CFD Broker Comparison – what criteria should you consider when choosing a broker?
If you decide to start trading CFDs, experience shows that you are often faced with the task of finding a good and suitable broker. We have therefore created the following CFD broker comparison to simplify this search. As a trader you should pay attention to the fact that the broker can offer the most favorable conditions. In addition, it is important that the provider has a good trading software and competent customer support. Which further criteria are essential when choosing a broker will be clarified in the further course of this article.
The trade offer: How many financial instruments are available for CFD trading?
Before you decide on a broker, you should also think about which financial instruments you want to trade. Experience has shown that the individual providers sometimes differ considerably in terms of the scope of their respective trading offers. In particular, the following financial instruments are available to traders:
- Stock indices (for example the DAX or Dow Jones Index)
- Currency pairs (for example the Euro/US dollar)
- Individual shares (for example the shares of Daimler, BMW, Google or Facebook)
- Precious metals (for example gold and silver)
- Raw materials (for example oil)
- Crypto currencies (for example Bitcoin and Ethereum)
The trade itself takes place at a CFD broker via contracts for difference or CFD. Trading with CFDs offers several advantages for the trader, for example, the CFD margin can be used in this way. The margin determines how much capital you need to have in your trading account to trade a certain financial instrument (for example DAX CFD). In our experience, when trading stock indices, the margin is 5% for many providers nowadays. If, for example, the DAX is quoted at 12,000 points, 500 € on the trading account is already enough to trade with the German leading index.
The amount of the margin also depends on the traded financial instrument. For example, the margin is usually lowest for currency pairs (from 3.4%). This is followed by the above-mentioned stock indices at 5 % and individual stocks at 20 %. Due to the strong price movements, the margin is highest for trading in crypto currencies (50 %).
In general, it is advisable not to limit oneself to a single financial instrument. Therefore, it is good if the CFD broker can provide the widest possible trading offer.
- With which financial instruments do you want to trade?
- Does the broker also offer trading in more “exotic” financial instruments (for example commodities and crypto currencies)?
- What is the margin for CFD trading?
CFD Trader Comparison: Costs & Fees for CFD Trading
At least as important as the trading offer of a CFD broker are its conditions. The costs and fees can usually be divided into the following three categories:
- Costs that arise with every trade (usually through the “spread”)
- Fees for deposits and withdrawals
- Other fees (e.g. for the use of the trading platform)
Experience shows that the highest costs of CFD trading arise from the fees that the customer has to pay to the broker for each trade. Often, the providers charge this fee in the form of a “spread”: This is the difference between the buy and sell price. The lower the spread, the lower the costs for the trader. In total, three different forms of the spread can be distinguished from each other:
- Fixed (unchangeable) spreads
- Variable spreads
- Variable spreads with commissions
As the name suggests, fixed spreads always have the same value. They therefore do not change even when the market is very turbulent. In contrast, variable spreads are variable: As a rule, these have a minimum size and are on average smaller than fixed spreads. But a variable spread can increase if, for example, the markets are nervous before important economic data is released. If you need a particularly low variable spread for your trading strategy, some brokers also offer a so-called commission-based model. In this case, the spreads sometimes start as low as 0 pips, but there is an additional fee for each trade, which you have to pay to the broker. Overall, it is advantageous if the broker can offer different spread models. You should also make sure that the spreads themselves are as small as possible.
In addition to the spread, there can be other costs with a CFD broker. For example, some providers charge fees for deposits to the trading account or when you withdraw money. Often the chosen payment method also plays a role (for example bank transfers, credit cards, online wallets etc.).
- The highest costs in CFD trading are usually caused by the spread.
- Fixed and variable spreads can be distinguished from each other.
- It is important to compare the individual brokers with regard to the spread level
Accounts and accounts: How do the individual accounts differ from each other?
When you decide to open an account with a particular CFD broker, you often have the choice of different account models. Often the individual accounts differ in terms of the spreads just mentioned. It is not uncommon to have access to an account with a provider with fixed spreads, with variable spreads as well as a commission-based model. As a trader, you should choose the spread that best suits your trading strategy.
Furthermore, accounts often differ in terms of the trading platform provided. The good news for the trader is that there is usually at least one trading platform that can be accessed free of charge. If the broker offers several platforms, it is recommended to try them out. Experience shows that every trader trades differently and therefore requires different functions in his trading software. Often you can also try out the individual platforms on a free demo account. We will talk about this topic in more detail in the rest of this article.
In our experience, some brokers also have different accounts and accounts with regard to the minimum deposit required to open an account. For example, with many brokers today, 100 € is already enough to open a trading account. As you can see, you do not need large amounts of money to start CFD trading. Therefore, trading CFDs is becoming more and more popular among private investors.
- Often one has the choice between different types of accounts
- The accounts usually differ in the type and amount of the spread as well as in the trading platform offered
- With many CFD brokers the opening of an account is already possible from 100 €.
Broker comparison CFD: Trading platform for trading and mobile apps
As discussed earlier, many CFD brokers today provide not just one, but several trading platforms. Many prospective traders appreciate the role of a good trading software: because it stands between the trader and the exchange. Ideally, the trading platform should support you as much as possible in your daily trading routine and not make your work more difficult. For this reason it is important that the trading software is structured as clearly as possible. This ensures that even beginners can quickly get used to the trading platform.
As a trader you primarily need tools for technical analysis. These consist of both drawing tools for chart analysis and technical indicators. In our experience, the most popular drawing tools include the ones listed below:
- Trendline tools (to determine up, down and sideways trends)
- Support and resistance lines
- Fibonacci lines (to determine price targets)
- However, a good trading platform should also provide a trader with numerous technical indicators. These can help a trader better assess the current chart situation. In addition, indicators are very helpful when it comes to getting good signals for entries and exits.
The trading platform “MetaTrader” is still available at almost all brokers. The main advantage for the trader is that the MetaTrader is offered free of charge. Furthermore, the trading platform is well suited for beginners as well as for advanced traders. For example, there are over 30 indicators available for technical analysis. Moreover, the MetaTrader is characterized by the fact that it can be easily extended with additional functions. These extensions are called “Expert Advisors (EAs)”. Many of these EAs are also available for free. The MetaTrader is available for different platforms. For example, you can use the MetaTrader App to access your trades on the go.
Meanwhile, according to our experience, more and more brokers are moving towards offering specially developed trading platforms. As already mentioned, it is recommended to try out and compare the individual platforms. In the end, you can then decide on the trading software that best suits your needs.
- With many CFD brokers you can access several trading platforms
- Mostly the MetaTrader is also available
- It is also important that you can also access your trades on the road using the Trading App
CFD Broker Comparison: Website Usability
If you compare CFD brokers with each other, you should also take a closer look at their websites. Because experience has shown that the individual providers often differ greatly from one another, especially in this point. It is especially important that as a trader you can find the most important information as quickly and easily as possible. This includes in particular:
- Information about costs and fees (including type and amount of spreads),
- available financial instruments (stock indices, shares, currency pairs, etc.),
- training offers of the broker,
- information on deposit protection and regulation, and
- Contact details.
All in all, a good CFD broker can also be recognized by the fact that he is very transparent and customer-friendly. This also includes, for example, that the website is offered in several languages. Otherwise it can easily lead to misunderstandings for customers from non-English speaking countries. In addition, one should make sure that the broker does not make false promises regarding the return on CFD trading. So it is true that you can earn a lot of money on the stock exchange, but unfortunately you will not succeed in getting rich “overnight”. It speaks therefore for the broker if he informs realistically on his website about the chances and risks of CFD trading.
It is also important that you can contact the broker as easily as possible. We come to this point in the next section in more detail.
- Is the website clearly and functionally structured?
- Is it possible for customers to find the most important contents quickly (keyword: transparency)?
- Is the website also available in several languages?
Consider customer support when comparing CFDs
In our experience, newcomers in particular often underestimate the importance of good customer support. After all, anyone who has ever had problems with their trading software will appreciate it if a competent support employee of the broker can be reached quickly by telephone. Unfortunately, many providers nowadays put the red pencil at this very point in order to save costs. So it is usually much cheaper to do without telephone support and instead offer only a contact possibility via e-mail. However, in our experience, questions and problems can still be solved best and fastest on the phone. Therefore, it speaks for a broker if he also offers this contact option to his customers. Overall, the following options are often available for contacting the broker:
- Live chat,
- telephone support,
- Contact possibility via Facebook.
It is also essential that the support is offered in several languages. Otherwise, communication can prove difficult – especially when things have to move quickly.In addition, customers should make sure that the hotline is a free telephone number, otherwise high charges can quickly arise. Some brokers prove to be extremely customer-friendly in this respect and offer their customers a free telephone number (0800), for example.
- Possible ways to contact them: Via live chat, e-mail, telephone and Facebook
- Experience shows that the best way to solve problems is still by telephone
- Make sure that the support is also offered in your language if your English is not so good.
Broker comparison CFD: the different payment methods
CFD brokers can also be distinguished in terms of the payment methods they offer to their customers. In our experience, the following options are often available:
- Bank transfers
- Credit card payments (often Visa, MasterCard and American Express)
- Payment service providers such as “Sofortüberweisung
- Online Wallets (for example PayPal, Neteller and Skrill)
In the “Costs and fees” section, we already mentioned that many brokers charge fees for deposits and withdrawals. The most different variants are conceivable: For example, with some providers, deposits are generally free of charge, but fees are charged as soon as you withdraw money from your trading account. It also often depends on the payment method used how high the fees are. Credit card payments and online wallets are often the most expensive. On the other hand, transactions in this way usually only take a few minutes.
The exact opposite is usually the case when using bank transfers: many providers offer these free of charge, but it often takes several days before the money arrives. In our experience, if the speed of the transaction is the most important factor, you should avoid transfers if possible.
Fortunately, there are also very customer-friendly brokers where both deposits and withdrawals are generally free of charge. At this point, it becomes clear once again how important it is to compare the individual providers thoroughly before finally deciding on a particular broker.
- There are often no fees for transfers, but they usually take several days
- Significantly faster transactions with online wallets and credit card payments
- You should be well informed about the possible fees for the different payment methods
CFD Broker Comparison: Which additional offers do CFD brokers offer?
Another way to compare CFD brokers is to take a closer look at their additional offers. So it is almost a good thing nowadays that extensive training materials are also offered to a customer. These include webinars, trading videos and guide articles. These training offers can be used to expand your knowledge regarding CFD trading. However, it is especially important that you apply the new knowledge yourself when trading. For this purpose you can use a free demo account very well.
Meanwhile, you have the possibility with almost all brokers to open such an account within a few minutes. You will usually be provided with real-time quotes in order to be able to test trading CFDs under conditions as close to reality as possible. However, one does not trade with real capital, but with virtual money. Often a virtual balance of 10,000 € is available to practice trading. This way you can try out different strategies and trading styles without risk. In addition, this way it is possible to become familiar with the different trading platforms of the broker. The demo phase usually lasts 30 days. However, in our experience, this period can be extended without difficulty if necessary.
If you wish, you can, for example, open a demo account with several CFD brokers simultaneously. This will make it even easier to identify the respective strengths and weaknesses of the provider. In the end, you can then choose the broker who has convinced you the most.
Some brokers offer their customers additional services. For example, an economic calendar is very useful. This is basically a normal calendar. However, only those dates are noted in it where there will probably be stronger price movements on the markets. An example of this is the publication of the American labour market data. As a trader, you should make it a habit to look at this calendar at least once a day. This can protect you from “bad surprises”.
- Use training offers of the brokers
- Use free demo account to train CFD trading
- Further additional offers: For example business calendar
Broker Comparison CFD: Regulation and Deposit Protection
Before you finally decide on a CFD broker, you should also deal with the topics “regulation and deposit protection”. Thus, it depends primarily on the headquarters of the broker, which authority is responsible for its supervision and control and which deposit insurance in an emergency. This question is very easy to answer for German brokers, for example: As the competent authority there, the Federal Financial Supervisory Authority (BaFin) is responsible for regulation and control. In addition, the German deposit insurance will take effect in case of need.
For brokers in other European countries, however, the situation is slightly different: Here, supervision is not exercised by the BaFin, but by the respective financial supervisory authority of the country. There may also be differences in the level of deposit protection. Popular locations for brokers are for example: United Kingdom, Ireland, Cyprus and Poland. In general, investors can therefore also choose a broker in another European country. However, you should inform yourself in advance about the respective regulations and deposit protection.
Caution is advised, however, if a provider advertises that he is not controlled at all and therefore everything is “very simple”. Often such providers have their headquarters on a small South Sea island – this does not exactly speak for the seriousness of the broker, which is why we recommend to choose either German or European brokers for CFD trading.
- Consider regulation and deposit protection when choosing a broker
- The best way to trade with a German or European provider
- In Germany, the BaFin is responsible for supervision and in an emergency, the German deposit guarantee scheme
CFD Comparison: Awards and opinions of the trade press
If you compare different CFD brokers with each other, it also makes sense to find out how the individual providers perform in the trade press. For example, different magazines and websites often run tests to compare the different brokers with each other. It is important that the test criteria are as objective as possible. For this reason, in our experience one should also avoid the opinions of other traders if possible. Because these often express themselves very subjectively.
Often brokers are also awarded in certain categories. For example, it speaks for the quality of the provider if he is awarded as “CFD Broker” of the year. Other possible titles are “Best Trading Platform” or “Best Customer Support”.
In general, however, we recommend that you test a CFD Broker yourself. As already mentioned, you can very well use a free demo account for this purpose.
- How does the CFD Broker perform in the trade press?
- Has the provider already received awards in the past?
- Broker best also test on a free demo account
Market overview and outlook
As already indicated, CFD trading is also becoming increasingly popular among retail investors. A possible reason for this is that today it is possible to open a trading account with many providers for as little as 100 €. Therefore, one does not need much capital to start trading. In addition, trading CFDs offers numerous advantages for the trader: It is possible to trade a wide range of financial instruments within a single trading platform. Furthermore, the CFD margin can be used for trading: As shown, there is the possibility to “leverage” the available capital.
In general, however, it is important that you as a trader do not put yourself under too much pressure, especially at the beginning. First of all, it is important to increase your knowledge about CFD trading. For this purpose, one can also very well use the addressed training offers of the brokers. Only in the next step it will be about increasing the performance. In general it is important that you do not take too big risks when trading. You should also make sure that you constantly trade a profitable strategy every day. That way you will be successful in the end.
Use comparisons and experience reports to select the right broker
As the number of brokers continues to increase, it will become even more important in the future to compare the individual providers with each other in order to find the best broker for themselves. In the context of this article we have highlighted many different comparison criteria. Very important in this respect are the costs and fees: Because when trading, you want to use your capital primarily for CFD trading and not to finance the broker. Therefore it makes sense to look for the cheapest possible provider. However, one should not neglect other important points such as a good trading software and a good customer support. For example, particularly customer-friendly brokers are also characterised by the fact that they provide their customers with a free hotline. In addition, one should make sure that the costs for deposits and withdrawals are as low as possible.
In general, it seems sensible to try out the providers first within the framework of a free demo account. As mentioned, one trades with virtual capital on such an account and can get to know stock exchange trading without risk. Often a virtual credit balance of 10,000 € is available to train trading. In this way, different strategies and trading styles can also be tried out. Already on the demo account you usually get access to the training offers of the brokers. In our experience, you should also use this to expand your knowledge of CFD trading. It is especially important to apply the new knowledge yourself when trading. For this you can use the demo account very well.
Whoever, after reading this article, has the desire to try CFD trading for himself can use our CFD broker comparison to find the right provider for himself.