CFD Stock Trading
CFD stock trading is a popular method that traders use to speculate on the price movements of equities and the market as a whole. Investors can be bullish or bearish on their value without the need to physically purchase company shares.
Read on to find out what CFD stock trading is, how it works and how to get started. This article will also run through some popular strategies and a few trading tips to get you going. We have compiled a list of our top recommended CFD stockbrokers below.
Best CFD Stock Trading Brokers
Here is a short summary of why we think each broker belongs in this top list:
- Interactive Brokers - IBKR provides access to an unparalleled array of equity products originating from 24 diverse countries. Whether seeking capital appreciation, dividends, or voting rights, you can directly invest in stocks. Alternatively, you can engage in speculative trading on price movements through CFDs, futures and more than 13,000 ETFs. IBKR also enhanced its European equity derivatives offering in 2024 by adding trading on CBOE Europe Derivatives (CEDX).
- Capitalcore - Capitalcore offers just 18 stocks spanning major US firms like Apple, Netflix and Nvidia and a handful of futures indices. However, this falls way short of the 16,000+ global stocks and indices at alternatives like IG. Also, the lack of screeners and market insights results in a very limiting stock trading experience.
- Videforex - Trade binary options and CFDs on global stocks from US, European, Russian and Asian exchanges, as well as 37 indices covering a wide range of global markets. The access to stocks trumps many binary options brokers, especially since big names like Palantir, Apple and Meta were added to the web platform in 2025..
- Sage FX - Speculate on price movements of 37 US and European blue chip stock CFDs, including Adidas, Intel and Volkswagen. On the negative side, the selection of stocks is limited vs alternatives and direct share dealing isn't provided.
- xChief - xChief offers 100 US company stock CFDs for MT4 DirectFX and Classic+ account holders. Alongside popular multinationals like Apple and Coca-Cola, you can also speculate on several major stock indices with spreads from 2.
- RaceOption - Go long or short on over 50 major global shares and map out your strategies using the intuitive charting tools. Those with $1,000+ starting capital can also enjoy their first 3 trades risk-free.
CFD Stock Trading Comparison
| Broker | CFD Leverage | Minimum Deposit | Minimum Trade | Regulators |
|---|---|---|---|---|
| Interactive Brokers | 1:50 | $0 | $100 | FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMA, AFM |
| Capitalcore | 1:2000 | $10 | 0.01 Lots | IFSA |
| Videforex | 1:500 | $250 | $0.01 | - |
| Sage FX | 1:500 | $10 | 0.01 Lots | Pending |
| xChief | 1:1000 | $10 | 0.01 Lots | ASIC |
| RaceOption | 1:500 | $250 | $0.01 | - |
Interactive Brokers
"Interactive Brokers is one of the best brokers for advanced day traders, providing powerful charting platforms, real-time data, and customizable layouts, notably through the new IBKR Desktop application. Its superb pricing and advanced order options also make it highly attractive for day traders, while its diverse range of equities is still among the best in the industry."
Christian Harris, Reviewer
Interactive Brokers Quick Facts
| FTSE Spread | 0.005% (£1 Min) |
|---|---|
| GBPUSD Spread | 0.08-0.20 bps x trade value |
| Stocks Spread | 0.003 |
| Leverage | 1:50 |
| Regulator | FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMA, AFM |
| Platforms | Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, TradingView, eSignal, TradingCentral, ProRealTime, Quantower |
| Fractional Shares | Yes |
| Demo Account | Yes |
| Minimum Deposit | $0 |
| Automation | Yes |
| Account Currencies | USD, EUR, GBP, CAD, AUD, INR, JPY, SEK, NOK, DKK, CHF, AED, HUF |
Stock Exchanges
Interactive Brokers offers trading on 16 stock exchanges:
- Borsa Italiana
- CAC 40 Index France
- Chicago Mercantile Exchange
- Euronext
- IBEX 35
- Japan Exchange Group
- Korean Stock Exchange
- London Metal Exchange
- London Stock Exchange
- Nasdaq
- Nasdaq Nordic & Baltics
- New York Stock Exchange
- Russell 2000
- Shenzhen Stock Exchange
- Tadawul
- Toronto Stock Exchange
Pros
- Interactive Brokers has launched ForecastTrader, a unique, zero-commission product where users can trade yes/no Forecast Contracts on political, economic, and climate events, with fixed $1 payouts per contract, 24/6 market access, and 3.83% APY on held positions.
- With low commissions, tight spreads and a transparent fee structure, IBKR delivers a cost-effective environment for short-term traders.
- There's a vast library of free or paid third-party research subscriptions catering to all types of traders, plus you can enjoy commission reimbursements from IBKR if you subscribe to Toggle AI.
Cons
- IBKR provides a wide range of research tools, but their distribution across trading platforms and the web-based 'Account Management' page lacks consistency, leading to a confusing user experience.
- Support can be slow and frustrating based on tests, so you might find it challenging to reach customer service representatives promptly or encounter delays in resolving issues.
- You can only have one active session per account, so you can’t have your desktop program and mobile app running simultaneously, making for a sometimes frustrating trading experience.
Capitalcore
"The major selling points of Capitalcore are its high leverage options up to 1:2000 and zero commission or swap fees. However, its weak regulatory oversight from the IFSA and non-existent education place it far behind the top brokers."
Capitalcore Quick Facts
| Bonus Offer | 40% Deposit Bonus up to $2,500 |
|---|---|
| FTSE Spread | 25 |
| GBPUSD Spread | 0.5 |
| Stocks Spread | 1.5 (Apple) |
| Leverage | 1:2000 |
| Regulator | IFSA |
| Platforms | WebTrader, Pro |
| Fractional Shares | No |
| Demo Account | Yes |
| Minimum Deposit | $10 |
| Automation | No |
| Account Currencies | USD |
Stock Exchanges
Capitalcore offers trading on 5 stock exchanges:
- DAX GER 40 Index
- Dow Jones
- FTSE UK Index
- Nasdaq
- S&P 500
Pros
- The Capitalcore platform provides comprehensive charting tools and a wide range of 150+ technical indicators, ideal for detailed market analysis.
- Capitalcore has added binary options trading on 30+ currency pairs, metals and crypto with one-click trading and payouts up to 95%.
- While a relative newcomer to binary options space, its transparent, accessible service earned it runner up in DayTrading.com's 2025 'Best Binary Broker' award.
Cons
- Platform support is limited to proprietary software, so there's no integration with the market-leading MetaTrader or cTrader, which offer built-in economic news and support automated trading.
- Capitalcore’s threadbare education and research seriously trail category leaders like IG, making it less suitable for aspiring traders.
- The web platform was inconsistent during testing, with occasional technical glitches that meant the trading platform wouldn’t load.
Videforex
"Videforex will serve traders looking for a no-frills, easy-to-use platform to speculate on the direction of popular financial markets through binaries. With a sign-up process that takes a matter of minutes and a web-accessible platform, getting started is a breeze. "
Videforex Quick Facts
| Bonus Offer | 20% to 200% Deposit Bonus |
|---|---|
| FTSE Spread | Floating from 0.2 |
| GBPUSD Spread | Floating from 0.1 |
| Stocks Spread | NA |
| Leverage | 1:500 |
| Platforms | TradingView |
| Fractional Shares | No |
| Demo Account | Yes |
| Minimum Deposit | $250 |
| Automation | Yes |
| Account Currencies | USD, EUR, GBP, AUD, RUB |
Stock Exchanges
Videforex offers trading on 7 stock exchanges:
- Dow Jones
- FTSE UK Index
- Hong Kong Stock Exchange
- IBEX 35
- Nasdaq
- S&P 500
- SIX Swiss Exchange
Pros
- Videforex regularly runs trading contests, offering practice opportunities and cash prizes to beginners and experienced traders, with position sizes from just ¢0.01.
- Videforex is one of the few brokers with 24/7 multilingual video support, providing comprehensive assistance for active traders.
- Traders can earn up to 98% payouts on 100+ assets with the broker’s binary options, bringing it in line with competitors like IQCent.
Cons
- The client terminal needs improvements based on our latest tests, sporting sometimes slow and unresponsive widgets which could dampen the experience for day traders.
- Videforex lacks authorization from a trusted regulator, meaning traders may receive little to zero safeguards like segregated client accounts.
- The absence of any educational tools is a serious drawback for newer traders who can find blogs, videos and live trading sessions at category leaders.
Sage FX
"Sage FX will suit forex traders looking for high leverage and ECN spreads. The broker's prop trading service will also appeal to users looking for funded accounts with up to $200K available."
Tobias Robinson, Reviewer
Sage FX Quick Facts
| Bonus Offer | $1,500 trading competition |
|---|---|
| FTSE Spread | 5.0 |
| GBPUSD Spread | 0.9 |
| Stocks Spread | N/A |
| Leverage | 1:500 |
| Regulator | Pending |
| Platforms | TradeLocker |
| Fractional Shares | No |
| Demo Account | Yes |
| Minimum Deposit | $10 |
| Automation | Yes |
| Account Currencies | USD, EUR, GBP, CAD, AUD |
Stock Exchanges
Sage FX offers trading on 0 stock exchanges:
Pros
- Flexible accounts with STP and ECN solutions available
- Bonus offers and trading competitions
- High leverage up to 1:500
Cons
- Lacks educational resources and other extra features
- Not regulated by any reputable body
- Relatively narrow range of asset classes
xChief
"xChief continues to prove popular with investors looking to trade highly leveraged CFDs on the popular MetaTrader platforms. The broker's rebate scheme and investment accounts will particularly appeal to seasoned traders. However, the lack of top-tier regulatory oversight is a major drawback."
xChief Quick Facts
| Bonus Offer | $100 No Deposit Bonus |
|---|---|
| FTSE Spread | 70 |
| GBPUSD Spread | 0.9 |
| Stocks Spread | 50 |
| Leverage | 1:1000 |
| Regulator | ASIC |
| Platforms | MT4, MT5 |
| Fractional Shares | No |
| Demo Account | Yes |
| Minimum Deposit | $10 |
| Automation | Yes |
| Account Currencies | USD, EUR, GBP, JPY, CHF |
Stock Exchanges
xChief offers trading on 14 stock exchanges:
- Australian Securities Exchange (ASX)
- CAC 40 Index France
- DAX GER 40 Index
- Deutsche Boerse
- Dow Jones
- Euronext
- FTSE UK Index
- Hang Seng
- Hong Kong Stock Exchange
- IBEX 35
- Japan Exchange Group
- Nasdaq
- New York Stock Exchange
- S&P 500
Pros
- Traders can access a copy trading solution via the MetaQuotes Signals service
- The low minimum deposit of $10 will appeal to beginners, as well as the beginners’ guides in the Library
- The broker offers several account types to suit different traders, including a Cent account for beginners and pro-level hedging/netting accounts
Cons
- The total range of 150+ assets is much lower than most competitors who typically offer hundreds
- The Classic+ and Cent accounts provide access to fewer instruments than the other account types, at 50+ and 35+, respectively
- Fees and minimums are imposed on most withdrawal methods, including a €60 minimum for SWIFT bank transfers
RaceOption
"RaceOption will appeal to investors looking for a feature-rich binary options trading experience with regular contests, account-based perks, and copy trading. The catch is its unregulated status, with little to zero investor protections available based on our investigations."
RaceOption Quick Facts
| Bonus Offer | 20% - 200% Deposit Bonus |
|---|---|
| FTSE Spread | Variable |
| GBPUSD Spread | Variable |
| Stocks Spread | Variable |
| Leverage | 1:500 |
| Platforms | TradingView |
| Fractional Shares | No |
| Demo Account | Yes |
| Minimum Deposit | $250 |
| Automation | No |
| Account Currencies | USD, EUR, GBP, AUD, RUB |
Stock Exchanges
RaceOption offers trading on 2 stock exchanges:
- DAX GER 40 Index
- FTSE UK Index
Pros
- RaceOption makes account funding a breeze with fee-free and near-instant deposits via bank cards and cryptos, plus guaranteed withdrawals processing within 1 hour.
- RaceOption is in the less than 1% of brokers that offers video chat, available 24/7 in multiple languages, although the knowledge of agents about trading and regulatory issues needs improvement from our direct experience.
- Payouts on popular underlying assets like EUR/USD can reach 95%, beating out most alternatives based on our evaluations, and increasing potential returns, while the first 3 trades are risk-free in Silver and Gold accounts.
Cons
- RaceOption is one of the only brokers not to offer a demo account, which when considered alongside the absence of education, makes this broker a poor choice for beginners.
- RaceOption is an unregulated, high-risk broker that doesn’t provide investor compensation or legal recourse options should you run into trading or withdrawal issues.
- While still affordable for many retail investors, the $250 minimum deposit raises the entry barrier, especially compared to Deriv and World Forex who are designed for budget traders.
What Is CFD Stock Trading?
A contract for difference (CFD) is an agreement between a broker and a trader that states the latter will either pay or be paid the difference between the value of an asset at the start of the contract and the end. Typically, these contracts have no expiry date and can be opened and closed whenever the trader wishes.
CFD stock trading involves derivative instruments, which means that the trader does not purchase the asset itself, they only speculate upon its price movements.
Therefore, investors do not take ownership of the underlying asset. For example, purchasing a CFD on Tesla shares does not give the investor shares in the company, simply the opportunity to be paid if their value goes up.
How CFD Stock Trading Works
With CFD share trading, investors essentially invest, or speculate, on the price movement of a stock, with the capability to profit (or loss) from both bullish and bearish markets.
CFD stock trading can be carried out by either going long or short on an asset if they believe its price will rise or fall, respectively.
Profit (or loss) is then determined by the difference between the value of the stock when the position is opened and its value when it is closed. Commissions are usually charged to open and close a CFD, typically around 0.1% for UK stocks.
Let us look at a CFD stock trading example where an investor believes the value of Lloyds Banking Group stock will rise from its current point ask/bid price of 45.55/46.55 pence.
They then purchase 10,000 units going long, meaning they stake £4,655 (10,000 * 46.55p bid price), and the broker charges a 0.1% commission with a minimum fee of £8. Since the commission would only be £4.66 (0.1% of £4,655), the minimum charge of £8 is charged.
After eight hours, the value of the stock CFD has risen to 65.55/66.55 pence and the trader closes the contract for £6655 (10,000 * 66.55p), for a gross profit of £ 2,000 (£6655 – £4655).
However, another £8 commission charge is taken (the 0.1% charge of £6.56 is less than the minimum). So, the total commission taken is £16 taken from a gross profit of £2,000, leaving the trader with a net profit of £1,984.
The same process is followed for short CFDs, except the price difference is in the other direction. That is, the stock price dropping to 25.55/26.55p would produce the same profit.
CFD Stock Trading Vs Spot Stock Trading
So what is the difference between CFD stock trading and traditional (spot) stock trading? Are you better off CFD share trading or just share trading?
Spot stock trading would entail purchasing some company shares if you believe the stock price will increase. This would come with all the benefits of owning the shares, gaining voting rights, dividends etc.
However, if the stock price falls, you will lose money as the value of your holding has decreased.
CFD stock trading, on the other hand, does not provide ownership but allows you to profit (or lose) from bidirectional price movements and execute trades much more quickly, better facilitating day trading strategies.
Each share trading style has its benefits, for example, spot stocks are probably better if you wish to hold the shares for a long time, earn voting rights and dividend yields.
However, if you wish to speculate on short term price movements, CFD stock trading may be better for you.
CFDs also come with the opportunity to leverage your trades, borrowing a portion of the contract cost from the broker so that you can increase your market exposure and take larger positions.
Experienced investors may use CFDs to hedge against traditional stock holdings. If you are holding for the long term but believe it may do poorly in the short term, you can purchase a selling CFD to balance this out, without affecting your shareholdings.
The Influence Of CFDs On The Price Of Stocks
Does CFD stock trading affect stock prices in any way? The simple answer is no. CFDs are derivative contracts that are related to the price movement of stocks. When buying stock/share CFDs, the trader never actually buys or owns the underlying asset. Therefore, CFDs have no impact on the value of the stock they are based on.
What Platforms Can I Trade On
You might have heard that share CFD trading is only available on MetaTrader5 (MT5) but this is not the case. Even though it’s commonly associated with forex, CFD and share trading is possible on MetaTrader4 (MT4). However, MetaTrader5 was designed with CFDs in mind and therefore presents an easier interface and is more suited to a CFD stock/share trader.
There is also a large number of other, less popular, trading platforms that support CFD stock trading. Many brokers offer their own proprietary or commercial platforms, such as cTrader or NinjaTrader. If a broker offers CFD shares trading then they will almost always provide access to a platform that supports it.
CFD Stock Trading Strategies
With CFD stock trading, strategy is important. Here, we have highlighted a few of our favourite strategies, though more detail can be found on our strategies page:
Pair Trading
This strategy entails investing in two different stock CFDs, with one long position and one short. The two stocks should be highly correlated assets that have recently become less correlated.
The aim is to take advantage of a divergence between the two underlying assets. You open a long position on the weaker asset and a short position on the stronger one.
The direction of the market shouldn’t matter, you will be winning with one position and losing with the other.
Any potential gain is then based on the price difference between these assets, rather than the direction of their price movements.
Hedging
This is almost like a CFD stock trading insurance policy and works if you already own stocks or have open positions.
Let’s say you own stocks in Coca-Cola and you believe the value is going to drop in the short term. You don’t want to sell the stock, as in the medium or long-term, you expect it to recover.
This is where hedging comes in. You can go short on Coca-Cola and, if the price does drop, you can cash these in and balance out any losses from your original holding.
Check that your broker allows hedging prior to trading.
News Trading
News trading is all about staying up to date with the latest announcements and releases from different companies. These will have a large impact on the value of a company’s stocks. With news trading, there are two approaches.
Firstly, you can purchase CFD contracts before the announcement in an attempt to predict the reaction to the release and the effect it will have on a stock’s price, this can be high risk. The other method is to use CFD stock trading just after the announcement, this way you can see the initial change in value and follow it. You may not see the full price swing, but it is less risky.
Pros
- No stamp duty
- Higher leverage
- Instant order execution
- Trade short or long positions
- You can offset losses against profit for tax purposes
- You can use CFDs to hedge against traditional stock holdings
Cons
- Lack of ownership and voting rights
- Financing fees for holding overnight
- High concentration levels are required
- You won’t earn dividends from holding contracts
- You can incur large losses
How To Start CFD Stock Trading
If you are looking to start trading stock CFDs, follow this step-by-step guide:
Choose A Broker
The first thing to do to begin CFD stock trading is to find a broker. There are many brokers out there, so selecting the best one can be daunting. Here are a few things to compare:
- Whether they are regulated
- Customer service levels
- Financing (overnight) fees
- How the trading platform works/feels
- Deposit and withdrawal minimums/fees
- Commissions or opening and closing charges
- The stocks they offer or exchanges they have access to
Research The Market
Once you’ve found a broker and opened an account, you should research the market. Look at the trends for different stocks, 1- or 3-year price charts can often show regular patterns. Also, search news sites to see if there are any new developments related to the companies you’re looking at.
Open A Position
If you have found a suitable stock and know whether you want to go short or long, you are ready to open a position and begin CFD stock trading. Purchase the number of CFD contracts you are comfortable with and be sure to keep an eye on the margin you need to put down and any potential losses.
Implement Risk Management Strategies
CFD stock trading comes with a level of risk, especially if you are using margin.
It is always wise to implement some form of risk management, whether it be stop loss orders that automatically close the contract once a predefined loss has been seen or a complex combination of trailing stops, hedging and size calculations.
Monitor And Close Position
Make sure you are constantly checking the market and be ready to close at any point. If you are day trading, you will want to close multiple times within a day. Alternatively, if you have a longer-term approach, you should still keep an eye on the market, and use trade calculators to ensure overnight fees are taken into account.
Trading Tips
These tips could enhance your CFD stock trading skills:
- Do Your Homework: Do plenty of market research before you purchase any CFD stock contracts. Make sure you have seen all the past charts, trends and dips. History may repeat itself, so give yourself the best chance by learning about the past.
- Follow The News: News releases have a huge impact on stock prices. Keep up to date on any new announcements and stay ahead of the curve.
- Use A Demo Account: Demo accounts are your friend. They let you practise strategies, refine approaches and get a feel for platforms, all without spending real money. Take time on a CFD share trading demo account before you jump into the real deal.
- Keep Learning: There are so many educational resources available for free that you can use to your advantage. YouTube has some great CFD share trading demo videos and there is a wealth of books and PDFs available on the subject.
Final Word
CFD stock trading presents a great way to access a range of different stocks on the market without owning the underlying asset.
Many experienced traders are adding stock CFDs to their portfolios, both as a stand-alone instrument and as a means of hedging existing holdings. Follow our guide to start CFD share trading today and make use of our tips and strategies to give yourself a head start. Also, check out our list of top recommended CFD stock trading brokers.
FAQs
Do You Own The Stock When CFD Stock Trading?
No, you do not own the underlying stock when you trade stock CFDs. You simply speculate and make a profit or a loss based on the price movement of the stock.
Is CFD Stock Trading Legal In The UK?
Yes, CFD stock trading is legal in the UK. Brokerages offering stock CFDs are regulated by the Financial Conduct Authority (FCA).
What Is The Best CFD Stock To Trade?
There is no simple answer as the market fluctuates so much. Stocks with the highest trading volume, liquidity and volatility are generally the best for traders.
Is CFD Stock Trading Taxable In The UK?
Yes, CFD stock trading is taxable in the UK. It is exempt from stamp duty, but any potential profits are eligible for capital gains tax (CGT) – over a certain threshold.
Is CFD Stock Trading Safe?
No financial instrument is 100% safe as the markets are inherently uncertain and constantly fluctuating. CFD stock trading can be carried out with reduced, although still very present, risk through the use of robust risk management strategies and limited leverage.