Choosing A Trusted CFD Broker – CFD Broker Ranking

Contract for differences or CFD trading is a popular form of financial derivatives that allows you to trade an asset without actually buying or selling it. Trading CFDs in Australia is legal as long as you trade with a licensed broker. Find out how a CFD trader makes a profit or a loss as the price of an asset is changed.

What is CFD Trading?

CFD stands for “contract for difference” and it is a financial derivative or an instrument that you can buy or sell. Other examples of a financial derivative would include futures or options. Hence to explain the meaning of CFD we need to define a financial derivative. A financial derivative is a contract or a mutual obligation on a certain action in regard to a certain traded asset. The asset in its turn can be anything that is traded on global financial markets: shares, bonds, commodities, government obligations and even other derivatives. Therefore, to define CFD we need to break it down to the action and to the asset. Usually, CFD is explained as a call for a rising or a falling price of a stock market share and as the result a CFD trader makes or loses money depending whether he made the right call.

Basically, CFDs are bets on the prediction on the rise or on the fall of a chosen share. If the price of a share goes as predicted – welcome to the winners’ club!

Interested in CFD trading with GetFirstStep? Try our demo or get it started with our partners!

Best CFD Trading Platform Australia

Here at Getfirstep we constantly monitor the CFD-trading market to provide you with the list of all CFD brokers available to Australians. We evaluate Australian trading platforms based on things like number and variety of trading instruments, available brokerage services and customer feedback. Then we move these cfd providers up and down the list according to our findings and the rating system that we let them go through. Below please find our latest list of best CFD trading platforms with short brand descriptions for your convenience.

IC Markets

“IC Markets” is a world leader when it comes to the variety and number of financial markets you can trade. Over 500 thousand trades are made daily with “IC Markets” with over 230 financial instruments. It is a strong, reliable and a very well-known brand in Australia and it wouldn’t be at top 1 position on our list otherwise. “IC Markets” is the best option for both those looking for “all-in-one-place” to trade and those looking for a top CFD broker.

Platforms: cTrader desktop, cTrader web, Mirror Trader, ZuluTrade, MT4 Dekstop, MT4 Web, MT5 Desktop, MT5 Web | Regulations: ASIC, CYSEC, Offshore | Minimum Deposit: 0

Pepperstone

“Pepperstone” holds completive advantages over other brands by holding a “Best Forex ECN Broker” award issued by the UK Forex Awards in 2018. Apart from a smaller number of trading financial instruments there isn’t any reason why it wouldn’t be on the top of our list. “Pepperstone” provides a high-quality CFD brokering service in Australia and gets best reviews in Australian trading community.

Platforms: cTrader desktop, cTrader web, ZuluTrade, MT4 Dekstop, MT4 Web, MT5 Desktop, MT5 Web, MAC Platforms | Regulations: FCA, MIFID-ESMA, ASIC, DFSA, CYSEC, Offshore | Minimum Deposit: 0

Plus500

“Plus500” is what comes to mind when we think of #1 CFD broker in the world. A primary sponsor of the Brumbies Rugby team, “Plus500” is available on any device in almost any country, including Australia. This brand claims to have the most convenient trading app which can definitely be considered very popular among Australian CFD traders. “Plus500” is a great all-around choice as a trading platform.

Platforms: Proprietary Web Platform | Regulations: MAS, FCA, MIFID-ESMA, ASIC, FMA, CYSEC, ISA, Offshore | Minimum Deposit: 100

TradeDirect365

“Tradedirect365” is a well-known brokerage company that provides is customers with top notch trading services. With “Tradedirect365” you can trade almost any type of financial assets, including CFDs. It also provides a whooping 1:200 leverage to it’s Australian traders.

If you haven’t found a brokers’ name you were looking for in the list above that means that Australia is among the restricted territories where this brand cannot operate or we found the brand to be unreliable and thus it didn’t make it to our list. We update information on a daily basis based on a market analysis provided to us by our affiliated professional traders. We also keep in touch with all listed CFD brokers to make sure that our reader are prone to all of their latest promotions.

CFD Trading vs Shares Trading: What Are the Differences?

They are two completely different things but both are traded on financial markets. Trading CFDs and shares is done through the services of a licensed brokers.

CFD vs stock shares trading comparison as follows:

  1. When you buy a CFD you do not enter a legal contract of ownership of a share (or shares) that are associated with a CFD trading. When you buy a share, you become a shareholder of the company who has issued the share.
  2. With CFD trading you can open both a long and a short position, or in other words you can benefit from prices going both ways – up and down, whereas when you trade stock shares you can expect to make profits only with increasing stock prices or paid dividends minus the commission of a broker.
  3. CFDs are traded with a leverage (or a margin loan), making it possible to enter high-payout deals with small deposits. On the contrary, shares trading requires paying a full amount of the market price at the instant of purchase.
  4. CFD trading is not limited to equity markets. The range of markets where CFDs are traded is broad and includes all global financial markets, including equities, commodities and bonds.
  5. CFD trading takes place 24/7, stock shares are traded when stock markets are open (usually from 9am to 9pm Monday-Friday).
Trading CFDs Vs Trading Shares

CFD Trading vs Options Trading

CFD trading and options trading have similarities such as the fact that both of them are derived from shares trading. And apart from that there is not a lot more to say about their similarities, so let’s look at how they differ from one another.

Options trading requires high analytical and financial skills and we are only going talk about basics without going into too much detail about how it’s done. Option trading involves simultaneous trading of options and sometimes also other derivatives. Each traded option has its value determined based on multiple things, including the current share price, the date of the option’s expiry and the estimated volatility of the share price until the option can be exercised.

Unlike with CFDs, there are 2 types of options: call options and put options (or puts). The former gives the right, or in other words the possibility, or in other words the “option”, to purchase a particular stock at a defined price called a “strike price”. The later, on the contrary, is the option to sell a particular stock a “strike price”. Here is how a single call option works:

  1. The current stock price of a single “Apples and Oranges Inc.” share is 100 AUD.
  2. Olivia makes a call option, or buys a right to buy one share of “Apples and Oranges Inc.” with an expiry period of 1 year and a strike price of 110 AUD.

Then 1 year passes and there are possible outcomes:

The stock price goes upThe stock price goes down
The stock price of a single “Apples and Oranges Inc.” share increases and becomes 120 AUD.Olivia decides to exercise the option she has bought a year ago and buys one share of “Apples and Oranges Inc.” for 110 AUD while its current market price is 120 AUD.  

In this case Olivia makes a profit of 10 AUD as a difference between the option’s strike price and the current stock price.
The stock price of a single “Apples and Oranges Inc.” share falls down and becomes 100 AUD.Olivia decides not to exercise the option she has bought a year ago because the current market price is lower than the option’s strike price.    

In this case Olivia doesn’t exercise the option she has called for and doesn’t make any profit. In fact, Olivia loses money in commissions and fees she had to pay when making a call option.

When you trade only one option everything is pretty straightforward. However, to be successful in options trading one has to make multiple complex simultaneous trades with options on various different stocks. There is even more to it as you dig deeper in learning about different types of options you can trade, such as barrier options or binary options. Anyways it should be quite clear now that options trading is very different from CFD trading, especially in terms of its complexity. If you understand the CFD vs options trading then the next bit will be intuitively straightforward.

CFD Trading vs Futures Trading

Both CFD trading and futures trading are a popular form of buying and selling assets in various financial markets, including bonds, commodities, shares and forex. However, CFD trading is quite different from futures trading in its very nature and in traders’ intent. As you should be already familiar with how CFD trading works below we will tackle the futures trading in more detail.

Futures trading, unlike CFD trading, is usually undergone to hedge future risks of rising prices on various financial assets, mostly so on the rising prices of commodities. Futures is a form of a financial contract that obliges to buy or to sell an asset at a defined price level at a certain time in future. For example, a large agricultural corporation might decide to hedge some of its risks by knowing for sure a price for corn in the upcoming year. Hence this corporation decides to buy futures for corn thus creating an obligation for itself to buy a commodity for a certain price and at a certain time in future. The seller of the corn futures is in its turn has an obligation to sell the commodity for the price and at the time stated in the futures contract.

Futures trading can also be explained when compared to options trading. With options traders decide whether they want to exercise them on the date of expiry or not, so buying an option is like buying a right. Whilst in the case with futures trading, traders have no choice but to abide the obligation to buy or to sell an asset at the time defined in the contract. Comparing CFDs vs futures trading leads to a conclusion that they are both financial derivatives but CFDs are traded to make profit on predicting where the market will go and futures are usually traded to hedge against cases where the market goes up or down. Besides, CFDs are common in many financial markets, including the market for futures trading. CFD futures trading works in the same way as CFD trading in stock markets.

Comparing CFDs vs futures trading leads to a conclusion that they are both financial derivatives but CFDs are traded to make profit on predicting where the market will go and futures are usually traded to hedge against cases where the market goes up or down. Besides, CFDs are common in many financial markets, including the market for futures trading. CFD futures trading works in the same way as CFD trading in stock markets.

How Does CFD Trading Work?

Contracts for Differences (CFDs) is one of the most innovative trading tools and its popularity in Australia grows by the year. CFDs allow you to bet on increasing or decreasing prices on any financial market: currencies (e.x. Forex), stocks (Apple, Tesla, Google, etc.), commodities (oil, gold, corn, etc.) or indices (stock market indexes e.x. S&P 500 Index). When trading CFDs you make a contract with a CFD broker and you can make money (or lose them) without owning the underlying asset.

So this is how CFDs work:

If you thing the price of an asset, let say a price of Apple stock shares, is going to increase you can buy a CFD and benefit on that rise. This is also referred to “going long” or “opening a long position”.

  • Buying = Expecting to make profit on rising prices = Opening a long position

However, when trading CFDs you can also benefit on falling prices if you sell CFDs or in other words “go short”.

  • Selling = Expecting to make profit on falling prices = Opening a short position

The profit or loss of a single CFD trade in both cases, i.e. “going long” and “going short”, is equal to the difference in the price of an asset.

Let’s say the current price of an asset is $587. The market for can go two ways: the price might go up and down. Let’s see how you can make profit trading CFDs with both rising and falling asset prices:

  1. You have bought 10 CFD for $587 with a leverage of 1:100 and closed it when the price was $595. Then your profit is number of CFDs x the price difference x the leverage.

10 x $8 x 100 = $8 000.

  • You have sold 1000 CFD for $587 with a leverage of 1:100 and closed it when the price was $583. Similarly, your profit is number of CFDs x the price difference x the leverage.

10 x $4 x 100 = $4 000.

In both of these scenarios you have entered a market when the price of an asset was $587. If you bet correctly on how the price is going to change you can make profit buying or selling CFDs.

When we calculated profits above you might have noticed that we had to account for the leverage. Leverage is something you can benefit from when trading CFDs. We will cover the leverage effect concept further down, so keep on reading!

Please note that other costs also have to be accounted for when calculating profits or loses:

  • Spread (Broker’s commission for making a transaction)
  • Overnight financing (doesn’t apply if you open and close your position the same day)
  • Inactivity fees (applies to inactive funds over long periods of time)
  • Withdrawal fees (check withdrawal fees with your bank)

How CFD Brokers Operate (Briefly)

So let us sum it up for you. Contract for Difference is a trading tool that enables investors to enter the financial market without having to buy or sell an underlying asset. Losses and profits are calculated and granted after the contract is exited. The calculation is based on the difference between the ask and bid prices. If you benefited, the broker with whom you entered the CFD will pay you the difference. If it is a loss, then it is up to you to compensate the difference in prices to your broker.

The main benefit of CFDs is that leverage is higher with the type of contract in comparison to traditional trading. Thus, traders invest only a small part of their own funds relying on their brokers to provide the rest. Reliable brokers offer smaller margins to lower the risks for traders.

What is Leverage in CFD trading?

When buying CFDs you don’t have to pay the full price of your position, but only a fraction of it. This practice is called a “trading with a leverage” or “trading on margin”. This allows traders to open more positions than they initially could with their budget.

Here how leverage effect works on our previous example: let’s say the current asset price is $587 and you expect it to rise in the near future. So you buy 10 CFD and the asset has a margin rate of 1 to 100, or 1%. 1% margin rate means that you only need to pay 1% of the whole price to open a long position, or similarly you only have to sell 1% of the whole price to open a short position.

  • 10 CFDs = 10 x $587 = $5870 is the whole price
  • With a leverage or margin rate of 1% you only have to pay 1% x $5870 = $58.7

In a situation when you have bet correctly, bought 10 CFDs and the price of an asset rises as you planned you make a profit which is equal to the number of CFDs x the price difference x the leverage. With a $8 price increase your profit is 10 x $8 x 100 = $8 000.

In a situation when you have bet correctly, sold 10 CFDs and the price of an asset falls down as you planned you make a profit which is equal to the number of CFDs x the price difference x the leverage. With a $4 price decrease your profit is 10 x $4 x 100 = $4 000.

There is of course a downside to a leverage effect because just like you can expect to have a higher return on your investment there is a substantial risk involved. When the position moves against you the opposite side of the leverage effect impacts your losses. You can expect to have high percentage losses when trading CFDs if the price of the underlying asset goes another way.

Choosing A Trusted CFD Broker – CFD Broker Ranking

CFD trading is a marvelous opportunity to earn a profit on the difference between buying and selling costs. Use all the benefits of this type of trading with the best CFD broker. Choose such a broker from the ones presented in the review and nothing will stop you from gaining your profit!

Rating Of Top 10 Best CFD Brokers

With the hundreds of CFD brokers on the Internet, it may seem easy to find the right one. However, if you are looking for a reliable CFD broker with the lowest cost and most attractive conditions, the choice narrows down. Our team tested the services of quite a lot of trading websites and we are ready to offer you the list of the best available options on the market.

CFD Brokers With High Leverage

CFD brokers with high leverage provide investors with the possibility to earn higher profits than the initial deposit allows. The deposit value is multiplied many times by the funds which an investor borrows from such types of brokers. Therefore, with only a single source of funds bigger positions are opened to a trader. Choose the best CFD broker from the list and earn huge profit from this kind of trade.

Lowest Spread CFD Brokers

If you would like to decrease trading risks then the lowest spread CFD brokers are your choice. Some brokers even offer the spread of 0 pips. It is really attractive because it means that the cost of difference between the bid and ask price is lower and that you pay very close to the actual market price  for a currency pair. Use our CFD broker ranking of the most reliable brokers that offer the lowest spreads on the market.

How CFD Brokers Differ

CFD brokers differ in the following ways:

  • whether they are regulated or not
  • the main strategy of trading they offer their clients (high leverage or lowest spread CFD brokers)
  • types of trading platforms they offer
  • types of trading accounts they open for their customers

Choosing The Best CFD Broker

The best CFD trading broker is the one that is licensed and regulated. What is more, a broker’s task is to provide you with access to a reliable trading platform. A beginner trader should get the best support from a broker including the possibility to create a demo account and access to the CFD knowledge base. The website that offers the best trading services should be adjustable to any device. Look at the list of the best CFD brokers ranking where each broker meets all the expectations. 

Regulations

CFDs occupy a significant segment of the trading market. Every day more than 5 trillion dollars are used in CFD-related transactions. Bigger and smaller brokers that work under different regulations readily offer their services to anyone who wishes to benefit from the flourishing trading market. The brokers who want to enter the CFD market can get their licenses in different jurisdictions. The common basis upon which each jurisdiction agrees is that to protect an investor’s money, it is highly important to segregate a company’s funds from a client’s funds. All the other rules and regulations vary from jurisdiction to jurisdiction. The differences lie in the treatment of the client’s funds, capital requirements, pricing, and leverage. Let’s have a look at the differences in the table:

CountryGoverned by№ of ProvidersTreatment of Client Money is regulated byFair Market PricingClient Money BufferLeverage
AustraliaAustralian Financial Services (“AFS”) Licence65Part 7.8 of the Corporations Act 2001 (Cth).NoNoN/A
CyprusCyprus Securities and Exchange Commission (CySec)181Investment Services and Activities and Regulated Markets Law of 2007 (Regulated Markets Law) and Part VI of CySec Directive DI144-2007-01 of 2012 (DirectiveYesNoThe lower limit of 1:50
United Kingdomthe Financial Conduct Authority (“FCA”)104Client Asset Sourcebook (CASS), specifically CASS 7.13, which is published by the FCA.YesNoN/A
United States of AmericaUS Commodities and Futures Trading Commission / a retail foreign exchange dealer (RFED) /a Futures Commission Merchant (FCM)3The Commodity Exchange Act and CFTC Regulation 1.20YesYes1:50 or 1:20 based on currency

When choosing the best CFD broker, always check if it is regulated by at least one of the tier-1 regulators mentioned in the table above. It is important because it ensures the security of your funds.

Variety Of CFDs

There are many varieties of CFDs that depend on what kind of price difference a client would like to speculate. Let’s have a look at some examples:

  • Share CFDs – the type of contract that resembles stocks trading making it more attractive to experienced stock trading experts. It is the most popular one in the marketplace. The price of a CFD derives from the underlying asset.
  • Index CFDs – one of the most liked CFDs because of the advantages it offers: high volatility and leverage, low margin, and trading price. The popular indexes for index CFDs traders are London Stock Exchanges, the Australian Stock Exchange, Dow Jones, Nikkei, and others.
  • Commodity CFDs – contracts that are based on the differences in prices of two types of commodities: hard (the ones that are mined) and soft (the ones that are grown).
  • Sector CFDs – allows investors to speculate on the growth or stagnation of different economies. For instance, if you choose a healthcare sector, you will need to take into account an overall state of things in the economy sector rather than in individual companies.

If you are a beginner broker, it is always better to stick to the smaller number of markets that you are familiar with. For example, start with one variety of CFD like hard commodity CFD and investigate this in detail to make better predictions. 

Capital Requirements

Imposing Capital Requirements is an important factor for ensuring the security of funds being invested by a customer in CFD. Jurisdictions impose the rules under which the Capital Requirements are regulated. If you’d like to find out what capital requirement a broker has, check his regulator. Thus, Capital Regulation is one more reason why you should look for regulated brokers. You can be sure that every broker presented in our best CFD broker lists are all regulated.

Here are the examples of the different capital Requirements:

CountryCapital Requirement
AustraliaAUD1,000,000 / 10% of average revenue
Cyprus€730,000
United Kingdom€730,000
United StatesUSD20,000,000 + adjustments for liabilities

Please note that all CFD trading brokers in Australia fall under the NTA requirement according to which they must provide their customers a financial buffer that is aimed at decreasing risks in case of the failure of their businesses.

 Commissions And Spreads

There are three different types of CFD fees:

  1. Commission fee (not that common for CFD)
  2. Financing cost (appropriate only in certain situations)
  3. Spreads (the most popular type of costs for CFD)

Best CFD trading brokers do not charge any extra commission fees. They earn on the difference between the buying and the selling prices. Let’s have a look at the examples of spreads that forex CFD brokers refer to:

Fixed spread – when you know the spread before you trade and it doesn’t change.

Floating spread – no fixed amount of spread, it is changing according to the market volatility

Commission fee – as it has been mentioned earlier, not that popular but still, sometimes is used. It is counted as a percentage of a broker’s spread. You will know the amount before you trade.

For a beginner trader it is a good idea to start his/her experience of trading with fixed spread CFDs because in this case he/she won’t have to make complicated calculations.

Different Types Of Trading Accounts

To make it more convenient for traders brokers from our lists of the best CFD brokers offer different types of accounts that traders can create according to the number of funds they are ready to invest in CFD:

  • Micro Account – the trading account usually recommended for beginners where one trading lot equals 1000 units of the traded instrument.
  • Mini Account – involves more risks and more investments. In the case of Mini Account, the size of one trading lot is 10,000 units.
  • Standard Account – in the case of this account different brokers may require a different minimum amount of units. The most common is 100,000.

The best CFD broker will also offer to create a demo account for a trader to get hands-on experience before risking his/her funds on trading. If you are a beginner it is highly recommended to start with this account and learn how to trade. Then, you can move on to a micro account and when you are confident enough, try other advanced accounts that a broker offers.

Trading Platform & Software

The best CFD broker is the one that offers a significant variety of trading platforms to choose from. As to the software providers, the state of things may differ. Some brokers refer to well-known names in the industry of software solutions like MetaQuotes Software. Others develop their software for trading platforms to demonstrate their uniqueness. In any case, brokers should provide the access to the selection of the platforms. The best Forex CFD brokers will offer you to choose between MetaTrader trading platform (MT4 and MT5) and cTrader platform. Choose a broker that offers the trading platform you prefer working on.

Custom Tools And Add-ons

Brokers that score high in the CFD broker ranking will be not only the ones that follow the main requirements but also the brokers that provide some additional features and custom tools to their clients. These features may be presented by but not limited to the following options:

  • Risk management instruments (e.g. ailing stops)
  • Broad selection of technical indicators
  • Charting package with clear conditions
  • One-click trading

Thus, when choosing a broker take into account the range of trading instruments it offers.

CFD Education And Training Tools

It takes time to become an experienced trader. However, you can reduce the amount of time required with different trading tools provided by the best brokers for CFD trading. First of all, a customer should have the possibility to start trading via a demo account without spending his/her funds. It is the best thing for gaining hands-on experience. What’s more, the information on the broker’s website should be as clear and accessible for understanding as possible. Of course, it would be great to combine the knowledge gained via your broker’s resources with an online course on trading strategies. There are a lot of them you can find on the Internet. The availability of educational information on a broker’s website is as important for a beginner as it is for an experienced trader. Webinars, topic articles, tutorials – look for the training tools when you pick a broker and don’t miss the chance to learn because your income will depend on your skills.

Mobile Trading

When you are looking for the best CFD broker, check if the broker is accessible via a mobile device. For instance, this can be a web-based app that does not require to be downloaded and installed on your gadget. The site will adjust to it automatically offering you the same features that you can use through your phone. CFD brokers ranking high in different reviews usually offer one more variant to their customers – the possibility to install an Android or iPhone-based app. Such apps should offer full functionality, in-app support and open all the market opportunities for a trader like live streaming prices and charts, technical indicators, track client sentiment, and many more. When we compiled the list of the best brokers we made sure to include only the ones that can offer the supreme portable trading experience. Always choose a broker that has web-based or Android/iOS-based apps that will adjust to your mobile device.

Customer Service

The main mistake when choosing the best CFD broker is to neglect the importance of a high-quality customer support service. Keep in mind that sooner or later you will need to refer to the customer support team for help. The support must be provided 24/7 via different contact channels like e-mail, live chat, and phone. The CS agents must be well-trained and knowledgeable to help you with any question or issue that may appear when you trade. It is in your best interests to check how the CS services work before signing up for a broker. You can always rely on our list of best forex and CFD brokers where we included only the brokers with the highest quality of customer support services.  

What CFD Broker To Choose For A Beginner

It is of high importance for a beginner to open a trading account with an experienced and reputable broker. At the beginning of your trading career, you should have the possibility to research the available markets and select comfortable financial instruments. Best CFD brokers for beginners will provide you with the possibility to try everything before entering the live trading market via a demo account. It means that you won’t have to risk your money while learning the overall CFD trading process.

A little life hack for you: with our ranking of CFD brokers mentioned above, you do not have to look for the best crypto broker if you’d like to enter the cryptocurrency market or the best CFD shares broker in case you are more into shares. The trading websites we included in the review are universal with the big number of markets available via different trading platforms.

Advantages Of CFD Trading

Deciding to focus on CFD trading is a wise choice because this type of trading brings a lot of advantages. Here is the couple of them:

  • One of the best features of CFDs is that you do not own any underlying assets.
  • With CFDs, you will be able to trade an unlimited variety of assets. Here are some examples: Shares, Indices, Cryptocurrencies, Metals and energy, Hard and soft commodities
  • Plenty of various trading tools (like charts, news feeds, etc.)
  • Reliable risk management instruments.
  • A lot of brokers offer a great choice of up to date educational materials on CFD trading.

Conclusion

CFDs are financial products that offer a great opportunity to earn a considerable profit on various financial markets by taking advantage of volatility. High tolerance for risk is the factor that makes CFDs so attractive for new traders.

FAQ

What Is A Global CFD?

A Global CFD is the way of trading on a big variety of global markets and is based on the difference between buying and selling costs of assets.

What Are The Best Platforms For CFD Trading?

The best CFD platforms are Plus500, XTB, TMGM, Swissquote, FxPro, IC Markets, eToro.

How Do CFD Brokers Operate?

CFD brokers allow you to enter the market with higher investments and pay you the difference between the cost of purchasing and selling assets if you predict the market fluctuations.

How Do I Choose A CFD Broker?

Check if a CFD broker is regulated, what kind of accounts you can open with it, the type of trading platforms you can access, and the quality of customer support. The best CFD broker will meet all the requirements.