There is a lot of money available in the financial markets. Unfortunately, many people believe that in order to make significant money, it will require that you have a large amount of capital. This way of thinking limits the potential of financial markets to large Wall Street firms and wealthy investors. This was especially the case at the beginning of the financial trading markets. However, things have changed significantly with the advent of CFDs that have boosted the day-to-day individual retail investor.
Most investors prefer to trade CFDs, or contracts for differences, because you don’t actually own the asset on which the contract is based, thus making trading more affordable and in most cases , more profitable. CFDs are usually contracts between investors and their financial security broker. The terms of the agreement are that the broker will exchange the difference in the market price of the underlying assets of a CFD between the opening and closing time of the contract and to do that you need to use a CFD trading platform.
We have gathered here the best CFD trading platforms that you can choose from:
Pepperstone
Founded in 2010, Pepperstone is a solid CFD broker founded by a team of experienced investment professionals who are all committed to empowering investors to achieve success in the financial markets. The firm makes a possible $ 9.2 billion worth of investment activity, on average, on a daily basis. More than 57,000 traders use the broker’s online platform worldwide. Along with CFDs, Pepperstone also offers Forex, commodities, cryptocurrencies and indices to trade.
Main features
Deep liquidity - Multiple sources of liquidity provide generous spreads
Wide range of assets - Forex, indices, stocks, cryptocurrency and commodities
MetaTrader - Access to MT4 and MT5
Social trading - Copy the trades of successful traders
Secure investment platform - Protects advanced security technology from fraudulent activities
Demo account - Commodities with virtual funds to practice
Pros and cons
AdvantagesWeaknesses
The spread is narrow
Fast trade execution
There are many tradable assets
Intuitively designed interface
MT4
MT5
Social Trading
Great customer support
Secure online platform
Secure withdrawal / deposit
There are no traders in the US
Demo accounts are limited
Commissions will be charged
Minimum account deposit : AUD $ 200
Maximum action : 1: 500
Pepperstone is regulated under the laws of Australia and by the representative body of that country. Also, the firm complies with all applicable international laws relating to the business activities of the financial services firm. In addition, Pepperstone complies with the policies and regulations of any authoritative international regulatory bodies that apply to the firm’s services provided to clients.
eToro
Founded in 2007, eToro has grown to become one of the most popular brokers in the industry. Millions of entrepreneurs now use the platform in more than 140 countries around the world. The platform provides access to cryptocurrencies, stocks, commodities and Forex. The broker is known for the trade copy feature that allows you to copy the goods of other successful traders. Also, eToro offers quality educational resources to improve market knowledge.
Main features
Intuitive software - The Interface is designed to be as user -friendly as possible
Wide range of assets - Stocks, cryptocurrencies, commodities and Forex
Social trading - Copy successful traders or give signals to others
Business education - Take advantage of many educational resources
Responsive customer service - Representatives are trained and knowledgeable
Strong security measures - Strict safety protocols and advanced security technology
Pros and cons
AdvantagesWeaknesses
Abundant spread of pricing
Social trading
Fast trade execution
Daily market analysis
Educational resources
Respond to customer service
There are no hidden fees
There are many tradable assets
Secure online platform
Secure withdrawal / deposit
US - Cryptocurrencies only
Overnight fees
Minimum account deposit : Varies from $ 50 to $ 10,000 depending on your location
Maximum action : 30: 1
EToro (Europe) is regulated by the Cyprus Securities Exchange Commission (CySEC) while eToro (UK) is regulated by the Financial Conduct Authority (FCA). The firm complies with applicable UK laws
The Australian Securities and Investments Commission ( ASIC ) regulates eToro AUS. The broker complies with all relevant Australian laws. Also, eToro complies with all applicable international policies and regulations.
Seriously
Traders gain access to over 270 tradable instruments using Investous. The platform provides four different asset classes. Traders can choose to trade Forex, indices, stocks or commodities. Investous also provides great educational resources to help enhance your investment results. This includes video tutorials, ebooks and advanced market analysis. Both mobile and web-based platform options are available for investors with Investous. Also, the broker platform is compatible with MT4.
Read the Investous Review Here
Main features
User -friendly software - The software interface is intuitively designed
Extensive menu of assets - Forex, stocks, commodities, indices and commodities
Educational resources- Video tutorials, advanced market analysis, e-books and more
MetaTrader - Compatible with MT4
Customer service - Maximum support from responsive representatives
Secure online platform - Advanced security technology and strong safety protocols
Demo account - Try the platform with virtual funds without risk
Pros and cons
AdvantagesWeaknesses
The spread is narrow
Powerful software interface
Fast trade execution
Excellent customer service
Quality educational resources
There is no deposit fee
MetaTrader (MT4) Compatibility
There are many tradable assets
Demo account
Inactive charges are charged
Some withdrawal fees
There are no traders in the US
Account minimum : May vary - Primary Account is € 250
Maximum Leverage : 1:30 Retail Client / 1: 400 Professional Client
Investous is regulated by the Cyprus Securities and Exchange Commission (CySEC) and the IFSC of Belize. The broker complies with all Belize rules and regulations that apply to the firm’s business activities. The firm also complies with any international laws that may apply.
Mason ford
Headquartered in the UK, Mason Ford is a reputable investment firm offering a wide range of tradable assets. Traders have access to over 300 exchangeable instruments that include Forex, cryptocurrency, commodities, indices and stocks. The broker offers more than one hundred stocks of major companies to trade. Also, Mason Ford is known for its powerful online interface that provides fast trade execution. In addition, Mason Ford provides impeccable customer service.
Read the Mason Ford Review Here
Main features
Many instruments - Access to over 300 tradable markets
Quality software - Intuitively designed user -friendly online interface
Educational resources - Tutorials, news announcements, seminars and more
Excellent customer service - Highly knowledgeable and well -trained representatives
Secure online platform - Advanced security technology and safety protocols
Pros and cons
AdvantagesWeaknesses
There are no transaction costs
There are many tradable assets
Deep liquidity
Intuitive software interface
Fast trade execution
Excellent customer service
Abundant spread
Secure online platform
Secure withdrawal / deposit
Inactive charges
There are no traders in the US
No MetaTrader
Account minimum : $ 5,000
Maximum action : 1: 1000
Mason Ford is regulated by the Australian Securities and Investment Commission (ASIC) and the UK Financial Conduct Authority (FCA). The broker also complies with all applicable UK laws. In addition, the firm complies with all international laws that may be associated with financial business activities.
Profit Trade
As a leading financial security broker, Profit Trade provides investors with the ability to trade Forex, cryptocurrency, stocks, indices and commodities. The broker’s comprehensive online environment empowers beginners and expert traders with features that improve investment results. You will have everything you need to achieve success in the financial markets with Profit Trade. Also, the broker provides users with educational resources designed to provide information and insights about financial markets.
Read the Commodity Revenue Review here
Main features
There are many tradable assets - Forex, commodities, stocks, cryptocurrency and indices
Powerful online platform - Fast trade execution with intuitive software interface
Business education - Webinars, eBooks, investment glossaries and more.
Generous bonus - Traders receive bonuses of up to 200%
Customer service - One of the best support teams in the industry
Security technology - Latest safety protocols and advances in security technology
Demo account - Practice with virtual funds without real risk
Pros and cons
Advantages Weaknesses
Powerful online platform
Outstanding customer service
There are many tradable assets
Advanced security technology
Spreads fixed
Respond to customer service
Useful educational resources
Web / mobile available
Secure withdrawal / deposit
Demo trade account
There are limited cryptocurrencies available
Inactive charges
Withdrawal fee
There are no traders in the US
Minimum account: $ 250
Maximum action : 1: 400
Profit Trade is regulated under the rules and laws of Bulgaria. The broker complies with the laws and regulations of the country of Bulgaria. Also, the firm complies with all international laws and representative bodies that may apply to Profit Trade’s business activities.
TeleTrade
Founded in 1994, TeleTrade provides investors with a powerful online software to trade the financial markets. TeleTrade is now one of the most respected brokers in the industry today. More than one million traders use the TeleTrade platform worldwide to trade the financial markets. TeleTrade provides a large menu of tradable assets. Users can exchange Forex, metals, energy, indices and stocks. Also, MT4, MT5 and MetaTrader CENT can be integrated into the TeleTrade platform.
Read the TeleTrade Review Here
Main features
Quality online platform - The software interface designed to be easy to use
Copy trading - Follow and copy the trading activity of investors to success
There are many available assets - Forex, metals, indices, stocks, energy and cryptocurrency
Demo account - Training online without risking real funds
Customer support - Excellent service from knowledgeable representatives
MetaTrader Compatibility - MT4 and MT5 integration available
Secure online platform - Best in security technology has been implemented
Pros and cons
AdvantagesWeaknesses
Fast trade execution
User-friendly software
Generous bonus
The spread is narrow
MetaTrader compatibility
Benefits of the loyalty program
Excellent customer service
Strong platform security
Secure withdrawal / deposit
Demo account
Deposit / Withdrawal fees
Account minimum : $ 300
Maximum action : 1: 100
TeleTrade is regulated by the laws of Saint Vincent and the Grenadines. Also, TeleTrade complies with all financial regulatory bodies of Saint Vincent and the Grenadines that may have authority over the company’s business practice. In addition, TeleTrade complies with all international financial laws, which may apply.
AvaTrade
Since 2006, when it was founded, AvaTrade has empowered investors with access to the financial markets through a comprehensive investment platform. The broker offers more than 250 tradable assets, including stocks, Forex, cryptocurrency, commodities and indices. The firm has approximately 200,000 registered users worldwide and serves more than 2 million merchants on a monthly basis. AvaTrade is also compatible with MT4, MT5 and mobile platforms. Advanced security technology provides a secure online environment.
Main features
Powerful software - Fast trade execution with comprehensive online tools
Many instruments can be exchanged - Forex, bonds, stocks, indices, cryptocurrency and commodities
Educational resources- Video tutorials, eBooks, articles and daily market analysis
MetaTrader Compatibility - MT4 and MT5 integration available
Customer service - The responsive team is ready to find solutions for merchants
Secure online environment - Implemented advanced security technology and safety measures
Demo account - Practice on the platform using virtual funds
Pros and cons
AdvantagesWeaknesses
All-inclusive online platform
Compatibility of expert advisors
Educational resources
Excellent customer service
Fast trade execution
MetaTrader integration is available
Secure online platform
Secure withdrawal / deposit
Demo account
There are no traders in the US
Account minimum : $ 100
Maximum action : 1: 400
AVA Trade EU Ltd. is regulated by the Central Bank of Ireland and complies with the laws of the Irish jurisdiction. AVA Trade Ltd is regulated by the BVI Financial Services Commission and adheres to Virgin Islands policies. Ava Capital Markets Australia Pty Ltd is regulated by ASIC and complies with the laws of the country of Australia.
Ava Trade Capital Markets Pty is regulated by the South Africa Financial Sector Conduct Authority (FSCA) and complies with the financial laws of the South African country. Ava Trade Japan KK is regulated by the Financial Services Agency of Japan and complies with the policies and regulations of the Japanese government. Ava Trade Middle East Ltd is regulated by the Abu Dhabi Global Markets (ADGM) and Financial Regulatory Services Authority (FRSA) while also complying with the laws of Abu Dhabi’s jurisdiction.
In addition, the firm complies with any international laws that may apply.
24Option
Traders have access to a comprehensive platform with 24option. Novice traders, as well as expert traders, will find 24option’s investment platform powerful and intuitively designed. The online platform offers a variety of asset classes, including Forex, cryptocurrency, stocks, indices and commodities. The broker also offers users access to a variety of educational resources, including ebooks, webinars and market analysis reports. The 24option platform is compatible with MT4. Also, the broker offers quality customer service.
Main features
All -inclusive platform - Comprehensive charting tools with fast trade execution
Educational resources - Webinar reports, eBooks and market analysis
Customer service - Support representatives are trained and knowledgeable
MetaTrader Compatibility - The online platform is compatible with MT4
Secure online platform - Security technology fully protects from fraudulent activities
Demo account - Trade virtual funds to learn about the platform
Pros and cons
Advantages Weaknesses
User -friendly online platform
Educational resources
Demo account available
There is no deposit fee
Strong customer support
Compatible with MT4
Secure online platform
Secure withdrawals / deposits
Demo account available
Inactive charges are charged
There are no traders in the US
Account minimum : € 250
Maximum action : 1:30 Retail Client / 1: 400 Pro Client
24option is regulated by the Belize International Financial Services Commission. The firm also complies with applicable Belize laws. In addition, 24option complies with all applicable international laws and representative bodies.
Stratton Markets
Stratton Markets is one of the financial industry’s most reputable brokers. Traders will have access to a variety of tradable assets, including Forex, cryptocurrency, stocks, commodities and indices. The broker provides excellent customer service to representatives who are always eager to find solutions to any issues that may arise. The platform is easy to use and intuitively designed while providing fast trade execution.
Read the Stratton Markets Review Here
Main features
Quality online platform - Intuitive software interface and fast trade execution
Wide range of assets - Forex, commodities, cryptocurrency, stocks and indices
Excellent customer support - The support team is well trained and courteous
MetaTrader compatible - Traders can integrate MT4 into the platform
Strong security measures - Advanced security technology with strict protocols
Pros and cons
AdvantagesWeaknesses
Intuitive online interface
Comprehensive online platform
Impeccable customer support
Fast trade execution
Abundant spread
Advanced security technology
Secure withdrawals / deposits
Many instruments can be exchanged
There are no educational resources
Account minimum : $ 250
Maximum Leverage : 1: 400
Stratton Markets is regulated by the Cyprus Securities and Exchange Commission. The firm complies with all relevant financial laws of Cyprus. The broker also complies with any international rules and regulations that may apply.
EuropeFX
One of the best brokers available, EuropeFX provides investors with a powerful and all-inclusive online platform. The broker has a variety of tradable assets available, including Forex, indices, commodities, stocks and cryptocurrency. The software interface is designed to be as intuitive and easy to use as possible, allowing even new traders to step into the trading arena with confidence. The broker provides a high-quality entrepreneur education resource that includes ebooks, a video academy and webinars.
Main features
Powerful online platform - Comprehensive software interface with effective charting tools
Large menu of assets - Forex, stocks, indices, cryptocurrency and stocks
MetaTrader Compatibility - MT4 integration available
Superior support - Customer service representatives are responsive and professional
Advanced security measures - Strong safety protocols and security technologies
Demo account - Practice with virtual funds without any risk
Pros and cons
Advantages Weaknesses
Intuitive software interface
MT4 compatible
Educational resources
Excellent customer service
Fast trade execution
Strong security measures
Secure withdrawal / deposit
There are many tradable assets
Demo account available
There are no traders in the US
Account minimum : $ 200
Maximum action: 1: 200
Regulation
EuropeFX is regulated by the Cyprus Securities and Exchange Commission (CySEC). In addition, the firm complies with all applicable laws of the country of Cyprus relating to the business activities of EuropeFX. The broker also complies with any international laws, while complying with the relevant financial bodies.
What are CFDs?
Contracts for differences ( CFDs ) are exactly what they sound like. These are contracts or agreements made in the financial derivatives trading industry. The agreement of a CFD is essential between the trader and a broker where the difference in the opening and closing prices of the position is fixed in cash. This means that there is no real delivery of physical goods, commodities or securities when investing in CFDs.
Many traders prefer CFDs because there are fewer margin requirements to control large positions in the markets. Stock CFDs may have margin requirements of almost 10% while other asset classes may have margin requirements of less than 3%. Margin requirements depend on your particular broker and which type of asset you are exchanging.
CFDs were originally created to hedge against stock market exchange losses in the early 1990s. Initially, only financial firms had access to CFD investment platforms. However, with the advent of technology, there are now many online investment platforms that offer CFD investing. This has empowered the average, day-to-day retail investor with the opportunity to control larger market positions that they cannot control. In a way, CFDs have darkened the playing field for retail traders and individuals.
Despite the many advantages of CFD trading, not all CFD brokers are the same. There are pros and cons to every broker. It’s a good idea to make sure the broker you choose to register is capable of providing you with the trading features and services you want. It depends on your individual financial and investment goals as well as your own tolerance for taking the risk of losing money. It’s important to remember that you shouldn’t risk more than you can afford.
Some brokers may offer more generous spreads while others may have lower fees for deposits and withdrawals. Others may not have any fee for withdrawal but may charge a commission. Many times brokers offer valuable educational resources, but not all of them do so. Therefore, it is important that you thoroughly research the advantages and disadvantages of any broker you are considering registering to start trading CFDs for profit.
How Does CFD Trading Work?
It is important to have a basic understanding of how CFDs work before you actually start investing. It’s a good idea to use an example to illustrate exactly how CFDs will work in a real life situation. The following will describe how the opening and closing of contracts was carried out.
Suppose a stock has a request price of $ 20.50 and you buy 100 shares of that particular stock. The cost to perform the transaction is $ 2,050.00 including fees and commissions. The CFD broker may only require a 5% margin which means you only need $ 102.50 deposited into your account to complete the transaction. Trading on the broker’s terminal will show a loss equal to the spread at the moment of execution of the trade. For example, if the spread is 4 cents, the stock will need to appreciate 4 cents for your position to reach the break-even. This means that the bid price must be at least $ 20.54 to avoid a loss.
Every broker is different and the variables that affect your earning potential can be different. The amount of margin required can be lower or higher, however, CFD brokers require less capital than traditional brokers. The margin value is generally between 3% and 50%. The lower the margin requirement, the less money you will have in your account to control larger market positions. On the other hand, you should be careful because lower margin requirements can result in more risk for large losses.
What is a CFD Trading Platform?
A CFD investment platform simplifies the online execution of contracts for difference. Today, CFD platforms are available to the general public and everyday investors. However, this is not always the case. When CFDs were first created, they were not available to everyone.
CFDs may have been first created in the early 1990s and are believed to have originated from a London financial firm. The company created CFDs to hedge against losses on the London Stock Exchange. Investors favor CFDs because of the smaller margin required and likewise, there is no exchange of actual physical shares. Also, CFDs allow investors to avoid certain taxes.
The rise of online investing in the late 1990s was accompanied by the introduction of CFDs by brokers to retail traders. Suddenly, retail investors bought stocks, indices and commodities that previously had no access. They did this with just a simple click of a mouse on a computer connected to the Internet. Following this advent, the popularity of CFDs has grown rapidly within the investment community.
Australia became the first country to offer CFDs on an exchange in 2007. It was sold for traders because it resulted in better regulation, transparency, fairness and counterparty risk. On the other hand, exchanging CFDs through controlled exchanges is associated with more costs, while the number of available CFDs is limited.
Today, the popularity of CFDs continues to remain strong in the countries where they are allowed. The range of asset classes offered by CFDs is also more diverse nowadays. Retail traders now have convenient access to CFDs for Forex, stocks, treasury, commodities and indices. To establish this, there are also brokers offering cryptocurrency CFDs. Every day, traders now have a wide range of CFD brokers to choose from enabling anyone to diversify their trading portfolios with ease.
Trading Strategies
In CFD investing, you have the option of either going long or short. It is important to understand how both techniques work and when to use them. Also, you will need to understand the assumptions of each strategy up to future market price movements. Below are the details of going to market and going short when making goods.
CFD Long Positions
Going long on CFDs is usually buying market position using CFDs. The goal is to maximize future appreciation of the value of the underlying asset. You are long in an asset market if you believe the price will rise. The price at which you first buy an asset is known as the entry price. The price at which you sell is the exit price. You calculate your income by subtracting the entry price from the exit price.
Here is an example of lasting in a security. Suppose you buy 100 shares of a stock worth $ 2.00 with a required margin of 10%. This means you need to have $ 20 in your brokerage account to hold a market position worth $ 200. If the stock price rises to $ 3.00 in the next two days, you will have a position worth $ 300. .
Of course, in real life, you will also have to factor in any fees, commissions or spreads charged by the broker. This will affect the overall profit of the trade. How much will be charged will vary between each broker and which asset class you are exchanging.
CFD Short Positions
Opening a short CFD investment position is essentially the opposite of long. This is known as short selling , which is essentially speculation on the future decline in the price of the security. As going long, in shortening CFD investing, you will only need enough funds to cover the broker’s margin requirement for that particular asset.
When you are short selling, the profit earned is equal to the exit price deducted from the entry price. For example, if you decide to shorten 100 shares of a stock at an entry price of $ 10 with a required margin of 10%, you will need to have $ 100 of capital deposited into your brokerage account to hold a position worth $ 1,000. If over the next two days, the stock price drops to $ 5, you are holding a position worth $ 1,500.
Also, just like going long, when you are short selling, you will have to factor in the costs of making the goods. The broker may charge fees, commissions and a spread. This can be reduced to your total income.
CFD Trading Pros and Cons
There are various pros and cons to CFD investing. You will need to know the advantages of CFDs as well as the pitfalls associated with them before deciding to invest in CFDs. The more versatile, the better you understand the risks involved. This will allow you to take actions to mitigate the risks while also maximizing your earned income. The following details the various advantages and disadvantages of investing in CFDs.
Advantages
There are many advantages to investing in CFDs as opposed to using traditional brokers. One of these advantages is that with CFDs, you are not required to have more deposit capital. For example, in a traditional broker, if an asset is worth $ 100 and you have $ 200, you can only buy two shares. On the other hand, in CFDs, assuming a 10% margin requirement, with $ 200, you can buy 20 shares.
Another advantage to trading CFDs is potential tax benefits. Depending on the country you live in, with CFD transactions you are able to avoid certain taxes levied on commodities by traditional brokers. Also, you are entitled to collect dividends from the shares despite not actually owning the shares directly. Importantly, with a fraction of the common capital required at a traditional broker, you get the benefits of handling shares and collecting dividends.
Using CFDs to trade cryptocurrencies has various technical advantages over directing cryptocurrency exchanges. Usually, you will need to create a wallet to store cryptocurrencies. You also need to deal with the wallet to also make transfers to participate in the cryptocurrency markets. However, with CFDs, you avoid all of these technical requirements to trade cryptocurrencies. Also, it is cheaper to trade crypto CFDs than trading it in actual cryptos.
Weaknesses
Despite all the powerful advantages of investing in CFDs, there are some disadvantages that you should consider. One disadvantage is the increased risk in CFDs because you access larger market positions. Although CFDs provide more potential for profit with a smaller amount of capital required, they also have more potential for large losses if the market acts against you.
Due to the increased market strength of CFDs, many traders are starting to become overly greedy because of the greater profit potential. Therefore, it is important to maintain a proper investment strategy with proper risk management to fit your own individual risk profile. Using the beats and stops size of your positions is important. Also, like any type of trading, CFD traders need to be more careful during times of volatility in the markets.