Brokerchooser blog - CFDs


CFD trading tips

CFD trading tips
| Gergely Korpos Gergely Korpos

CFDs are exciting financial instruments that can help you achieve your invesment objectives and give you an opportunity to test your investment skills in exotic markets. However, they don't come without risks. In the following CFD trading tips article we explain why guaranteed stop-loss orders are must-haves and why you should limit your leverage. We only recommend CFD trading to experienced investors, and if you're a rookie, it's an absolute must that you read our CFD trading tips.

CFD trading, in a nutshell is using contracts which you can invest in to make a bet whether a particular financial asset, like an equity or commodity, will increase or decrease in value – without actually investing in the financial asset. For example, when you want to bet on the increase of the oil price, you chose a CFD, which has its price change linked to the price change of a crude oil contract. When the price of the oil increases one percent, the price of the CFD will also increase one percent, so you will gain the price difference of the crude oil. Hence the name: Contract for Difference.

CFDs started out as a type of leveraged equity swap in the 1990s in London, primarily used by hedge funds. In the late 1990s CFDs appeared on the retail market as well, while the 2000s and 2010s saw the first exchange traded and centrally cleared CFDs – so things really picked up. The FCA estimated that the number of UK CFD brokers doubled between 2010-16 and UK clients held £3.5bn in their accounts in total. Of course, the picture is not completely rosy. Because of the risks inherent in these contracts, regulators are increasingly strict with CFD providers. The Australian Exchange closed its CFD exchange in 2014, while in some countries, such as the United States or Belgium, CFD trading is outright banned.

Ok, but some of you might ask, what on earth is a CFD trading? Don't worry, we will let you know.


ESMA CFD Intervention: New EU regulations of forex and CFD trading

ESMA CFD Intervention: New EU regulations of forex and CFD trading
| Robert Soós Robert Soós

Following a more than a year long preparatory work, a regulatory guideline that is often referred to as the ESMA CFD intervention got recently published. These are new regulatory measures affecting online brokerages operating in the European Union and investors using these brokers as a vehicle to achieve their investment goals.

The press release headline of the supranational regulator is more than telling:

ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors - see the full release here.

Continue reading to get answers to the most important questions related to this 2018 ESMA CFD intervention.


Best online brokers in 2018

Best online brokers in 2018
| Gergely Korpos Gergely Korpos

To make sure you choose the best online broker for your needs we went ahead and did a thorough research for you. Without such research picking a broker based on ad-hoc preferences is just a guess game. The evaluation criteria contain but is not limited to fees, funding process, withdrawal methods, offered products, ease of account opening and the trading platforms each offer.

After testing 16 online brokers, 6 brokers made it to the top which we highly recommend for you. This selection contains Brokerchooser's four highest-ranked stockbrokers, the highest-ranked forex broker, and the highest-ranked CFD broker.

And now, without further ado… The top 6 picks for the best online brokers in 2018:

Broker Description From which regions you can open an account?
Saxo Bank Danish investment bank Worldwide except for the US
Interactive Brokers Leading discount broker from the US Worldwide
Strateo Swiss online broker Europe
DEGIRO Upcoming Dutch discount broker Europe
Pepperstone Australian discount forex broker Worldwide except for the US
IG Leading CFD broker from the UK Worldwide except for the US

Regarding the selected brokers, only Interactive Brokers is available for US clients. 

If you want to check precisely which broker is available from your country, visit our country selector.

  Saxo Bank Interactive Brokers Strateo DEGIRO Pepperstone IG
Fee structure ★★★★ ★★★★★ ★★★ ★★★★★ ★★★★ ★★
Funding and withdrawal ★★★★★ ★★ ★★★★ ★★★ ★★★★★ ★★★★★
Account opening ★★★ ★★★★ ★★ ★★★★ ★★★★★ ★★★
Product portfolio ★★★★★ ★★★★★ ★★★★★ ★★★★★ ★★ ★★
Trading platform (web) ★★★★ ★★ ★★★★ ★★★★ ★★★★★ ★★★★★
Overall rating 4.8 4.5 4.4 4.3 4.3 4.1

 

All selected broker's portfolio contains CFD products. They are complex and very risky, thus not suitable for everyone. You can easily lose all of your invested money. If you don't have clue what a CFD is, start by reading more about CFD trading. Just a short FYI for US customers: CFD trading is banned in the US.

Not sure which one to choose? For a personal broker recommendation, check out Brokerchooser's broker selection tool. You input your preferences and you get a personal recommendation fitting your needs.

Want to see more options? For comparing all the brokers, visit our comparison page.

Best-online-brokers-blogpost

What is an online broker?

Thirty years ago if you wanted to buy a stock, you had to pick up the phone and call your broker, who executed the transaction in return for a commission. Brokers were like in the Wolf of Wall Street movie. They were checking the stocks' prices while holding telephone and shouting.

Everything changed after the internet appeared. Nowadays if you want to buy Apple shares, you open online an account, deposit money, and make the order through the brokers' online platform. These brokers are the online brokers.

Online brokers help you buying and selling securities, like stocks. After making your order, the online broker executes it immediately. Everything is online.


Best discount brokers in 2018

Best discount brokers in 2018
| Gergely Korpos Gergely Korpos

Choose the best discount broker, we did the research for you. We tested in-depth only quality online brokers available for European and US customers. We evaluated fees, funding, withdrawal, product portfolios, account opening, trading platforms and more.

As a result, we filtered out the online brokers with the lowest fees and the highest quality.  

Our top eight picks for the best discount brokers in 2018 are:

Broker Description From which regions you can open an account?
Interactive Brokers Leading discount broker from the US Worldwide
DEGIRO Upcoming Dutch discount broker Europe
tastyworks Upcoming US low commission option broker Europe, US, Latin America
Tradestation Large discount broker from the US Worldwide
Pepperstone Australian discount forex broker Worldwide except for the US
Oanda US discount forex broker Worldwide
eToro CFD broker specialized in social trading Worldwide except for the US
Markets.com Discount CFD broker Worldwide except for the US

Head to our country selector to get detailed info on which broker is available in your country.

We have created three online broker categories: discount stockbrokers, discount forex brokers and discount CFD brokers. The three groups substantially differ in several areas, like fee structure, so it makes sense to create the three peer groups. This categorization will also help you to easily find a cheap stockbroker, forex broker or CFD broker.

The best discount broker for beginners is DEGIRO. It has an easy-to-use trading platform and very low fees.

 

BEST DISCOUNT STOCKBROKERS

  Interactive Brokers DEGIRO tastyworks Tradestation
Fee structure ★★★★★ ★★★★★ ★★★★★ ★★★★
Funding and withdrawal ★★ ★★★ ★★ ★★★
Account opening ★★★★ ★★★★ ★★★★
Product portfolio ★★★★★ ★★★★★ ★★ ★★★
Trading platform (web) ★★ ★★★★ ★★★★ ★★★
Overall rating 4.5 4.3 4.0 3.8

 

BEST DISCOUNT FOREX BROKERS

  Pepperstone Oanda
Fee structure ★★★★ ★★★★★
Funding and withdrawal ★★★★★ ★★★★
Account opening ★★★★★ ★★★★★
Product portfolio ★★ ★★
Trading platform (web) ★★★★★ ★★★★
Overall rating 4.3 4.1

 

BEST DISCOUNT CFD BROKERS

  Markets.com eToro
Fee structure ★★★★★ ★★★★
Funding and withdrawal ★★★★★ ★★★★
Account opening ★★★★★ ★★★★
Product portfolio
Trading platform (web) ★★★ ★★★
Overall rating 4.1 3.9

CFDs are complex and very risky products, thus not suitable for everyone. You can easily lose all of your invested money. Start by reading more about CFD trading if you don't have a clue what a CFD is. Just a short FYI for US customers: CFD trading is banned in the US.

Not sure which one to choose? For a personal broker recommendation, check out Brokerchooser's broker selection tool. You input your preferences and you get a personal recommendation fitting your needs.

Want to see more options? For comparing all the brokers, visit our comparison page.

What is a discount broker?

A discount broker by definition is a brokerage company that executes your buy and sell orders at a low trading fee. Discount broker's fees can be lower since they don't provide extra services like full-.service brokers. These extra services include research, personal investment advice, tax planning or robo-advisory.

Discount brokers were appearing with the wider penetration of the internet and the online broker services. Brokerage companies started to provide their service online and fully automatized. This was the rise of the online trading platforms. An online trading platform is basically a website, where you can insert your own orders and you get only a customer support, no investment advice. 

The distance between the full-service brokers and discount brokers has been narrowing in the last 5-10 years. Discount brokers started to provide extra services as well, like research, while full-service brokers started to lower their fees.The full brokerage and wealth management industry is under a fee pressure thanks to the more and more cost-effective online broker companies.

Nowadays, the new discount brokers are the free-trade brokers. These provide commission-free trading and charge an extra fee for ancillary services, like after hour trading. The biggest free-trade online broker in the US is Robinhood. In the UK, Freetrade is planning to launch its trading app this year. Stay tuned, we will come out with a Robinhood and Freetrade broker reviews soon.


Best CFD brokers in 2018 - Go with secure brokers

Best CFD brokers in 2018 - Go with secure brokers
| Gergely Korpos Gergely Korpos

Choose the best CFD broker, we did the research for you. We tested in-depth 16 quality online brokers available for Europeans. We evaluated fees, funding, withdrawal, product portfolios, account opening, trading platforms and more to find the best CFD trading platforms for your needs.

We have created two categories for CFD trading brokers, stockbrokers offering CFDs and CFD-only brokers. The two groups substantially differ in several areas, like fee structure, so it makes sense to create the two peer groups.

Our top eight picks for the best CFD brokers in 2018 are:

Stockbrokers offering CFDs

  Saxo Bank Interactive B. DEGIRO Comdirect
Fee structure ★★★★ ★★★★★ ★★★★★
Funding and withdrawal ★★★★★ ★★ ★★★ ★★★★
CFD product portfolio ★★★★★ ★★★★★ ★★★★ ★★★★
Account opening ★★★ ★★★★ ★★★★ ★★★
Trading platform (web) ★★★★ ★★ ★★★★ ★★★★
Overall rating 4.8 4.5 4.3 4.1

CFD-only brokers

  • IG, one of the biggest CFD brokers in the world
  • Markets.com, a CFD broker with a gambling parent
  • Plus500, a CFD broker listed on the London Stock Exchange section AIM
  • eToro, a social trading platform
  IG Markets.com Plus500 eToro*
Fee structure ★★ ★★★★★ ★★★★ ★★★★
Funding and withdrawal ★★★★★ ★★★★★ ★★★★★ ★★★★
CFD product portfolio ★★★★★ ★★★ ★★★ ★★★
Account opening ★★★ ★★★★★ ★★★★★ ★★★★
Trading platform (web) ★★★★★ ★★★ ★★★★ ★★★
Overall rating 4.1 4.1 4.0 3.9

*Clients from the UK and some other countries can trade with stocks as well

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money. If you don't have a clue what a CFD is, start by reading more about CFD trading.

Not sure which one to choose? For a personal broker recommendation, check out Brokerchooser's broker selection tool. You input your preferences and you get a personal recommendation fitting your needs. Just a short FYI for US customers: CFD trading is banned in the US.

Want to see more options? For comparing all the brokers, visit our comparison page.

Visit comparison page


How to invest in Bitcoin, Bitcoin CFDs, Bitcoin ETNs or Bitcoin Futures

How to invest in Bitcoin, Bitcoin CFDs, Bitcoin ETNs or Bitcoin Futures
| Tibor Bedő Tibor Bedő

Did you know crypto exchanges are not the only way to get cryptos? They might not even be the best for you. They can be expensive and unsecure. In this article you will learn about crypto exchange alternatives and get introduced to established and regulated financial providers offering crypto investments.

At the end of the article you will know how to invest in Bitcoin, Bitcoin CFD, Bitcoin ETN or Bitcoin Futures.

How do we know this? We analyse financial institutions and help people to find the best stockbrokers. We understand brokerage and know the financial industry well. In the last months, readers asked us constantly how to invest in Bitcoins and cryptos. We looked into it, and compiled an easy to understand introduction.

As cryptos are extra risky, here is an extra risk warning. Only invest money in cryptos you are prepared to fully lose. Their price fluctuates like crazy. If my mom asked about Bitcoin, I would tell her not to touch it.

Still interested, ok, let’s get to it then. I reckon you want to buy Bitcoin from a cheap and secure source. Right? But what does this mean? Let’s break it down.

Buying Bitcoin means exchanging your Euro or Dollar to Bitcoin.

Cheap means depositing money to the exchange, doing the exchange and withdrawing your money doesn’t cost you a lot.

Secure is also important. When finance guys talk about security they mean:

  • The service provider is not a fraud, because it is
    • regulated, meaning they proved their capability to set up the business and run it.
    • audited, checked by an independent auditor
    • transparent, providing financial data, ownership, etc. to the public
  • The service provider can manage itself, because it has good
    • risk management (they are prepared to deliver when things go south)
    • operation (e.g. accessing the interface, giving orders, etc. work)
    • IT security from external attacks
  • Investors are compensated by the state if the service providers defaults. This is the so called investor protection. Note, you will not get compensated if your investment price drops. You will get compensated if your broker was a fraud or it defaulted.

It turns out, crypto exchanges are bad at both being cheap and secure. So, what are the alternatives? There are three other ways how to invest in Bitcoins, not known by many

  1. Going long in a Bitcoin CFDs, abbreviation for Contract for Differences
  2. Investing in passive funds, namely ETNs covering Bitcoins
  3. Going long on Bitcoin Futures

Let’s analyse them one by one. We will be fair with crypto exchanges and give them a run for their money. And to be fair, the alternatives are not perfect either. What should you do? As a step one, understand the differences. Here we go.


Best CFD brokers in 2017 - Go with secure brokers

Best CFD brokers in 2017 - Go with secure brokers
| Tibor Bedő Tibor Bedő

2017 has seen a major shift in CFD broker regulations, placing emphasis on user security. We at Brokerchooser have long argued for prioritizing security over price when selecting the best CFD broker.

In our 2017 review, we unveil the best CFD brokers and also provide a CFD broker 101 for investors.