Contract for difference trading lets you speculate on whether the price of an asset will go up or down in value.

It is also a leveraged investment, meaning you do not need to put down the total value of your trade. This can result in quicker losses or gains, depending on how your trade performs.

How to trade CFDs online

Open an account and add money to it to get started. Then choose an asset to trade CFDs on.

You can choose from two prices; the buy price, if you think the value will go up, and the sell price, if you think the value will go down.

How to get the best CFD account

A contract for difference (CFD) is a way of trading on financial markets without owning the underlying asset you trade on.

Before you start trading, look at the following to find the best trading account:

  • The size of the spread: the smaller the better

  • The margin per trade

  • If you can trade on the market you want

Why is the spread important?

The spread is the difference between the sell and buy price on a trade. The bigger the spread, the more the market has to move in your favour before you can make a profit.

For example, if the sell/buy price on the FTSE 100 is 6800/6801 (one point spread), the market needs to move by more than one point in your favour to give you a profit.

When you compare CFD brokers, look for the smallest spread you can find on the market you want to trade on.

What does the margin do?

When you make a trade, you only need to have a small percentage of the total value of your trade in your account, this amount is the margin.

For example, a trade worth 100,000 and a margin of 0.1% only requires you to have 100 available in your account.

It also acts as a deposit, which means the CFD company can use it to cover any losses you make on a trade up to the amount of the margin.

However, when the margin is small, there is an increase to both the risk to your money and the potential for a higher profit. Find out more information on margins here.

What markets can you trade CFDs on?

You can use this comparison to see the spreads and margin offered on:

  • Indices, stock exchanges like the FTSE 100 and Wall Street

  • Forex, currency pairs like GDP/USD (pound/US dolllar) and EUR/USD (euro/US dollar)

Most companies let you CFD trade on many other markets, so check each one before opening an account.

CFD trading account FAQs

Q

What is a CFD?

A

A contract for difference (CFD) is a way of trading on financial markets without owning the underlying asset you trade with. Find out more here.

Q

How much money do I need to make a CFD trade?

A

It depends on the margin, as you can only make a trade if the amount in your account covers the margin needed for the trade. Find out more here.

Q

What is the spread?

A

It is the difference between the sell and buy price. The smaller the spread, the smaller the market movement needs to be before you make a profit.

Q

Can I lose more money than I deposit?

A

Yes, although your margin helps cover any losses you make, you could lose more that what is in your account. Here is more information on CFD trading.

Q

What are points and pips?

A

Points are used to measure any market movement when CFD trading, with the exception of CFD forex, which uses pips. Find out more here.

Q

How do I make a CFD trade?

A

After you choose a broker, go to their website and register for an account. When your account is open, here is how to make a CFD trade.

About our CFD trading accounts comparison

Q

Who do we include in this comparison?

A

We include CFD trading accounts from our panel. They are either authorised and regulated by the Financial Conduct Authority (FCA), or a European regulator and listed on the FCA register as EEA authorised.

Here is more information about how our website works.

Q

How do we make money from our comparison?

A

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

You do not pay any extra and the deal you get is not affected.