joined the company in 2019 after ten years experience in research, editorial and design for political and financial publications. His background has given him a deep knowledge of international financial markets and the geopolitics that affects them. Chris has a keen eye for editing and a voracious appetite for financial and political current affairs. He ensures that our content across all sites meets the standards of quality and transparency that our readers expect.

 

Alison Heyerdahl
Senior Financial Writer

Alison joined the team as a writer in 2021. She has a medical degree with a focus on physiotherapy and a bachelor’s in psychology. However, her interest in forex trading and her love for writing led her to switch careers, and she now has over eight years experience in research and content development. She has tested and reviewed 100+ brokers and has a great understanding of the Forex trading world.

 

Ida Hermansen
Financial Writer

Ida joined our team as a financial writer in 2023. She has a degree in Digital Marketing and a background in content writing and SEO. In addition to her marketing and writing skills, Ida also has an interest in cryptocurrencies and blockchain networks. Her interest in crypto trading led to a wider fascination with Forex technical analysis and price movement. She continues to develop her skills and knowledge in Forex trading and keeps a close eye on which Forex brokers offer the best trading environments for new traders.

 

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