- 6 asset classes tradable on the platform via CFDs
- Demo account with virtual money for practice
- Microlots available for trading on Forex and other CFDs
- Zero commissions for all trades
71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
- Free demo account with virtual funds
- 3 types of accounts available based on trading needs
- Leverage up to 1:3000
- 6 thematic indices available for trading
- Copy trading functionality to copy Popular Investors' portfolios
- Easy-to-use platform even for beginners
- Minimum order of $10 to open a CFD position
- Minimum deposit of $50
46% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
- Over 60 currency pairs tradable via CFDs
- Authorised and regulated by CySEC and the FCA
- Demo account with virtual money for practice
- Guaranteed stop loss to cap losses
82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
What CFDs are and how they work
An acronym for 'Contract for Difference', CFDs are financial instruments that allow you to speculate on the price difference of an underlying asset.
Being a derivative instrument, CFD trading does not involve the physical exchange of the financial instrument. Rather, it is a transaction in which two parties exchange money about the movement in the underlying asset's value from the opening to the closing of the trade.
CFDs allow you to invest in both bullish and bearish markets.
In the case of a bullish market, you open a long position to gain on the rise in the underlying asset's price.
In the case of a bearish market, you open a short position to profit on the downward trend in the underlying asset's price.
CFDs are traded in 'Over the Counter' (OTC) markets.
OTC markets denote those markets where the financial contracts are concluded and the related trading occurs outside the official stock markets.
CFD trading with leverage
One feature of CFDs is that they allow you to invest using leverage. We can define leverage as a kind of 'capital multiplier', i.e. an instrument that allows for more exposure than the capital invested..
Let's take an example: You have a capital of 100€ and you want to invest, via CFDs, in shares with leverage of 1:10. Thanks to the leverage effect, with an amount of 100€ you will have an exposure on shares for a total value of 1,000€ (since 100€ x 10 = 1,000€).
Related to leverage is another very important concept: margin.
Margin represents the capital required to open a position and is equal to the nominal capital divided by the leverage.
For example, if you want to invest in 5,000€ of shares with 1:20 leverage, the margin required will be 250€ (5,000€ / 20).
The required margin is composed of the initial margin, i.e. that part of the margin on which profits and losses will be generated, and the maintenance margin, i.e. the part of the margin needed to keep the position open.
Usually, initial and maintenance margin have a specific weight of 50% each. The maintenance margin is very important because, based on it, you can trigger the margin call, which is a warning that the broker sends you when the maintenance margin, due to a losing position, gets too close to equity (given by the sum of the available balance in your account, the initial margin and the maintenance margin)..
Taking the previous example, i.e. 5,000€ of shares with 1:20 leverage, the scenario would be as follows:
-
Available balance: 50€
-
Initial margin: 125€
-
Maintenance margin: 125€
-
Equity: 300€
If the equity, now 300€, were to fall below the maintenance margin due to a bearish trend in the price of the shares purchased, a margin call would be triggered.
In this case, you could decide
- to keep the position open (which will still be closed by the broker should the price continue to fall)
- close the position yourself,
- add more equity to increase the equity.
Warning: as leverage increases the financial exposure of the investment, it can multiply gains, but also losses.
For this reason, EU capital market regulation provides for a leverage for retail investors (the type of investor that enjoys the most protection from the legislator) of a maximum of 30x.
The Pros and Cons of CFDs
Having explained what CFDs are and how they allow leveraged investing, let us now look at the pros and cons of these particular financial instruments.
What are the advantages of CFDs? To help you assess why you should invest with CFDs, we propose a comparison between CFDs and futures, other derivative instruments which allow leveraged investing.
Similar to CFDs, futures are financial contracts which allow two counterparties to exchange an underlying asset but at a pre-determined future price.
CFDs are the best choice for retail investors with moderate levels of capital and limited financial knowledge and experience.
In addition, compared to futures that are traded on regulated markets, CFDs very often do not have trading commissions charged on each opening and closing of a position, but only the spread to be paid to the broker you have turned to for CFD trading.
Here are the top 4 CFD brokers:
ActivTrades: trade CFDs with rapid execution
5.0Type of broker: Market Maker
Minimum deposit: £0.01
Demo account:
Commissions:
Trading platforms:
Ideal for: CFD trading with low spreads, zero commissions and trading platforms suitable for both beginners and experts
Pros:
- Transparent pricing and rapid execution
- Trading platforms suitable for both beginners and advanced traders
- Insured trading account up to £1,000,000
Cons:
- Inactivity costs from the second year onwards
ActivTrades is a broker based in the UK (but with offices all over the world). This type of online broker is ideal for traders who want to trade with high leverage and daily trades on speculative instruments such as CFDs.
ActivTrades is authorised and supervised by the UK FCA. Trading accounts can be insured up to as much as £1,000,000 and clients' funds are segregated and held in separate bank accounts.
There are 7 financial assets you can invest in via CFDs on the ActivTrades trading platform:
Forex: over 50 tradable currency pairs, with up to 30x leverage
Indices: Cash and Forward indices of the major world indices (including the FTSE 100) are available, with a maximum leverage of 20x
Raw Materials: 12 tradable commodities available at 10x maximum leverage
Shares: over 500 stocks listed on European and US stock exchanges. Maximum leverage 5x
ETFs: major global ETFs available. Maximum leverage 5x
Bonds: 8 fixed-income CFDs available. Maximum leverage 1:5.
Spread betting: tens of thousands of underlying markets available with leverage, tax-free.
On the commissions and spreads level, ActivTrades charges different commissions depending on the type of asset:
Forex: target spread between 0.50 pips (as for EUR/USD) and 2.60 pips for major currency pairs and between 5.90 and 27.90 pips for exotic currency pairs
Raw Materials: spread between 35 and 45 pips
Shares: commissions for European shares are 0.05% of the counter value (except for London equities where the commission is 0.1%), with a minimum of €1. For US equities, on the other hand, you pay $0.02 per share bought/sold.
The spread reflects that of actual stock prices.
Start trading with ActivTrades or try the demo account
70% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
IUX: trade CFDs with the highest leverage
5.0Type of broker: STP
Minimum deposit: 10$
Demo account:
Commissions:
Trading platforms:
Ideal for: CFD trading with for tight spreads, fast execution, and flexible account types
Pros:
- 3 account types tailored to different needs
- Wide variety of tradable instruments
- Trading app and MT5 compatibility
Cons:
- Broker not regulated in the UK
IUX is an international broker that stands out as a solid option for trading Forex and CFDs. It combines competitive trading conditions with tools suitable for both beginners taking their first steps and experienced traders looking for advanced features. With three account types, every trader can find the solution that best matches their trading style:
- Standard account: designed for beginners. No commissions (costs are built into the spreads) and a small minimum deposit of 10$ to start trading.
- Pro account: tailored to more active traders. It offers tighter spreads plus a small commission with a minimum deposit of 500$.
- Raw account: ideal for advanced traders and scalpers. It features zero spreads with a commission of 6$ per lot.
From a regulatory perspective, IUX is supervised by ASIC (Australia) and FSCA (Mauritius), ensuring a safe trading environment. Client funds are protected through strict security protocols and negative balance protection, so losses cannot exceed the deposited capital.
The maximum financial leverage offered by IUX is up to 1:3000 for every account type, giving traders the possibility to operate with significant flexibility..
In terms of platforms, IUX provides a proprietary mobile app, a web-based trading platform, and full compatibility with MT5. This ensures access to both intuitive solutions and professional-grade tools, making trading smooth and efficient across all devices.
Discover IUX: trade live or practice risk-free with the demo account
eToro: ideal for novice traders
5.046% of retail accounts lose money
Type of broker: Market Maker
Minimum deposit: $50
Demo account: Yes
Commissions:
Trading platforms:
Ideal for: trading CFDs on stocks, indices and commodities, as well as copy trading with the social trading community
Pros:
- Copy trading functionality to copy the best CFD traders
- Ideal trading platform and mobile app for beginners
- Minimum deposit of $50
Cons:
- Platform not suitable for advanced traders
The famous Israeli broker eToro operates in Europe through a subsidiary, eToro (Europe) Ltd. based in Cyprus. Therefore, eToro operates in compliance with European investor protection regulations, under the supervision of the Cyprus Securities & Exchange Commission (CySEC).
On eToro you can invest in various financial products:
Shares: more than 2,700 shares on 11 world stock exchanges
ETFs: 145 ETFs issued by iShares, Vanguard, PIMCO, SPDR etc. available. Maximum leverage up to 5x
Indices: 20 world indices are tradable via CFDs. There is CFD on the DAX, the Nasdaq and the FTSE 100. Maximum leverage up to 20x
Forex: 47 major, minor and exotic currency pairs tradable. Maximum leverage up to 30x
Materie prime: 26 commodities tradable via CFDs, including oil, gold and gas. Maximum leverage up to 20x
Cryptocurrencies: 42 cryptos can be traded via CFDs including Bitcoin, Ethereum, Ripple, Litecoin etc. In addition, with eToro you can also trade crypto crosses with fiat currencies, commodities and other cryptocurrencies such as BTC/EUR, ETH/EUR, ETH/BTC, GOLD/BTC and many more. Maximum leverage up to 2x
Finally, the subject of commissions: the Israeli broker charges a spread on both purchases and sales. On CFDs on cryptocurrencies, the spread is 1%, while for stocks and ETFs it is 0.15%.
In addition, if the trader wants to keep the position open for more than one day, he will also have to consider rollover costs.
Start trading with eToro or try the demo account
46% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Plus500: trade Forex with an intuitive mobile app
5.0Type of broker: Market Maker
Minimum deposit: 100€
Demo account:
Commissions:
Trading platforms:
Ideal for: trading CFDs in a user-friendly environment, especially for beginners and intermediates
Pros:
- Regulated and listed online broker
- Guaranteed stop loss to cap potential losses
- CFD spreads narrowed, especially on Forex
Cons:
- Inactivity costs from the second year if the account is not used
Plus500 is a broker that operates under the supervision of multiple financial authorities, including the FCA (UK), CySEC (Cyprus) and ASIC (Australia).
A large number of financial instruments can be traded via CFDs on the trading platform and mobile app provided by Plus500. Specifically:
Shares: availability of shares listed on 23 global markets, including the London Stock Exchange
ETFs: you can choose from more than 90 ETFs from issuers such as Vanguard, iShares, etc.
Forex: more than 72 major, minor and exotic currency pairs are available
Cryptocurrencies: range of more than 10 cryptos including Bitcoin, Ethereum, Cardano, etc.
Raw materials: more than 22 raw materials including commodities, energy and soft commodities
Indices: more than 37 European and non-European indices are available
Options: numerous options on equities, commodities and indices
Plus500 is a broker that does not charge direct commissions. The costs for Forex trading will be the spread, overnight costs and currency conversion if we trade in a currency other than the account currency.
Concerning the spreads applied by Plus500, our analysis showed that the bid-ask spread is among the best around.
Start trading Forex or try the Plus500 demo account
82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
