What are the Best CFD Brokers in the UK?

What is a CFD or Contract for Difference?

The term CFD is the abbreviation for Contract For Difference.

A CFD is a financial instrument in the derivatives category. Indeed, the value of a CFD is based on the performance of one or more underlying assets. The assets represented by a CFD can be diverse, such as shares, indices, currencies, commodities, bonds or cryptocurrencies.

One of the particularities of CFDs is that they allow speculation on both the rise and fall of the prices of a financial asset.

The profit or loss generated when closing the position corresponds to the difference between the price of the underlying asset at the time of purchase and the price of this asset at the time of sale.

Attention !

81% of retail investor accounts lose money when trading CFDs.

What is a CFD broker?

A CFD broker is a trading platform that allows investors to speculate on the price movements of a financial asset without actually owning the underlying asset. CFD stands for "Contract for Difference", a derivative product that reflects the price movement of an asset such as a stock, currency, commodity, or stock market index.

A CFD broker provides traders with an interface where they can buy (long position) or sell (short position) a CFD on a given asset. The difference between the entry price and the exit price determines the trader's profit or loss.

The main elements that characterize a CFD broker are:

• Market access: brokers generally offer a wide range of assets as CFDs, including stocks, indices, Forex, cryptocurrencies and commodities.
• Leverage: traders can use leverage, allowing them to amplify their market exposure with reduced capital. However, this also increases the risk of losses.
• Trading fees: a CFD broker may charge spreads (the difference between the buying and selling price), commissions or financing fees for positions held open overnight.
• Regulation: in the United Kingdom, CFD brokers must be registered with the Financial Conduct Authority (FCA) and comply with regulations regarding investor protection and leverage limits.

Types of CFD Brokers: Market Maker vs STP/ECN

When choosing a CFD broker, it is important to understand the differences between Market Makers and STP/ECN brokers. These models influence order execution, fees and the trading experience.

What type of broker to choose?

• Market Maker: Ideal for beginner traders and those who prefer simple pricing with fixed spreads.
• STP/ECN: Suitable for experienced traders looking for reduced costs, greater transparency and direct access to the market.

What Regulation and Security do CFD Brokers in the UK Have?

In the United Kingdom, all CFD brokers must be authorised and regulated by the Financial Conduct Authority (FCA), one of the most respected financial regulators globally. The FCA ensures that brokers adhere to strict standards of transparency, client protection, and financial stability.

Here are the main regulatory authorities that UK traders can trust:

Any CFD broker authorised by the FCA must comply with a comprehensive set of rules designed to protect retail traders and ensure market integrity. These include:

• Leverage restrictions: Maximum leverage of 1:30 for major forex pairs.
• Negative balance protection: Traders cannot lose more than their initial deposit.
• Segregation of client funds: Brokers must keep client money in separate accounts.
• Ban on bonuses and promotions: No trading incentives that encourage excessive risk.
• Risk disclosures: Brokers must clearly display risk warnings, including loss percentages.
• Compensation scheme: Traders are covered by the FSCS (Financial Services Compensation Scheme) up to £85,000 if the broker fails.

How to choose a CFD broker?

Choosing a CFD broker is an essential step for any trader wishing to speculate on the financial markets. Several criteria must be taken into account to ensure that the broker matches your trading profile and complies with current security standards.

1. Available assets

A good CFD broker should offer a wide range of financial assets, allowing traders to diversify their investments. Here are the main types of assets accessible as CFDs:

2. Regulation of CFD Brokers

Regulation is one of the most important criteria when selecting a CFD broker. In the UK, a broker must be authorised by the Financial Conduct Authority (FCA) and comply with strict rules aimed at protecting retail investors.

Here are the main financial regulators you should look for:

Warning

Avoid brokers that are unregulated or licensed in offshore jurisdictions (e.g., Belize, Vanuatu). These often offer little to no investor protection.

3. Leverage in the UK and elsewhere

Leverage allows traders to amplify their market exposure with a reduced capital. However, it also increases the risk of significant losses.

Since 2018, the FCA has imposed restrictions on the maximum leverage allowed for retail traders in the UK:

Professional traders may request higher leverage by waiving certain protections. Some brokers outside of the UK offer significantly higher leverage, but with increased risks and no negative balance protection.

4. Available Orders

A good CFD broker should offer a variety of trading orders to optimise strategies and better manage risks.

5. Available Features

The best trading platforms offer advanced features that facilitate analysis and order execution.

• Trading platforms: MetaTrader 4 (MT4), MetaTrader 5 (MT5), TradingView, proprietary platforms.
• Charts and technical indicators: moving averages, RSI, MACD, Fibonacci, etc.
• Analysis and reporting tools: price alerts, trading signals, real-time market analysis.
• Mobile compatibility: iOS/Android app for trading on the go.
• Trading automation: trading robots (Expert Advisors on MT4/MT5) and API for algorithmic trading.
• Customer service: support in English, 24/7 support via chat, phone or email.

Which CFD broker is best for a beginner UK trader?

Choosing a CFD broker when you're new to trading can be difficult. Here are the essential criteria for selecting a broker suitable for novice UK traders.

• Simple and intuitive platform: prioritise a broker with a clear interface such as eToro or XTB. MetaTrader 4 (MT4) is also a popular option, but a little more technical. It is recommended to test a demo account before switching to a real account.
• Regulation and security: a reliable broker must be regulated by the FCA or a recognised authority in the United Kingdom (ESMA, CySEC, FCA). It must guarantee protection against negative balance and segregation of client funds. Avoid offshore brokers (Belize, Vanuatu) that do not protect investors.
• Transparent and competitive fees: compare the spread (difference between buying and selling price), commissions (some brokers are commission-free on stocks/ETFs), overnight fees (swap) and deposit/withdrawal fees. Opt for a broker with tight spreads and free withdrawals.
• Customer support in English: check if the broker offers assistance in English via chat, email or telephone, as well as a detailed FAQ. Support available 24/5 or 24/7 is a real plus.
• Educational resources and training: a good broker for beginners should offer video tutorials, webinars and trading guides. A free and unlimited demo account is essential for practising without risk.

How to Trade CFDs with an Online Broker?

Trading CFDs with an online broker involves several essential steps. Here's a detailed guide to get you started effectively.

1. Choose a Regulated CFD Broker

Before starting, it’s essential to select a regulated and trustworthy broker. In the UK, make sure the broker is authorised by the Financial Conduct Authority (FCA). A reliable broker should offer:

• A user-friendly trading platform (like MetaTrader 4/5 or proprietary web platforms)
• Competitive spreads and low commissions
• Responsive customer support, ideally available in English 24/5 or 24/7
• Educational resources and risk warnings for beginner traders

2. Opening a Trading Account

Once the broker is selected, opening an account requires:

• An online registration with your personal information
• An identity verification (identity card, proof of address)
• An initial deposit according to the broker's requirements (often between £100 and £500)

Some brokers offer a demo account to practice risk-free before trading with real money.

3. Choose an asset to trade

CFD brokers typically provide access to a wide range of financial markets. Popular assets among UK traders include:

• Stocks: e.g., BP, Tesco, Barclays, Apple, Tesla
• Indices: FTSE 100, S&P 500, Nasdaq, DAX 40
• Forex pairs: GBP/USD, EUR/USD, USD/JPY
• Commodities: Gold, Brent Crude Oil, Natural Gas
• Cryptocurrencies: Bitcoin, Ethereum, Ripple (availability depends on the broker and regulation)

4. Analyse the market and take a position

Before opening a position, analyse the market with:

• Technical analysis: indicators (RSI, MACD, moving averages) and chart patterns
• Fundamental analysis: economic news, company results, central bank decisions

Next, you can open a position:

• Buy (Long): if you think the price will go up
• Sell (Short): if you anticipate a decrease

5. Defining your Leverage and Protection Orders

Leverage allows you to increase your market exposure, but it also amplifies the risks. In the United Kingdom, it is limited to:

• 1:30 on Forex (major pairs)
• 1:20 on gold and major indices
• 1:5 on stocks

To manage risk, use stop-loss and take-profit orders:

• Stop-loss: Automatic closure of the position in case of excessive loss
• Take-profit: Automatic taking of profits when the target is reached

6. Monitoring and Closing Your Position

Once your position is open, monitor its progress via the broker's platform. Depending on your strategy, you can:

• Manually close your position
• Let your take-profit or stop-loss execute automatically
• Adjust your orders according to the market

Attention!

Positions held open for several days may incur overnight fees (swap), to be verified with your broker.

7. Analyse your performance and optimise your strategy

After each trade, analyse your results to improve:

• Check what worked and what didn't
• Adapt your risk management and entry/exit strategies
• Use the broker's tools such as trading journals and market analysis

What are the fees of a CFD broker?

CFD brokers apply various fees that influence the profitability of trading. It is essential to fully understand these costs before opening an account. Here are the main types of fees, with concrete examples.

1. The spread

The spread is the difference between the buying (Ask) and selling (Bid) price of an asset. It is the main source of income for commission-free brokers.

Example of CFD spread

A broker offers a CFD on EUR/USD with a spread of 1.2 pips. If you open a position of 1 lot (100,000 units), the cost of the spread will be:

• 1 pip = $10 on a standard lot
• 1.2 pips = $12 fee upon opening the position

2. Commissions

Certain brokers charge fixed commissions in addition to the spread, particularly on ECN/STP accounts, which offer tighter spreads.

Example of CFD commission

An ECN broker applies a commission of $7 per lot on a Forex trade. If you open a 1 lot position on the EUR/USD, you will pay $3.50 on opening and $3.50 on closing, totalling $7 in fees.

3. Overnight fees (swap)

Overnight fees, also called swaps, are charged when you keep a position open after the markets close (22h GMT). They are based on the interest rates of central banks.

Example of CFD swap fees

You hold a long position on the CFD EUR/USD with a leverage of 1:30. Your broker applies a swap rate of -0.7 pips per day. If your position is 1 lot, you will pay $7 of overnight fees each night.

4. Inactivity fees

Brokers may charge inactivity fees if your account remains inactive for a certain period (usually 3 to 12 months).

Example of inactivity fees

A broker charges £10 per month after 6 months of inactivity. If you do not trade for a year, you will pay £60 of inactivity fees.

5. Deposit and Withdrawal Fees

Some brokers charge fees on bank transactions or withdrawals depending on the payment method used.

Example of deposit and withdrawal fees

A broker charges 1.5% on deposits by credit card and £5 on each withdrawal by bank transfer. If you deposit £1,000, you will pay £15 in fees. If you withdraw £500, you will pay an additional £5.

6. Leverage Fees

Leverage allows you to trade with a larger capital than is available in your account, but it can lead to financing fees.

Example of Leverage Fees

You open a position of £10,000 with a leverage of 1:30. Your broker applies a daily financing rate of 0.01% on the borrowed amount (£9,667). Each day, you will pay approximately £0.97 in fees to maintain this position.

What Strategy to Trade With a CFD Broker?

CFD trading allows traders to adopt various strategies depending on their experience, investment horizon, and risk tolerance. Below is a summary of the most commonly used strategies among UK-based traders, with examples adapted to popular assets like FTSE 100, GBP/USD, and UK stocks.

What are the tax implications for CFD income in the UK?

In the United Kingdom, profits from Contracts for Difference (CFDs) are generally treated as capital gains rather than income. It is crucial for traders to understand the tax rules around CFD trading in order to meet their legal obligations and optimize their net returns.

1. CFD Tax Regime in the UK

CFD profits in the UK are subject to Capital Gains Tax (CGT). Traders are allowed an annual tax-free allowance, and gains above this threshold are taxed based on their personal income band.

📌 Note: CFDs are not subject to UK Stamp Duty as they are derivative contracts.

2. Offsetting Losses and Taxable Gains

CFD losses can be used to offset gains of the same tax year or carried forward to offset future gains.

Example of offsetting:

You earn £6,000 in CFD gains and incur £2,000 in losses in the same year.
Your taxable capital gain is: £6,000 - £2,000 = £4,000

After applying the annual exemption (£3,000), the taxable gain is £1,000.
If you fall under the higher rate tax band (20%), you would owe £200 in CGT.

3. Declaring CFD Gains to HMRC

To declare your CFD trading profits or losses:

• File a Self Assessment tax return via HMRC’s online portal or by paper
• Include your total gains and losses in the Capital Gains Tax Summary section
• Submit before the 31 January deadline (for online submissions related to the previous tax year ending 5 April)

Important: If you hold an account with an overseas broker, you must declare this account to HMRC. Not doing so could result in penalties.

Key box to complete: "Capital Gains" section in your Self Assessment
Deadline: 31 January (for the previous tax year)

P. Laurore

Finance expert

Co-founder of HelloSafe and holder of a Master's degree in finance, Pauline has recognised expertise in personal finance, which she uses to help users better understand and optimise their financial choices. At HelloSafe, Pauline plays a key role in designing clear, educational content on savings, investments and personal finance. Passionate about financial education, Pauline strives, with every piece of content she oversees, to provide reliable, transparent and unbiased information for independent and informed financial management. To this end, she has tested over 100 trading platforms to help internet users make the right choices.