Best UK brokers to trade CFDs and maximise your investment potential

CFDs remain one of the most utilised derivative products in the UK, and in fact, it has become even more popular as an alternative to trading real assets. CFDs, or contracts for difference, are derivatives that track the price movement of an underlying asset. Traders do not own the underlying asset, but they can benefit from both falling and rising markets by using these popular financial instruments.

Next, we will analyse the best brokers for trading CFDs.

What is a CFD?

Contracts for difference are derivative financial instruments that track the price movement of an underlying asset. The difference between the price at the opening of the contract and the price at the closing of the contract represents the trader's profit (or loss).

Contracts for Difference (CFDs) emerged in the financial markets a few years ago and have become one of the most sought-after financial derivatives.

Since it is possible to open both buy positions (long position) and sell positions (short position), CFDs give traders the possibility of benefiting from both rising and falling markets. For example, if you expect Facebook stock to rise in value, you open a long (buy position), and close (sell) it after the price increases, and you pocket the difference. However, if you expect the stock to decline in value, you short-sell the stock via CFDs (short position) and close the position after the price declines, and the difference is your profit.

Another advantage is that CFDs are usually available on any type of asset – ranging from currencies (forex) to stock, indices, and commodities. In the UK, CFDs on cryptocurrencies are not available to retail traders.

In addition, CFDs allow leverage. For example, you can use 1:2 leverage to trade Facebook stocks and you decide to invest $500. With this amount and a leverage of 1:2, you can open a position worth $1,000 and pocket all the profit on it, even if you invested only half of the transaction amount.

For some assets, like forex, the maximum leverage allowed is 1:30. However, it's important to note that leverage is risky because it does not only multiply your potential profit but also your potential losses.

Best brokers to trade CFDs in the UK

Next, let's have a look at some of the most popular CFD brokers in the UK right now.

BrokerRegulationSpreadPlatformMore Information
IGFCA, BaFINFrom 0.6 pipsProprietary
ProRealTime
MT4
IG Review
ActivTradesFCA, CSSFFrom 0.5 pipsProprietary
MT4
MT5
ActivTrades Review
Interactive BrokersFCA, SECFrom 0.2 pips ($2 minimum)Trader WorkstationInteractive Brokers Review
XTBFCA, CySECFrom 0.5 pipsProprietaryXTB Review
eToroCySEC, FCA and ASICVariable (+1 pip)ProprietaryeToro Review
Admiral MarketsFCA, CySECFrom 0 pipsMT4
MT5
Admiral Markets Review
OandaFCAFrom 0.8 pipsProprietary
TradingView
MT4
Oanda Review
CMC MarketsFCAFrom 0 pipsProprietary
Metatrader 4
CMC Markets Review
EightcapFCAFrom 0 pipsMT4
MT5
TradingView
Eightcap Review

Next, let's have a closer look at each broker.

IG

Undoubtedly, among the top brokers, we have IG, which is one of the most experienced brokers in the market. It has consistently proven its stability over time and operates under stringent regulations. Additionally, IG offers one of the most diverse ranges of options in the market, with over 17,000 CFDs available.

Perhaps one of its main drawbacks is the complex cost structure. Depending on your chosen account type and asset, you may have to cover different fees. Overall, its spread fees start at a minimum of 0.6 pips.

FeaturesExplanation
RegulatorFCA, BaFIN
Financial AssetsMore than 17,000 CFDs on stocks, forex, indices, bonds and interest rates, ETFs, commodities, and more.
Buy-sell commissionThe minimum spread is 0.6 pips.
PlatformsProprietary
ProRealTime
MT4
LeverageMaximum allowed by FCA (1:30 for forex)

ActivTrades

ActivTrades stands as one of the leading CFD brokers in the market, providing a vast array of products exclusively tradable via CFDs. Traders can access over 50 currency pairs, major global indices, and commodities, as well as over 1,000 stocks and ETFs. The broker also offers a demo account, along with highly competitive spreads and 0% commissions.

FeaturesDefinition
RegulatorFCA, CSSF
Financial assetsMore than 1,000 CFDs on underlying assets such as stocks, forex, commodities, ETFs, and more.
Minimum spread0.6 pips
PlatformsProprietary
MT4
MT5
LeverageMaximum allowed by FCA (1:30 for forex)

Interactive Brokers

Interactive Brokers is an online stock broker that offers a wide variety of financial products, including stocks, options, futures, currencies, and bonds, among others. It has a wide range of assets from more than 150 markets around the world, with a presence in more than 30 countries.

Interactive Brokers is known for its advanced technology and its online trading platform Trader Workstation, which offers fast execution and a plethora of analysis tools to help investors make informed decisions. However, due to the limits imposed on spreads and other features (including the lack of leverage for deposits below $2,000), Interactive Brokers is most recommended for experienced traders.

FeaturesExplanation
RegulatorFCA, SEC
Financial assetsMore than 7,000 CFDs on underlying assets such as stocks and indices.
SpreadsFrom 0.2 pips ($2 minimum)
PlatformsTrader Workstation
LeverageMaximum allowed by FCA (1:30 for forex)

XTB

Another notable CFD broker is XTB. With a selection of over 2,000 CFDs, a leverage of 1:30, and no minimum deposit requirement, XTB stands as one of the prominent CFD brokers in Europe.

It offers a complimentary demo account, and a comprehensive range of tools on its xStation platform (which delivers exceptional performance and an excellent user experience), and operates under robust regulations.

XTB is highly regarded within the investor community due to its extensive collection of high-quality investment content, enabling individuals to gain deeper insights into markets and assets, leading to more informed investment and trading decisions.

FeaturesExplanation
RegulatorFCA, CySEC
Financial assetsMore than 2,000 CFDs on stocks, forex, indices, commodities, and ETFs
SpreadsFrom 0.5 pips
PlatformsxStation 5 (proprietary) and mobile app
LeverageMaximum allowed by FCA (1:30 for forex)

eToro

eToro stands out as a distinctive broker with its unique resemblance to a social network. It is renowned for its copy trading system, enabling traders to interact with their follower communities.

It offers a user-friendly and convenient trading experience. However, it may not excel in terms of execution speed or have the lowest commissions compared to other brokers on this list. Additionally, its customer service may not be as competitive as that of other brokers.

FeaturesExplanation
RegulatorFCA, CySEC, ASIC
Financial assetsMore than 3,000 CFDs on stocks, forex, commodities, indices, and others
SpreadsVariable (+1 pip)
PlatformsProprietary
LeverageMaximum allowed by FCA (1:30 for forex)

 

Admiral Markets

Admiral Markets ranks among the preferred brokers for traders, owing to several reasons. It supports trading with both MetaTrader 4 and 5 platforms and has headquarters not only in the UK (its country of origin) but also in various other countries, enabling it to offer excellent international proximity and customer service. Moreover, it is regulated by the FCA, one of the world's most reputable regulatory bodies, in addition to several other international regulators.

FeaturesExplanation
RegulatorFCA, CySEC
Financial AssetsMore than 8,000 CFDs on forex, indices, stocks, commodities, and more
SpreadFrom 0 pips
PlatformsMT4
MT5
LeverageMaximum allowed by FCA (1:30 for forex)

Oanda

“Oanda, another longstanding player in the industry, specialises in trading CFDs across various financial instruments. It provides a range of trading platforms, including TradingView, which is a popular choice among traders. This aspect greatly benefits Oanda, as many individuals appreciate the convenience of trading and analysing from the same platform. Additionally, Oanda offers an unlimited demo account, which is highly desirable for novice traders.

FeaturesDefinition
RegulatorFCA
Financial assetsOver 120 CFDs on forex, indices, commodities, bonds
Buy-sell commissionFrom 0.8 pips
PlatformsProprietary
TradingView
MT4
LeverageMaximum allowed by FCA (1:30 for forex)

 

CMC Markets

CMC Markets provides access to a wide range of over 12,000 CFDs, including the option for high-frequency trading. Its platform offers a remarkable user experience. In fact, CMC Markets was recognised as the best CFD provider by Capital Radio in both 2019 and 2020. With this extensive selection of CFDs on various financial assets, we have the following options available:

  • More than 10,000 stocks ETFs
  • Over 330 currency pairs
  • Over 120 CFDs on raw materials
  • Over 80 indices
FeaturesExample
RegulatorFCA
Financial assetsMore than 12,000 CFDs on stocks, ETFs, forex, commodities, and indices
SpreadFrom 0 pips
PlatformsProprietary
Metatrader 4
LeverageMaximum allowed by FCA (1:30 for forex)

Eightcap

Eightcap is a global CFD and forex broker that provides access to the most versatile platforms: TradingView, where you can utilise a wide range of technical analysis tools, MetaTrader 4 for forex trading, and MetaTrader 5 for other assets.

Even more conveniently, Eightcap targets both advanced and beginner traders via its two types of accounts: the Raw account that starts from 0 pips, ideal for experienced traders, and a beginner-friendly Standard account starting from 1 pip. To find out how to open an account with Eightcap, its assets and other fees, have a look at our in-depth Eightcap review.

FeaturesExample
RegulatorFCA
Financial assetsForex, stocks, indices, commodities
SpreadFrom 0 pips
PlatformsMT4, MT5, TradingView
LeverageMaximum allowed by FCA

What criteria should a CFD broker meet?

There are numerous CFD brokers worldwide. However, not all of them are suitable for discerning investors; in fact, the majority may not meet the necessary criteria. Therefore, in order for the top CFD brokers to be considered reliable and of high quality, they must possess the following characteristics.

Regulation

Brokers should be regulated by a reputable regulatory entity. For investors from the UK, it is ideal for the broker to be regulated by the FCA (Financial Conduct Authority). Here are some other reputable regulations around the world:

  • ASIC in Australia
  • BaFiN in Germany
  • CNMV in Spain
  • CySEC (Cyprus)
  • SEC (the US)

Ultimately, CySEC in Cyprus would be considered acceptable. However, it should be noted that many brokers opt for this supervisor due to the relatively lenient oversight over their day-to-day operations and lower regulatory pressure.

If you choose a broker regulated by the CySEC only, we strongly recommend ensuring that it has additional control mechanisms in place, such as being listed on the stock exchange (which requires further transparency and regulation) and having regulated branches in the UK. These measures can provide additional assurance and accountability.

Wide range of assets

The best CFD broker should offer a wide variety of underlying assets, including:

  • Stocks
  • ETFs
  • Currency pairs
  • Indices
  • Commodities

Have a look at this CFD trading guide for more information.

Suitable trading platform

The trading platform serves as the primary tool for every trader and investor to conduct their operations in the markets. There is a wide variety of trading platforms available, including some that are specific to certain brokers, while others are third-party software and can be used across multiple brokers.

Below, we will categorise several platforms based on the type of user (beginner or expert):

  • For beginner users: Some of the most suitable platforms include MT4 (for forex) or MT5 (for other assets) as the most widely used platforms in the world. eToro's trading platform is also great for beginners thanks to social trading and an easy-to-use interface.
  • For more advanced users: MetaTrader or xStation can still be a good option, although there are also other platforms that offer great performance and a variety of options such as TradingView and ProRealTime.

Costs

Nowadays, the new standard among CFD brokers is zero commissions, so only the spread must be covered by the trader. However, the spread is also important to consider, especially if you are planning to trade actively, as these costs can easily add up.

Also, choosing a broker that supports your favourite payment method with no charge is ideal. Next, currency conversion fees and other fees (such as inactivity) may be worth considering, depending on your strategy and chosen assets.

Leverage

The best CFD brokers offer high leverage to allow traders to get exposure to significant capital with a small investment.

Leverage can undoubtedly be a great advantage for traders with a robust risk management strategy and who know how to utilise it, although it is a double-edged sword, as it not only multiplies your potential profit but also your potential losses.

The FCA allows the following leverage limits for retail traders, between 1:30 and 1:2, depending on the volatility of the asset.

Types of CFD brokers: market maker, ECN, DMA

Among the different types of brokers, we differentiate two main groups, the Dealing Desk and the Non-Dealing Desk.

  1. DD: Dealing Desk – These act as a counterparty to the clients' trades. They make their own buy and sell prices, so they are known as market makers.
  2. NDD: Non-Dealing Desk – These are the brokers that are simple intermediaries that help the trader access the actual markets.

NDD brokers can be split into:

  • ECN: ECN (Electronic Communication Network) brokers connect traders directly to liquidity providers (that the broker has contracted), such as banks or hedge funds. ECN brokers display the best prices available from the liquidity providers. ECN usually charge commissions for each trade.
  • STP: STP (Straight Through Process) brokers also transmit the trades to liquidity providers (banks, financial entities, etc) and these may charge variable spreads depending on volatility and liquidity (and usually no commissions).
  • (DMA): DMA (Direct Market Access) brokers function similarly to STP and ECN brokers, but there are differences in how they utilise this technology (i.e., in terms of routing methods or fee structures).

What are the risks of investing in CFDs?

In the operation with CFDs, there are four main risks:

  1. Leverage: If not managed carefully, leverage can result in substantial losses exceeding the initial risk the investor or trader was willing to take. To address this, the FCA implements limits to the maximum allowed leverage.
  2. Price gaps: Unexpected events can lead to price gaps, causing positions to close at undesired prices and resulting in larger losses than anticipated if the trade had failed. Traders can use stop-loss orders (such as guaranteed stop-loss orders) to address this.
  3. Costs: Some brokers may have high spreads (the difference between the buy and sell price of the asset). Also, overnight fees are applied to CFD positions, and these can also eat into the trader's profits. There may also be hidden fees, so you need to do your due diligence before choosing a broker.
  4. Regulation: It is crucial to choose a broker with a high regulatory standard to ensure security. Brokers with lower regulatory standards may be susceptible to irregular price movements in assets or fraudulent activities.

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Summary: best brokers to trade CFDs

In conclusion, selecting a reliable and regulated CFD broker in the UK is crucial for traders and investors. By considering factors such as regulation, trading platforms, risk management, and cost structures, one can make informed choices to enhance their trading experience and mitigate potential risks.

FAQ: best CFD brokers UK

Are all the recommended CFD brokers in the UK regulated?

Yes, all the recommended CFD brokers in this article are regulated by renowned regulatory entities such as the Financial Conduct Authority (FCA) or other trusted supervisory authorities in Western Europe, ensuring a higher level of security and transparency for traders.

Can I trade CFDs with a small initial deposit?

Yes, many of the recommended CFD brokers offer flexibility in terms of initial deposit requirements, allowing traders to start with a small amount.

Can I try out CFD trading before risking real money?

Most of the top CFD brokers mentioned in this article offer demo accounts, allowing traders to practise and familiarise themselves with CFD trading strategies and platforms without risking real money.

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