Summary: Contracts for differences (CFDs) are a solid choice for UK investors looking to profit from speculating on price fluctuations of stocks, commodities, and other assets. And in this guide, we’ll introduce you to the best broker for CFD trading in the UK, Plus500.
Recommended Multi-asset Broker for Online CFD Trading
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Reliable & Regulated by CySEC (#250/14) - Plus500 Ltd is a FTSE 250 company listed on the London Stock Exchange
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Wide range of instruments - CFDs on stocks, crypto, forex, commodities, ETFs, and more
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Low cost investing - No commissions and tight spreads.
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Transparent pricing on overnight funding, currency conversion fees, guaranteed stop orders, and inactivity fees.
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Advanced platform - Top notch analytical tools, real-time quotes, fast order execution, secure withdrawals
About CFDs
Contracts for Difference (CFDs) are financial derivatives that allow traders to speculate on the price movements of various assets, such as stocks, commodities (e.g., gold), currencies, and indices, without actually owning the underlying asset. This means you can potentially profit from both rising and falling markets.
One of the key advantages of CFDs is leverage. Leverage allows you to control a larger position size with a relatively small amount of capital, amplifying potential profits. However, it’s important to note that leverage also increases the risk of significant losses, so it should be used with caution.
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Where to trade CFDs in the UK
The UK boasts a selection of trustworthy CFD brokers, all under the regulation of the Financial Conduct Authority (FCA). Even though they all share a common principle, these platforms are each different. Therefore, when evaluating and differentiating them apart from one another, you should take into account several key factors, such as:
- Spreads: Spreads refer to the difference between the buying (ask) and selling (bid) prices of a CFD. Lower spreads mean lower trading costs for you, so a broker offering tight spreads can save you money over the long run;
- Commissions and fees: While some brokers may offer zero commissions, they may compensate by widening spreads or charging other fees. It’s, hence, crucial to consider the overall cost of trading, including any overnight financing charges;
- Leverage: Leverage can magnify your potential gains, but it also increases the risk of significant losses. Be sure to choose a broker that provides a suitable level of leverage based on your risk tolerance and experience;
- Margin: Margin is the amount of money you need to deposit as collateral to open and maintain CFD positions. Different brokers have varying margin requirements, so it’s essential to understand how margin works with your chosen broker.
Some of the best CFD brokers in the UK are:
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Plus500
Recommended Multi-asset Broker for Online CFD Trading
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Reliable & Regulated by CySEC (#250/14) - Plus500 Ltd is a FTSE 250 company listed on the London Stock Exchange
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Wide range of instruments - CFDs on stocks, crypto, forex, commodities, ETFs, and more
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Low cost investing - No commissions and tight spreads.
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Transparent pricing on overnight funding, currency conversion fees, guaranteed stop orders, and inactivity fees.
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Advanced platform - Top notch analytical tools, real-time quotes, fast order execution, secure withdrawals
Our go-to brokerage is Plus500, a leading CFD trading platform in the UK, which is also available for investing on the London Stock Exchange (LSE).
The platform boasts an extensive array of over 2,000 CFD financial instruments, Forex pairs, cryptocurrencies, commodities, and stocks. Furthermore, it’s FCA-regulated, ensuring an extra layer of security with negative balance protection.
Plus500 goes the extra mile by offering a user-friendly app for mobile CFD trading, the option to create complimentary demo accounts for users to acquaint themselves with the platform, and completely fee-free withdrawals. Additionally, traders can benefit from competitive spreads, all without incurring commission fees.
Pros and cons
Pros
- No deposit fees;
- Numerous markets;
- Publicly traded and well-established platform.
Cons
- No third-party platform support;
- Higher account minimums.
eToro
Highly Rated Stock Trading & Investing Platform
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Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
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0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
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Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
Next up, we have eToro, a global CFD trading platform celebrated for its social and copy trading options, which enable traders to track and replicate the trading tactics of accomplished investors within the platform. This particular feature renders eToro a dependable option, especially for newcomers to the trading arena.
Furthermore, the platform provides users with entry to a diverse array of markets, spanning cryptocurrencies, stocks, and Forex pairs. The convenience extends to its user-friendly mobile application, facilitating on-the-go trading.
Pros and cons
Pros
- Copy trading;
- Low rates;
- User-friendly platform;
- Low account minimums.
Cons
- Withdrawal fees on non-USD payments;
- Just account base currency.
Disclaimer: 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. This content is not intended for US users. eToro USA LLC does not offer CFDs, only real Crypto assets, Stocks and ETFs are available.
Interactive Brokers
Best Platform for Worldwide Stock Trading & Investing
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Highly trusted multi-asset broker with clients in over 200 countries
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Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)
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Low commissions starting at $0 with no platform fees or account minimums
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Easily fund your account and trade assets in 26 currencies
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IBKR pays up to 4.58% interest on cash balances of $10k or more
Thirdly, we have Interactive Brokers which stands as one of the leading CFD brokers, proudly offering access to a staggering portfolio of more than 8,500 CFD markets. It’s key to note that it provides a plethora of order-type customizations and grants access to an array of advanced this-party trading tools that enhance the overall trading experience.
What’s more, Interactive Brokers boasts the distinction of being publicly listed on NASDAQ under the ticker symbol IBKR and is regulated by the FCA. This robust regulatory framework ensures a secure and diversified trading ecosystem for all its users.
Pros and cons
Pros
- Low fees and commission-free trading;
- A lot of research tools;
- Supports a solid range of currencies.
Cons
- The platform can be hard to navigate;
- Some features are not available to all account types.
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Pros and cons of trading CFDs in the UK
Now that we’ve explored some top CFD brokers, let’s summarize the pros and cons of trading CFDs in the UK:
Pros
- Diverse asset selection: CFDs allow you to access a wide range of global markets and assets;
- Leverage: Leverage can amplify your potential profits;
- Shorting opportunities: You can profit from falling markets as well as rising ones;
- Flexibility: CFDs provide flexibility in terms of trade size and strategy.
Cons
- High risk: The leverage inherent in CFDs can lead to significant losses;
- Costs: Trading costs, including spreads and overnight financing charges, can add up;
- Complexity: CFDs may be complex for beginners to understand;
- Regulatory risks: The regulatory environment for CFDs can change, affecting trading conditions.
Summary
Choosing the best CFD broker in the UK is a key decision that can significantly impact your trading success. As such, it’s advised to consider factors like spreads, commissions, leverage, and margin requirements when making your choice.
Plus500, eToro, and Interactive Brokers are all strong contenders—each with its unique features and drawbacks. Of course, your decision should align with your overall trading goals, experience level, and risk tolerance.
Remember that CFD trading carries inherent risks, and it’s crucial to educate yourself and develop a solid trading plan before you start. Also, be sure to always use risk management strategies to protect your capital and trade responsibly.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about best broker for CFD trading in the UK
Are CFDs suitable for beginners?
CFDs can be complex, and beginners should take the time to understand how they work before trading. It’s, therefore, advisable to start with a demo account to gain experience without risking real money.
How much leverage should I use?
The level of leverage you use should align with your risk tolerance and trading strategy. It’s generally recommended to use lower leverage when starting, and only increase it as you gain experience.
Are CFDs regulated in the UK?
Yes, CFD trading is regulated in the UK by the Financial Conduct Authority (FCA). Ensure that your chosen broker is regulated to ensure a safe and secure trading environment.
Can I lose more than my initial deposit when trading CFDs?
Yes, it is possible to lose more than your initial deposit when trading CFDs, especially when using leverage. Implement risk management strategies to limit potential losses.
Do all CFD brokers offer the same assets for trading?
No, the assets available for trading can vary among brokers. It’s essential to pick a broker that offers the specific assets you want to trade.
Recommended Multi-asset Broker for Online CFD Trading
-
Reliable & Regulated by CySEC (#250/14) - Plus500 Ltd is a FTSE 250 company listed on the London Stock Exchange
-
Wide range of instruments - CFDs on stocks, crypto, forex, commodities, ETFs, and more
-
Low cost investing - No commissions and tight spreads.
-
Transparent pricing on overnight funding, currency conversion fees, guaranteed stop orders, and inactivity fees.
-
Advanced platform - Top notch analytical tools, real-time quotes, fast order execution, secure withdrawals
