How to choose a CFD broker

A CFD broker is a financial services provider that allows the trading of products called CFDs. CFDs are a type of derivative product that allows you to speculate on the price movements of various assets, such as stocks, commodities, currencies, and indices, without actually owning them.

CFD brokers provide a platform for traders to access financial markets and trade CFDs online. They typically offer a range of trading tools and services, including trading platforms, educational resources, and customer support.

While the main focus of CFD brokers is CFDs, many of them also offer other types of products for trading. Most usually also allow forex trading, and some include products like stocks, options or cryptocurrencies in their offering as well.

We at BrokerChooser cover all the major, regulated CFD brokers on the market. You can check them out, including what other products they offer, by using our handy Compare Brokers tool.

CFDs offer several advantages and options, such as leverage, flexibility, shorting and access to a wide range of markets. However, they also involve risks, such as market volatility, margin calls, and counterparty risk. Read more about CFDs and their pros and cons in our main article on CFDs.

Thus, you need to make sure you find a reliable and reputable CFD broker that best fits your goals and trading style. How to start?

Here are some key factors to consider when choosing a CFD broker:

• Regulation and investor protection: When choosing a CFD broker, it’s essential to consider the safety of your funds and the level of investor protection provided. A good CFD broker should be licensed and regulated by reputable financial authorities. Look for a broker that is overseen by well-known regulators such as the Financial Conduct Authority (FCA) in the UK, or the Australian Securities and Investments Commission (ASIC) in Australia. This will ensure that the broker operates within strict regulatory boundaries and has measures in place to protect your funds. Read more about investor protection.

• Range of markets and CFD products available: CFDs can be traded on various assets, such as forex, stocks, commodities, and cryptocurrencies. A good CFD broker should offer a wide selection of markets and instruments to suit different trading strategies and preferences. Choose a broker that offers a wide range of the CFDs you are planning to trade. This will allow you to diversify your portfolio and take advantage of different market conditions.

• Trading fees: When choosing a CFD broker, it’s important to consider the trading fees. This includes spreads, commissions, and overnight financing charges. A good CFD broker should offer competitive and transparent pricing. However, don’t make your decision based solely on price. Competitive fees are important but a low-fee broker may not offer the best overall trading experience. Learn more about CFD trading fees like spreads and overnight charges or brokerage charges in general.

• Trading platform features and usability: The trading platform is where you will be placing your trades, so it's important to choose a broker with a high-quality, user-friendly and reliable trading platform that offers a wide range of tools and features. Make sure the platform is available on your preferred device, such as desktop or mobile. In addition to basic tools like charts and indicators, some brokers may also offer additional services, such as news, analysis, and education. Some of the more popular platforms are MetaTrader 4 (MT4), MetaTrader 5 (MT5), cTrader, and WebTrader.

• Negative balance protection: CFDs are high-risk instruments, due to the ability to use leverage, which can multiply your profits, but also your losses. This means that in theory you could lose even more money than is on your account. Negative balance protection prevents this from happening. This means that if your account balance falls below zero, the broker will absorb the losses, preventing you from owing more money than you deposited. Not all brokers offer this protection, so it's important to check before you start trading. Find out more about negative balance protection.

In addition to the above factors, you may want to consider other aspects, such as withdrawal fees and minimum deposit requirements when choosing a CFD broker.

Also, don’t forget that you can have an account at more than one CFD broker! So it’s not the end of the world if you don’t find that one special broker that fulfills all your needs: open several accounts, and use each one what it is best for (e.g. one for trading US stock CFDs, the other for European index CFDs). Most major brokers today have quick and easy account opening and a smooth deposit process, so it's not a big hassle.

Feeling overwhelmed with all of the above? Don’t want to spend hours upon hours researching to find the best CFD broker? No worries, you are in the right place!

Fortunately, our expert team has done all the work for you, and reviewed all the major brokers based on BrokerChooser's unique methodology.

As a result, we have compiled a list of brokers that offer the best CFD trading conditions overall: check our top recommendations of the best CFD brokers in the world available in your country.