Top 10 Best CFD Brokers 2023
In the dynamic environment of online trading, there are a variety of tools to help investors get started. CFDs are particularly noteworthy here. For those who want to conquer the financial market without trading directly on the stock exchange, “the best CFD brokers” are essential.
But what constitutes “the best CFD brokers”? In simple terms, CFD brokers are financial intermediaries that allow trading CFDs on a wide variety of market values. Before jumping into the trading water, the decisive question arises: Which are actually “the best CFD brokers” for me? Which one offers the most advantageous trading conditions? And which ones are particularly beginner-friendly?
In order to make a well-founded decision, it is important to look at CFD trading in detail. This ranges from the basic question “What are CFDs?” to aspects of a broker’s security and reliability.
The 10 best CFD brokers in 2023
2023 is all about innovation and adaptability in the world of online trading. “The best CFD brokers” this year have proven to be particularly resilient and forward-thinking. With rapid changes in various financial sectors and a growing pool of investment opportunities, brokers need to continuously update their offerings. Not every broker, however, has the ability to adapt to these dynamic demands.
In the following list, we focus exclusively on those platforms that impressed in 2023 with first-class offers for online trading beginners.
The trust in “the best CFD brokers” is underpinned by certifications from renowned international financial supervisory authorities. If you choose one of these platforms, you can be sure that your investor rights are safeguarded and protected by state-of-the-art IT security systems.
One aspect that should not be underestimated is security. Unfortunately, cases of fraud are not uncommon in the CFD broker industry. For trading novices, it is therefore essential to start with a regulated and reputable broker. A good tip for beginners: start your trading career with a demo account.
So which are the 10 best CFD brokers in 2023?
No. 1: ActivTrades – A Titan in the CFD Trading Space
ActivTrades has established itself as one of the frontrunners in the CFD trading space. With an impressive market presence and a broad range of products, it clearly stands out from the competition. The broker scores points not only for its wide range of trading options, but also for its strong commitment to customer support and education.
ActivTrades’ focus is clearly on providing a first-class trading experience. Using the latest technology and trading platforms, it offers traders accurate and fast order execution. This is complemented by competitive spreads and a range of tools and resources that are beneficial to both novice and experienced traders.
Another highlight is ActivTrades’ robust education platform. With a variety of webinars, tutorials and market analysis, it helps traders to constantly expand their skills and adapt to ever-changing market conditions.
For those looking for a reliable and powerful CFD broker that values customer satisfaction and education, ActivTrades is undoubtedly one of the top choices in the industry. ActivTrades Experience
No. 2: eToro – Pioneer in Social Trading
eToro has established itself as one of the leading names in the world of social trading and copy trading. This broker stands out in particular for its excellent structuring and the possibility of identifying the most successful traders and automatically tracking their trades in one’s own account.
eToro’s offering includes trading in contracts for difference in areas such as shares, currency pairs, indices, commodities, ETFs and cryptocurrencies. Traders benefit from variable spreads and a maximum leverage of 1:30.
Another highlight is the first-class chat support, which is available to traders at all times. In terms of user experience, eToro sets standards thanks to a highly optimised and uniquely designed platform that was developed specifically for social trading.
Not to be forgotten are eToro’s innovative CopyPortfolio options. These are specialised investment portfolios that make it possible to automatically replicate the strategies of top traders.
For anyone looking to move into the field of social trading and copy trading, eToro is undoubtedly one of the first places to consider.
No. 3: Capital.com – Versatile CFD broker for every trader level
Capital.com stands out as an outstanding CFD broker that offers private investors a user-friendly platform. It provides access to a wide range of CFD markets, combined with powerful analysis tools and a reliable support service.
A unique selling point of this broker is the guaranteed stop losses. A feature that is rare with many CFD brokers. These guarantee that stops are executed at the specified prices and eliminate the risk of slippage in times of high market volatility. Particularly noteworthy is the high quality of Capital.com’s CFD platform, which ranks among the top web-based offerings in our tests.
The spreads are extremely competitive: they start at 0.6 pips for EURUSD, 0.4 for the S&P500 index and 0.1 for oil. The portfolio includes an impressive 2400 CFD products, including forex, equities, commodities, indices, cryptocurrencies and ETFs.
For beginners, intermediate and even experienced traders looking for a CFD broker with a top-notch web-based platform, Capital.com is a top choice.
No. 4: Plus500 – A leading provider in CFD trading
Plus500 has established itself as one of the leading CFD brokers in Europe and stands for ease of use and instant access. This broker gives traders access to a diverse range of contracts for difference (CFDs), whether in indices, forex, commodities, cryptocurrencies, equities, options or ETFs. Particularly noteworthy is the commission-free trading and the attractive spreads, which are especially interesting for private traders with small to medium volumes. Another point of trust is the company’s listing on the renowned London Stock Exchange, which signals a high level of investor protection.
A decisive advantage of Plus500 is the quick support, which can be reached via chat as well as email. The platform’s intuitive user interface is another reason why many traders prefer Plus500.
Prospective traders can benefit from the unlimited and free demo account, which can be set up without much effort – just with an email address and a password. No phone number necessary! In addition, the platform is both web-based and optimised for mobile devices, so that trading is also possible on the go without any problems.
For anyone looking for a reliable CFD broker with a user-friendly platform, Plus500 is definitely a top recommendation.
Trade CFDs now at Plus500
82% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
No. 5: AvaTrade – A Giant in CFD Trading with a Versatile Offering
AvaTrade has established itself as a heavyweight in the CFD sector and impresses with the impressive diversity of its portfolio. Traders have access to a plethora of CFD markets, including Forex, stock market indices, ETFs, gold, oil and equity markets. In terms of trading platforms, there are four to choose from: The popular MetaTrader 4 and 5, AvaOptions – a top platform for trading vanilla options – and DupliTrade, which allows trades made by experienced investors to be automatically tracked in your own account.
Another advantage of AvaTrade is its strict regulation by the Irish Central Bank. This allows investors to trade with a considerable leverage of up to 1:400, unlike many other European brokers.
With competitive terms, excellent customer service and a long history in the industry, AvaTrade has positioned itself as a reliable choice for traders of all experience levels.
Trade CFDs now at AvaTrade
76% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
No. 6: Pepperstone – forex trading specialist from Australia
Pepperstone, based in Australia, has positioned itself as an outstanding CFD broker that pays special attention to the foreign exchange market. It scores with excellent spreads and trading conditions in the currency sector. In addition to Forex, Pepperstone offers a comprehensive selection of CFD products in the commodities, indices, metals and energy segments.
Three trading platforms are available: cTrader, MetaTrader 4 and MetaTrader 5, all of which offer specific benefits for different trading styles. Impressive trading conditions include spreads that start as low as 0.0 pips, a maximum leverage of 1:30 for retail investors and up to 1:500 for professional traders. Particularly noteworthy are the special offers for high-frequency traders with a high trading volume. A 24/5 support rounds off the overall package and there is the possibility to follow a variety of trading strategies.
For advanced traders who focus on the Forex market in particular, Pepperstone is a highly recommendable address.
No. 7: Admiral Markets – Metatrader expert with additional features
Admiral Markets, a well-established CFD broker, is characterised by an extremely competitive offer, diverse trading options and a first-class training programme. Its excellent reputation and consistent reliability position it as one of the top brokers in Europe.
A unique selling point of Admiral Markets is the extended range of additional functions for the well-known MetaTrader 4 and 5 platforms. These extensions raise the trading experience to a new level and make it one of the first places to go for all those looking for a MetaTrader-based broker.
The so-called Metatrader Supreme Edition enables the integration of numerous Expert Advisors and individual indicators. In our estimation, this feature is the main reason why many traders prefer Admiral Markets when it comes to MetaTrader platforms.
The broker’s trading offering is broad, from ETFs and pure equities to contracts for difference. This is complemented by first-class support and a wealth of educational resources.
For those looking for a Metatrader broker with advanced features, Admiral Markets is definitely a top recommendation.
No. 8: XM.COM – The beginner-friendly multi-asset CFD broker
XM.COM has established itself as an impressive multi-asset CFD broker in the market. It stands out in particular for its wide range of trading markets, first-class support and particularly low minimum deposit of just €5.
A special feature of XM.COM is its focus on beginners. With a wealth of educational resources and analysis services, it offers newcomers to trading a solid basis for getting started. In addition, traders appreciate the broker’s restrained sales policy, which refrains from aggressive sales strategies.
The convincing trading conditions include spreads that start as low as 0.6 pips on the XM Ultra Low account, a minimum trade size of 0.01 lots and the flexibility to apply various trading strategies, such as hedging and scalping, without restrictions.
For all those who want to take the plunge into CFD trading and start with a minimal investment, XM.COM is a recommendable option.
Trade CFDs on shares now at XM
75.33% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
No. 9: IC Markets – World leader with top service
IC Markets is one of the elite brokers on the global trading floor and enjoys an excellent reputation due to its consistent commitment to quality and customer service. Particularly noteworthy are the first-class conditions for online CFD trading, which has established it as a top provider in the forex sector.
As an ECN broker, IC Markets offers the distinct advantage of direct market access with authentic quotes. Traders can choose between three top-class trading platforms: cTrader, MetaTrader 4 and MetaTrader 5, with IC Markets allowing impressive leverage of up to 1:30 for private investors and up to 1:500 for professionals.
Another plus is the free demo account, which allows a risk-free introduction to trading. For the further education of its customers, IC Markets regularly organises webinars with industry experts and offers extensive market analysis services. The company also scores with reliable customer support, strict security guidelines for fund management and access to a broad CFD product portfolio. With spreads from 0.0 pip on key assets such as the EURUSD currency pair, IC Markets sets standards in the market.
For traders of all levels of experience, IC Market presents itself as
No. 10: NAGA – The New Star in the CFD and Social Trading Universe
Founded in 2015 in Germany, NAGA has established itself with the vision of providing traders worldwide with expanded access to the financial markets and social trading. Within a few years, NAGA has made impressive progress and positioned itself as a versatile CFD broker. Over one million registered accounts testify to the dynamic growth story of this fledgling broker.
With NAGA, traders can trade a range of financial instruments, from foreign exchange and equities to commodities and indices. A special highlight is the NAGA Wallet, which enables trading and secure storage of cryptocurrencies.
In terms of trustworthiness, the listing of its shares on Xetra speaks for NAGA above all. As a listed company, NAGA regularly publishes its financial results, which strengthens investor confidence.
The conditions are extremely competitive. Particularly noteworthy is the free share purchase. Anyone looking for a strictly regulated broker that offers diversification and innovative trading opportunities will find an ideal partner in NAGA.
Trade CFDs with Naga now
What exactly defines a CFD broker?
After getting an overview of the leading CFD brokers, you might ask yourself: what exactly defines a CFD broker? There are ECN brokers on the market as well as those that allow investments via DMA and have a wide range of offerings.
A CFD broker does not focus exclusively on contracts for difference. Many financial intermediaries expand their portfolios to offer their clients a wide range of derivatives to ensure the greatest possible operational flexibility.
It is therefore no wonder that the top CFD brokers 2022 also include those platforms that offer direct market access (such as DMA) or investment opportunities in:
- Turbo warrants, novel derivatives that primarily target short-term speculative trades;
- Options, and not the binary options banned in Europe, but MIBO options (such as those offered by Plus500) or vanilla options from AvaTrade;
- Spread betting, which is banned in Europe but attracts many investors outside the Eurozone.
A CFD broker becomes more attractive the broader and more individual the range of products offered. After all, a broad range of products means that one can react more flexibly to different market opportunities.
For beginners, this offers a valuable insight into different investment opportunities. For professionals, it is essential to be able to exploit the full potential of the financial markets.
What exactly are CFDs?
CFDs, short for Contracts For Difference, are derivative financial instruments that were developed in the 1970s and have since found a permanent place in the financial world. Despite the adjustments and refinements made by the evolution of online trading over time, the basic principle of CFDs remains unchanged.
Unlike direct investments in securities, where the profit is exclusively linked to the increase in value of the asset in question, CFDs offer a more flexible investment option. When buying shares, you only profit if their value rises. If, on the other hand, the share price falls, the value of one’s investment also decreases.
The decisive difference with CFDs is that you do not invest directly in the share or security, but in its price movement. This means that when you buy an Amazon share CFD, you profit proportionally to the percentage increase in the share price as long as the position is open.
With CFDs, you don’t buy the actual asset, which gives you the flexibility to bet not only on rising prices but also on falling prices – a process known as short selling. As an example: If you short a Tesla share CFD and the price of that share falls by 10.3% in one day, you could potentially make a profit of 10.3%, minus the spread. However, it is important to stress that the reverse is equally true. Should the share price rise, you would suffer a loss of the same amount. This means that CFDs, although offering significant profit opportunities, also represent a high risk if the market does not develop as expected.
Characteristics of CFDs
CFDs are known for their specific features that distinguish them from other financial instruments. Three of these key features are:
- Financial leverage
- Speculative nature
- Swap fees
1. financial leverage: this instrument extends the buying power of an investor. Leverage allows you to take a larger market position with a smaller capital investment. For example: investing in an Amazon stock CFD with a leverage of 1:5, you could open a position worth €250 with only €50. This means that a 10% change in Amazon’s share price will be applied to the leveraged amount of €250 rather than your original €50, which brings the potential for higher profits but also higher losses.
2. speculative nature: as discussed earlier, CFDs allow you to invest in price movements rather than the actual asset. Therefore, one can profit from both rising and falling prices.
3. swap fees: CFDs are subject to what is known as overnight swap. This is a fee that is incurred when a position remains open beyond the close of trading in the relevant market. For example, if you hold a position in an Amazon stock CFD and it remains open beyond 10pm (German time) because Amazon is listed on NASDAQ, a swap fee will be charged. During the weekend, when the markets are closed from Friday to Monday, this fee is even tripled to compensate for the non-trading time.
CFD Brokers: Criteria for Your Decision
The specifics of CFDs offer a clear insight into the criteria that should be considered when choosing a CFD broker. The best platforms for 2023 are usually characterised by a diverse offering that includes several financial instruments.
When considering the key features of CFDs, you should pay particular attention to the following aspects:
1. leverage: the leverage effect not only magnifies potential gains but also potential losses. This makes it risky in inexperienced hands. ESMA has therefore stipulated in its 2018 MIFID II Directive that European brokers must comply with certain leverage limits. These vary depending on the market and are a maximum of 1:30, so investors who choose ESMA-regulated CFD brokers are better protected in terms of the risk associated with CFDs.
2. speculative nature: The possibility of betting on falling prices (so-called short selling) offers more operational freedom, but also entails risks. While with long positions losses are limited to the amount invested (e.g. a maximum of €100 when buying Amazon shares), losses with short positions can theoretically be unlimited, as an asset can rise indefinitely. So if you invest €100 in the falling price of Amazon and this price rises disproportionately, you could lose more than your original investment. However, MIFID II provides protection against negative balances here.
3. swap rates (overnight fees): As CFDs usually involve overnight fees, they are most suitable for day traders or investors with a short-term investment horizon. For positions that remain open for months, such fees could eat up any profits and even lead to losses. Therefore, it is not surprising that many of the best CFD brokers for 2023 (such as eToro) also allow DMA investments, which are better suited for long-term strategies.
Trading via CFD brokers: Interest structures and fees
A significant advantage of trading with online CFD brokers over traditional trading platforms, such as banks, is the saving on transaction costs. CFD brokers do not generate their revenue by charging fixed commissions for opening and closing trades, regardless of the trading volume.
Instead, their revenue model is based on a system of interest and fees, from which small investors in particular benefit. But what exactly are these fees?
- Spreads: A spread refers to the difference between the buy and sell price, i.e. between the price you pay to open a position and the current price of the underlying asset. Spreads are measured in pips, where a pip is equal to the fifth decimal place of an asset’s value. For example, if you want to buy EUR/USD at a rate of 1.20345 and the actual rate of the asset is 1.20343, the spread is 2 pips.
- Swap Rate (Overnight Fee): As previously discussed, this is a fee that is incurred when a position remains open beyond the closing time of the reference market.
- Commission per lot traded: Such fees are typically charged by ECN brokers who offer trades with extremely low or even zero spreads. These fees are based on the number of lots traded, where one lot represents 100,000 units of the base currency. For example, if you trade EUR/USD, the commission per lot is usually around €4 (for 100,000 units). So if you trade micro lots (1,000 units) with a leverage of 1:30, a fee of €0.04 is charged for each €33 invested.
If you compare this fee and interest system with that of traditional brokers, such as banks and investment funds, the advantages for small and medium-sized investors become immediately apparent.
CFD brokers: trustworthy or not?
A frequently discussed topic in connection with CFD brokers is the question of their trustworthiness and reliability. There are certainly some black sheep in the industry, but it would be a mistake to generalise and consider all CFD brokers dubious.
The real problem lies in differentiation: not every platform that may be considered non-compliant in Europe is actually fraudulent. Often, such assessments stem from certain trading restrictions that apply within the EU.
A CFD broker that has an official licence from a European regulatory authority can generally be considered trustworthy.
The main authority for regulating online trading in Europe is ESMA (European Securities and Markets Authority). All national financial regulators in the EU member states are obliged to ensure that brokers in their jurisdiction comply with the guidelines set by ESMA.
So, for example, if a broker has a licence from the Cypriot CySEC but not from the German BaFin, it is still registered in Germany and subject to BaFin supervision.
For further clarification, here is a list of some important European financial supervisory authorities:
Zuständigkeitsbereich | Aufsichtsbehörde | Vollständiger Name |
---|---|---|
Italy | CONSOB | Nationale Kommission für Unternehmen und die Börse |
United Kingdom | FCA | Financial Conduct AuthorityFinancial Conduct Authority |
Germany | BaFIN | Bundesanstalt für Finanzdienstleistungsaufsicht |
France | AMF | Autorité des marchés financiers |
Spain | CNMV | Commissione Nazionale del Mercato dei Valori |
Swizerland | FINMA | Eidgenössische Finanzmarktaufsichtsbehörde |
Poland | KNF | Finanzaufsichtskommission |
Irland | CBI | Zentralbank von Irland |
Belgium | FSMA | Behörde für Finanzdienstleistungen und Märkte |
Malta | MFSA | Malta Financial Services Authority |
Cyprus | CYSEC | Cyprus Securities and Exchange Commission |
It is important to always do a thorough check and focus on platforms regulated by reputable regulators when choosing a broker. This ensures that you trade in a safe environment and that your capital is protected.
Hedging strategies of CFD brokers
In the financial sector, “hedging” refers to strategies used to minimise potential losses or to protect against the risk of negative price movements.
What exactly does this mean for CFD brokers? A CFD broker uses hedging strategies to protect himself from the financial risks that could arise if his clients suffer losses.
Why is this necessary? Understanding how leverage works is crucial for this. For example, with a leverage of 1:5, a client invests only one-fifth of the actual trade value, while the broker provides the remaining four-fifths. This could be seen as a kind of “loan” from the broker to the client, although technically it is not.
Now, if a client makes an erroneous investment decision, the broker is exposed to the risk of the larger share of the investment. He could thus lose significantly more than he earns through spreads and overnight fees.
The hedging is now done directly through the CFDs. For example, if a client takes a long position in Amazon shares, the broker takes the opposite position to offset the risk. This means: while the client bets on rising prices, the broker bets on falling prices.
This could give the impression that the broker is betting against the client. But it is important to understand that with brokers that are regulated according to the ESMA guidelines, there is no conflict of interest. These brokers profit from trading activities, regardless of market developments.
In summary: Hedging serves to protect the broker from large losses that could arise from leverage and ensures that clients can continue their trading activities without the broker going bankrupt. It is a win-win situation for both parties.
Advantages and disadvantages of CFD brokers
CFD brokers offer investors an interesting opportunity to trade on the financial markets. However, as with any investment opportunity, there are both positive aspects and potential pitfalls.
Advantages of CFD brokers:
- Flexible market access: through CFDs, investors can trade in a variety of assets without actually having to own them. This allows trading with lower capital investment.
- Leverage: The ability to open larger positions through the use of leverage can increase potential profits. At the same time, however, it also means that losses can exceed the initial investment.
- Opportunities in different market conditions: With CFDs, investors can bet on both rising and falling prices and thus take advantage of opportunities in different market conditions.
Disadvantages of CFD brokers:
- Increased risk potential: although leverage offers the potential for higher profits, it also increases the risk of losses. However, in Europe, it is regulated that the CFD account cannot go into the red, so the maximum investors can lose is the capital they have in the account.
- Short-term approach: CFDs are often geared towards short-term trading strategies, which makes them less attractive for long-term investors.
- Additional costs: Holding positions overnight can lead to so-called overnight fees.
- Lack of real ownership rights: When trading CFDs, investors do not acquire real ownership rights to the assets, which means that they do not benefit from dividends, for example.
Conclusion: Trading via CFD brokers can offer both opportunities and risks. It is essential that investors thoroughly inform themselves about the specifics and potential pitfalls of CFD trading before deciding whether this form of investment is suitable for their investment strategy and risk appetite.