We found 11 online brokers that are appropriate for Trading CFD.
In this CFD vs stock guide, we will discuss the two trading tools separately to know in detail what each is and which fits the best to an individual trader's investment strategy.
CFDs are complex instruments contingent on underlying financial markets. CFD is somewhat similar to the trading of shares but with a difference and this is simply a contract for difference and not owning the underlying asset. For traders, it is a great trading alternative.
One of the key differences between CFD trading and trading stocks is that the contracts can be leveraged while trading a security asset cannot. CFD trade is traded on margin. This means only a small portion of capital is required and not the full value of the position.
When you buy stocks, you're purchasing a share of ownership in a company, which includes shareholder benefits like voting rights and potential dividends. In contrast, trading Contracts for Difference (CFDs) does not involve owning the underlying asset; it's a form of derivatives trading where you speculate on the price movement of a stock or other asset.
While stocks offer the potential for dividends and are considered long-term investments, CFDs are typically used for short-term speculation and can involve higher levels of risk due to leverage, which allows traders to amplify their exposure with less capital.
This leverage can significantly increase both potential profits and potential losses. CFD trading also offers more flexibility in that you can easily go short (bet on prices falling) as well as long (bet on prices rising), whereas short selling stocks can be more complicated and restricted.
Features | CFD | Real Stocks |
Own Underlying Assets | No, CFD trading is a deal on price movement between the trader and Stock CFD broker | Yes |
Leveraged Trading | Yes | No |
Risk Level | High | Medium |
Losses | Loss may exceed deposited amount | loss will not exceed invested amount |
Outlay | CFD leverage allows depositing of a fraction of the exposure to the markets | Full amount has to be paid for stocks upfront |
Direct Market Access | Yes | Yes |
Tradable Assets | CFD Stocks, CFD Commodities, CFD Forex, CFD Cryptocurrency, CFD ETF, CFD Indices | Stocks, Indices, ETFs |
Fees | Spreads, Overnight fees | Commission on buy or sale |
Market Hours | 24 hours a day 7 days a week | 24 Hours, 5 days a week |
Shareholder Privilages | No | Yes |
Right To Vote | No | Yes, if you own enough stock in that company |
Dividend Rights | No | Yes, if you own enough stock in that company |
Short Or Long | CFDs can be trades on rising and falling prices on a specific financial instrument with the CFD broker | Trade stocks on rising prices |
Expire Dates | No | No |
Suitable For | Day trading, Short term trading | Long term trading |
Imagine you have $10,000 and are looking to trade NVIDIA stock, which is priced at $122.34 per share. Let's explore two different methods of trading: CFD trading and traditional stock trading. We will discuss what happens if the trade goes in your favor and if it goes against you, as well as the associated risks.
Contracts for Difference (CFDs) allow you to speculate on the price movement of NVIDIA stock without actually owning the shares. With CFD trading, you can use leverage, meaning you only need to put down a fraction of the total trade value.
Both CFD trading and traditional stock trading offer opportunities and risks. CFD trading allows for potentially higher returns through leverage but comes with increased risk and the possibility of margin calls. Traditional stock trading is more straightforward, with ownership of actual shares, but without the amplified gains or losses from leverage.
Suppose NVIDIA stock rises to $130.34:
With leverage, your return on the initial $10,000 investment is 66.69% ($6,669.20 / $10,000).
Suppose NVIDIA stock falls to $114.34:
With leverage, your loss on the initial $10,000 investment is 64.23% ($6,422.80 / $10,000).
With traditional stock trading, you buy actual shares of NVIDIA and own them outright.
Suppose NVIDIA stock rises to $130.34:
Your return on the initial $10,000 investment is 5.59% ($558.54 / $10,000).
Suppose NVIDIA stock falls to $114.34:
Your loss on the initial $10,000 investment is 7.41% ($741.46 / $10,000).
Below are the advantages related to CFDs vs stocks:
Stocks and CFDs (Contracts for Difference) each have specific disadvantages depending on the investor's goals, risk tolerance, and investment strategy. Here's a simple comparison of their drawbacks:
Capital Requirement: Buying stocks generally requires more capital than trading CFDs because you are purchasing the underlying asset outright, rather than trading on margin.
Liquidity Issues: Some stocks, especially those of smaller companies, can have low liquidity which makes them harder to buy or sell without affecting the price.
Market Hours: Stock trading is typically restricted to the open hours of the stock exchange on which the stock is listed, limiting the ability to trade at any time.
Potential Lower Returns in Short Term: Stocks are often viewed as a long-term investment; the short-term price movement can be slow, reducing the potential for quick profits.
High Risk Due to Leverage: While leverage can increase potential returns, it also increases potential losses, even beyond the initial investment.
No Ownership Benefits: Traders of CFDs do not receive dividends or have voting rights since they do not own the underlying asset.
Overnight Financing Costs: Holding CFD positions open overnight can incur financing costs, which can add up, particularly for long-term positions.
Regulatory Risks: CFDs face different regulatory treatment across jurisdictions, and in some countries, they are heavily restricted or even banned.
Leverage tends to add more risk since price moves in the global markets you are conducting trade in will make for a larger margin percentage that you have deposited than if you decided to pay the complete amount.
For instance, if a trader has deposited 10 percent collateral for an equity trade, the share price will have to fall 10 percent for them to lose their full deposit.
However, traders can still add more funds to cover margin calls, thereby providing some flexibility provided it is used carefully. In some cases, the losses occurring on a trade can go beyond the funds that were initially deposited, leading to a high risk of losing money rapidly for the trader.
From the viewpoint of leverage, CFDs (Contracts for Difference) and stocks differ significantly in terms of how they amplify potential returns and risks:
CFDs:
High Leverage: CFDs are traded on margin. This leverage can significantly increase the potential return on investment because it allows traders to gain large exposure to a market with a relatively small amount of capital.
Increased Risk: The same leverage that can amplify profits can also magnify losses. Losses can exceed the initial investment, making it possible for traders to lose more money than they have deposited in their account. This high-risk factor makes it crucial for CFD traders to employ stringent risk management techniques.
Stocks:
Generally No Leverage: When buying stocks outright through a typical brokerage account, you pay the full price of the stock upfront, so there is no leverage involved. This means that the potential loss is limited to the total amount invested.
Margin Accounts: Some investors do use leverage through margin accounts offered by brokerages, which allows them to buy stocks with borrowed money. However, the level of leverage typically available in stock trading is much lower than in CFD trading. For example, a common leverage ratio might be 2:1 for stocks, compared to much higher ratios for CFDs (up to 20:1 or more).
Lower Risk Relative to Leverage: Since the available leverage for stocks is typically lower, the associated risk is also reduced compared to CFDs. This makes stock trading less volatile in terms of the impact of leverage on investment returns and potential losses.
Overall, leverage is a double-edged sword that can either significantly increase profits from small price movements or lead to substantial losses, including those greater than the trader's initial investment, particularly in the case of CFDs. This makes understanding and managing leverage critical when choosing between trading CFDs or investing in stocks.
Here are the key differences between CFDs and stocks. CFDs offer high leverage and flexibility for short-term speculation across various markets without the need to own the underlying assets. This makes them suitable for traders looking for quick, high-return investments and who are comfortable with high risk, including the potential to lose more than their initial investment.
Stocks, on the other hand, are better suited for long-term investments, providing ownership in a company, potential dividends, and typically lower risk compared to CFDs. Stocks are ideal for investors seeking growth over time, stability, and those interested in shareholder rights.
We have conducted extensive research and analysis on over multiple data points on Cfd Vs Stock to present you with a comprehensive guide that can help you find the most suitable Cfd Vs Stock. Below we shortlist what we think are the best CFD brokers after careful consideration and evaluation. We hope this list will assist you in making an informed decision when researching Cfd Vs Stock.
Selecting a reliable and reputable online CFD trading brokerage involves assessing their track record, regulatory status, customer support, processing times, international presence, and language capabilities. Considering these factors, you can make an informed decision and trade CFD more confidently.
Selecting the right online CFD trading brokerage requires careful consideration of several critical factors. Here are some essential points to keep in mind:
Our team have listed brokers that match your criteria for you below. All brokerage data has been summarised into a comparison table. Scroll down.
When choosing a broker for CFD trading, it's essential to compare the different options available to you. Our CFD brokerage comparison table below allows you to compare several important features side by side, making it easier to make an informed choice.
By comparing these essential features, you can choose a CFD broker that best suits your needs and preferences for CFD. Our CFD broker comparison table simplifies the process, allowing you to make a more informed decision.
Here are the top CFD Brokers.
Compare CFD brokers for min deposits, funding, used by, benefits, account types, platforms, and support levels. When searching for a CFD broker, it's crucial to compare several factors to choose the right one for your CFD needs. Our comparison tool allows you to compare the essential features side by side.
All brokers below are CFD brokers. Learn more about what they offer below.
You can scroll left and right on the comparison table below to see more CFD brokers that accept CFD clients.
Broker | IC Markets | Roboforex | eToro | XTB | XM | Pepperstone | AvaTrade | FP Markets | EasyMarkets | SpreadEx | FXPro |
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Regulation | Seychelles Financial Services Authority (FSA) (SD018) | RoboForex Ltd is regulated by the FSC, license 000138/437, reg. number 128.572. RoboForex Ltd, which is an (A category) member of The Financial Commission, also is a participant of its Compensation Fund | FCA (Financial Conduct Authority) eToro (UK) Ltd (FCA reference 583263), eToro (Europe) Ltd CySEC (Cyprus Securities Exchange Commission), ASIC (Australian Securities and Investments Commission) eToro AUS Capital Limited ASIC license 491139, CySec (Cyprus Securities and Exchange Commission under the license 109/10), FSAS (Financial Services Authority Seychelles) eToro (Seychelles) Ltd license SD076 | FCA (Financial Conduct Authority reference 522157), CySEC (Cyprus Securities and Exchange Commission reference 169/12), FSCA (Financial Sector Conduct Authority), XTB AFRICA (PTY) LTD licensed to operate in South Africa, KPWiG (Polish Securities and Exchange Commission), DFSA (Dubai Financial Services Authority), DIFC (Dubai International Financial Center), CNMV (Comisión Nacional del Mercado de Valores), KNF (Komisja Nadzoru Finansowego), IFSC (Belize International Financial Services Commission license number IFSC/60/413/TS/19) | Financial Services Commission (FSC) (000261/4) XM ZA (Pty) Ltd, Cyprus Securities and Exchange Commission (CySEC) (license 120/10) Trading Point of Financial Instruments Ltd, Australian Securities and Investments Commission (ASIC) (number 443670) Trading Point of Financial Instruments Pty Ltd | Financial Conduct Authority (FCA), Australian Securities and Investments Commission (ASIC), Cyprus Securities and Exchange Commission (CySEC), Federal Financial Supervisory Authority (BaFin), Dubai Financial Services Authority (DFSA), Capital Markets Authority of Kenya (CMA), Pepperstone Markets Limited is incorporated in The Bahamas (number 177174 B), Licensed by the Securities Commission of the Bahamas (SCB) number SIA-F217 | Australian Securities and Investments Commission (ASIC) Ava Capital Markets Australia Pty Ltd (406684), South African Financial Sector Conduct Authority (FSCA) Ava Capital Markets Pty Ltd (45984), Financial Services Agency (Japan FSA) Ava Trade Japan K.K. (1662), Financial Futures Association of Japan (FFAJ),, FFAJ, Abu Dhabi Global Markets (ADGM)(190018) Ava Trade Middle East Ltd (190018), Polish Financial Supervision Authority (KNF) AVA Trade EU Ltd, Central Bank of Ireland (C53877) AVA Trade EU Ltd, British Virgin Islands Financial Services Commission (BVI) BVI (SIBA/L/13/1049), Israel Securities Association (ISA) (514666577) ATrade Ltd, Financial Regulatory Services Authority (FRSA) | CySEC (Cyprus Securities and Exchange Commission) (371/18), ASIC AFS (Australian Securities and Investments Commission) (286354), FSP (Financial Sector Conduct Authority in South Africa) (50926), Financial Services Authority Seychelles (FSA) (130) | Cyprus Securities and Exchange Commission (CySEC) (079/07) Easy Forex Trading Ltd, Australian Securities and Investments Commission (ASIC) (Easy Markets Pty Ltd 246566), British Virgin Islands Financial Services Commission (BVI) EF Worldwide Ltd (SIBA/L/20/1135), Financial Sector Conduct Authority South Africa (FSA) EF Worldwide (PTY) Ltd (54018), FSC (Financial Services Commission) (SIBA/L/20/1135), FSCA (Financial Sector Conduct Authority) (54018) | FCA (Financial Conduct Authority) (190941), Gambling Commission (Great Britain) (8835) | FCA (Financial Conduct Authority) (509956), CySEC (Cyprus Securities and Exchange Commission) (078/07), FSCA (Financial Sector Conduct Authority) (45052), SCB (Securities Commission of The Bahamas) (SIA-F184), FSA (Financial Services Authority of Seychelles) (SD120) |
Min Deposit | 200 | 10 | 50 | No minimum deposit | 5 | No minimum deposit | 100 | 100 | 25 | No minimum deposit | 100 |
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Used By | 200,000+ | 730,000+ | 35,000,000+ | 1,000,000+ | 10,000,000+ | 400,000+ | 400,000+ | 200,000+ | 250,000+ | 60,000+ | 7,800,000+ |
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Platforms | MT5, MT4, MetaTrader WebTrader, Mobile Apps, iOS (App Store), Android (Google Play), MetaTrader iPhone/iPad, MetaTrader Android Google Play, MetaTrader Mac, cTrader, cTrader Web, cTrader iPhone/iPad, cTrader iMac, cTrader Android Google Play, cTrader Automate, cTrader Copy Trading, TradingView, Virtual Private Server, Trading Servers, MT4 Advanced Trading Tools, IC Insights, Trading Central | MT4, MT5, R Mobile Trader, R StocksTrader, WebTrader, Mobile Apps, iOS (App Store), Android (Google Play), Windows | eToro Trading App, Mobile Apps, iOS (App Store), Android (Google Play), CopyTrading, Web | MT4, Mirror Trader, Web Trader, Tablet, Mobile Apps, iOS (App Store), Android (Google Play) | MT5, MT5 WebTrader, XM Apple App for iPhone, XM App for Android Google Play, Tablet: MT5 for iPad, MT5 for Android Google Play, XM App for iPad, XM App for iOS (App Store), Android (Google Play), Mobile Apps | MT4, MT5, cTrader,WebTrader, TradingView, Windows, Mobile Apps, iOS (App Store), Android (Google Play) | MT4, MT5, Web Trading, AvaTrade App, AvaOptions, Mac Trading, AvaSocial, Mobile Apps, iOS (App Store), Android (Google Play) | MT4, MT5, TradingView, cTrader, WebTrader, Mobile Trader, Mobile Apps, iOS (App Store), Android (Google Play) | easyMarkets App, Mobile Apps, iOS (App Store), Android (Google Play), Web Platform, TradingView, MT4, MT5 | Web, Mobile Apps, iOS (App Store), Android (Google Play), iPad App, iPhone App, TradingView | MT4, MT5, cTrader, FxPro WebTrader, FxPro Mobile Apps, iOS (App Store), Android (Google Play) |
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Risk Warning | Losses can exceed deposits | Losses can exceed deposits | 51% of retail investor accounts lose money when trading CFDs with this provider. | 75-83% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. | CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.12% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. | 75-95 % of retail investor accounts lose money when trading CFDs | 71% of retail investor accounts lose money when trading CFDs with this provider | Losses can exceed deposits | Your capital is at risk | Losses can exceed deposits | 75.78% of retail investor accounts lose money when trading CFDs and Spread Betting with this provider |
Demo |
IC Markets Demo |
Roboforex Demo |
eToro Demo |
XTB Demo |
XM Demo |
Pepperstone Demo |
AvaTrade Demo |
FP Markets Demo |
easyMarkets Demo |
SpreadEx Demo |
FxPro Demo |
Excluded Countries | US, IR, CA, NZ, JP | AU, BE, BQ, BR, CA, CW, CZ, DE, ES, EE, EU, FM, FR, FI, GW, ID, IR, JP, LR, MP, NL, PF, PL, RU, SE, SJ, SS, SL, SI, TL, TR, DO, US, IT, AT, PT, BG, HR, CY, DK, FL, GR, IE, LV, LT, MT, RO, SK, CH | ZA, ID, IR, KP, BE, CA, JP, SY, TR, IL, BY, AL, MD, MK, RS, GN, CD, SD, SA, ZW, ET, GH, TZ, LY, UG, ZM, BW, RW, TN, SO, NA, TG, SL, LR, GM, DJ, CI, PK, BN, TW, WS, NP, SG, VI, TM, TJ, UZ, LK, TT, HT, MM, BT, MH, MV, MG, MK, KZ, GD, FJ, PT, BB, BM, BS, AG, AI, AW, AX, LB, SV, PY, HN, GT, PR, NI, VG, AN, CN, BZ, DZ, MY, KH, PH, VN, EG, MN, MO, UA, JO, KR, | US, IN, PK, BD, NG , ID, BE, AU | US, CA, IL, IR | AF, AS, AQ, AM, AZ, BY, BE, BZ, BT, BA, BI, CM, CA, CF, TD, CG, CI, ER, GF, PF, GP, GU, GN, GW, GY, HT, VA, IR, IQ, JP, KZ, LB, LR, LY, ML, MQ, YT, MZ, MM, NZ, NI, KP, PS, PR, RE, KN, LC, VC, WS, SO, GS, KR, SS, SD, SR, SY, TJ, TN, TM, TC, US, VU, VG, EH, ES, YE, ZW, ET | BE, BR, KP, NZ, TR, US, CA, SG | US, JP, NZ | US, IL, BC, MB, QC, ON, AF, BY, BI, KH, KY, TD, KM, CG, CU, CD, GQ, ER, FJ, GN, GW, HT, IR, IQ, LA, LY, MZ, MM, NI, KP, PW, PA, RU, SO, SS, SD, SY, TT, TM, VU, VE, YE | US, TR | US, CA, IR |
You can compare CFD Brokers ratings, min deposits what the the broker offers, funding methods, platforms, spread types, customer support options, regulation and account types side by side.
We also have an indepth Top CFD Brokers for 2024 article further below. You can see it now by clicking here
We have listed top CFD brokers below.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
This communication is intended for information and educational purposes only and should not be considered investment advice or investment recommendation. Past performance is not an indication of future results.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
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eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.