Maximise Market Opportunities With the Best CFD Brokers in the UK

Plus500

Besides low-cost CFD trading, Plus500 maintains its edge against peers like Trading 212 or eToro with a set of very unique and handy trading tools. We were particularly impressed with its recently launched +Insights tool. It is, in many ways, Plus500’s take on social trading – but promises a little more than just observing more experienced traders.

Being one of the best trading platforms in the market, It gives you insights into the popularity and return rates of various assets. You’ll have data on questions, such as: Which commodities were bought the most last week? What are the markets with the highest return rate? Which indices were followed the most, last year?

Mobile traders will also appreciate the versatility of Plus500’s trading alerts system. Besides simple price alerts, you can also set alerts to notify you when the percentage of buyers and sellers of an asset reaches a certain level.

Plus500UK Ltd is authorised & regulated by the FCA (#509909).

Pros

• A variety of trading alerts
• Tight spreads
• Great range of CFD trading instruments
• No deposit fees or commissions, keeping costs low for traders

Cons

• Customer support is not the best
• High non-trading fees
• Limited range of educational materials for beginners

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Plus500 Risk Warning: *81% of retail CFD accounts lose money

It’s much easier to understand CFDs in comparison to something more familiar, like share dealing.

Imagine you’d like to buy some Microsoft shares. First, you’ll need money to invest and a trading platform that has access to stocks listed on the NASDAQStock Market. Then, you buy those shares, and they are deposited into your CFD trading account. After this trade, you actually own the shares and become a shareholder in Microsoft.

CFDs are completely different. They constitute a contract between you and your CFD broker to speculate on the price movement of the stock price. When you get into a CFD contract, you don’t actually own the stock or become a shareholder.

CFDs are traded in units. 1 CFD equals 1 share, and so its price equals the price of the share you wish to trade. 2 shares would make 2 units of CFD. If the stock costs £100 per share, your contract would also cost £100. Each unit within a contract for difference represents one share. As you buy more shares, your contract will be bigger.

Say that you believe Microsoft's price will go up. You can buy a CFD to take advantage of the upwards price movement ("go long"). The price will be the current share price of Microsoft, say £250. If the price goes up by £40, you benefit from that price rise. When you close your trade or sell your CFD, you can make a profit from the difference (£40).

However, if you are wrong and Microsoft's price drops in value instead of increasing, then you have to pay the difference to your broker. If the price drops by £40 by the time you close the trade, you pay that money to your CFD broker.

One of the standout advantages of CFD trading is the ability to speculate on both rising and falling market prices. This is commonly referred to as going long or going short.

• Going Long or ‘Buy’: When you go long, you are essentially buying a CFD because you believe the price of the underlying asset will increase. For instance, if you expect Microsoft shares to go up, you open a long position. If the market moves in your favour, you profit from the price difference between your entry and exit points.

• Going Short or ‘Sell’: Conversely, when you go short, you are selling a CFD in anticipation that the price will fall. This is something that traditional share dealing often doesn’t allow – you typically only profit when asset prices rise. CFDs break this limitation, enabling traders to potentially profit even when markets are heading south.

The first time I went short was during a market dip in early 2023. I had a strong feeling that a tech stock I was monitoring was overvalued after a sudden rally. I opened a short position through my CFD broker, and within a week, the price had dropped significantly. That trade not only gave me a solid return, but also taught me the power of strategic short-selling – something I’d never had access to before with traditional investing.

CFD platforms typically show two prices for each asset: the buy (or ask) price and the sell (or bid) price. To open a long position, you trade at the buy price. To go short, you trade at the sell price. Being able to take advantage of both directions offers flexibility that’s invaluable in volatile markets.

Another key use of short-selling is hedging. Hedging means opening a position that offsets potential losses in another investment. Here’s a practical example: let’s say you own 10 Microsoft shares, each worth £100 – your investment totals £1,000. If you anticipate a drop in the price, you could open a short CFD position for those same 10 shares at £100 each. If the share price falls to £50, your original investment is now worth £500, but your CFD short position gains £500 – effectively cancelling out the loss.

This kind of strategic flexibility is one of the biggest reasons I transitioned to CFD trading. It gives me more control over my portfolio and helps me manage risk far more effectively than I could with standard stock purchases alone.

Leverage is borrowed money from a trading platform, it essentially increases your buying power. If you have £1,000 to trade with, for example, and your broker gives you 5x leverage, it increases your initial investment to £5,000.

Say that you opened a long position with £1,000, and the price moved up by 5%. You’ll get £50 profit when you close your trade. If you enter the contract with 5x leverage, your profit would be £250.

Leverage is seen both as a blessing and a curse. In the above example, if you use leverage to bump your position from £1,000 to £5,000 and the price actually dropped 5%, you would owe the broker £250 instead of £50.

What are the margin requirements for CFDs?

Margins basically function as insurance. For the CFD broker to give you leverage, you have to have some money in your trading account that will work as collateral – and that's called a margin requirement.

Margin requirements vary from asset to asset, and within an asset class. Shares, for example, tend to have the highest margin requirements (usually around 20%) whereas currency pairs tend to have the lowest (around 3% for major pairs).

For riskier assets, like minor currency pairs, margin requirements tend to be higher. Gold prices are less volatile than other commodities, for example. You are likely to see lower margin requirements for gold (around 5%) than other commodities (around 10% on average).

CFDs and spread betting are very similar: they both trade at the asset price and allow you to speculate on the price direction. One main difference is that spread bet contracts have an expiry date. This is when you settle the contract (either get paid if you were right or pay if you were wrong). CFDs have no set date, you can close your trade whenever you want.

CFDs are exempt from the 0.5% stamp duty you pay whenever you buy an asset online. But you still have to pay capital gains tax.

If you sell your asset for more than what you bought it for, it means that you made a profit. Say that you bought that Microsoft share for £200. Its price increased to £250, and you sold it straight after. The £50 difference is your profit. Hooray! But now the government will have some of it.

That’s what capital gain tax is. It’s the tax on the profit you make when you sell an asset.

But it’s not all grim – you have some allowances to max out before you have to pay taxes. For the tax year 2023/2024, your capital gain tax allowance is £12,500. You have to pay 20% in taxes for anything above that by filling in a self-assessment tax return to HMRC.

The first thing you should check is whether your CFD broker is regulated by the Financial Conduct Authority (FCA) or not. The FCA is the main regulatory body that oversees financial institutions like brokers, helps keep the competition fair, and protects professional traders like you.

Back in 2015 for example, the FCA introduced negative balance protection – which is a superb risk management tool that you can use when trading CFDs. It automatically closes your position before your balance goes negative and you owe money to your broker (which can happen pretty quickly when trading with leverage).

The FCA also regulates the leverage offered by the CFD brokers in the UK as well. According to its limits, CFD traders can get 1:30 of maximum leverage for major currency pairs, while stocks are capped at 1:15.

When you trade with FCA-approved CFD brokers, you also get a free insurance policy. The government has set up the Financial Services Compensation Scheme (FSCS) that covers deposits of up to £85,000 if anything goes wrong with the company holding your cash.

These regulations also grant you access to the Financial Ombudsman Service (FOS). If you ever feel like your broker is not treating you fairly or is undertaking some shady business, provided that you couldn’t settle the issue by contacting customer support, then you can make an official complaint through FOS.

CFDs can be used with a variety of assets such as stocks, commodities, currencies, bonds, indices, and ETFs. It makes sense to go with the investment platform that offers a good variety of asset types so that you have loads of opportunities.

• Stocks and shares are the most common trading instruments. They represent a unit of a company – so when you own a stock, you essentially own a little share of a company. They are listed on exchanges like the London Stock Exchange or the New York Stock Exchange, where you can buy or sell them. The price of a stock fluctuates depending on how the company is performing and how investors feel about the stock market in general.

• ETFs are baskets of assets (like stocks). They function as pools of investments – dozens, hundreds, or even thousands of assets can be included in ETFs. They are traded on the stock exchange like stocks and are usually bundled into topical groups, like automaker companies or the best-performing 100 companies on an exchange.

• Commodities are products we consume such as energy, livestock, or metals. CFDs are a common way to trade commodities. One thing to pay attention to is that different factors contribute to the price swings of commodities, like natural events or scarcity of a commodity.

• Currencies are very common trading instruments in the UK – and CFDs are commonly used to trade them. It’s essentially swapping one currency (like British pounds) for another (like US dollars) to make a profit from price differences. Pairs that include currencies from developing or emerging economies, like the Turkish lira or Mexican peso, can be very volatile, so you should be extra careful when using CFDs for trading foreign currencies.

These are the most commonly used trading instruments for CFDs. A CFD broker may offer a variety of assets, but may not offer CFDs for each one of them. You should also check how many CFD options they offer. Saxo Markets, for example, is one of the brokers that offer the most CFDs with a good selection of over 9,000 contracts.

Pricing for UK CFD trading is different from regular trading – and we can’t stress this enough: Check. Your. Trading costs.

• Commissions are charged per trade. CFD brokers usually don’t charge commissions when trading Forex pairs and commodities, but they do so for stocks. The opening and closing of trades are considered two separate trades. This means that you have to pay commissions when you buy a CFD and also at the time of selling.

• Overnight charges are interest charges that you have to pay every day you keep your position open. They are usually calculated as a percentage of the position.

• Spreads are one of the main ways CFD brokers make money. They are the difference between the buy (offer) and sell (bid) prices. Due to spreads the price to buy an asset will always be slightly higher than the real market price and the one to sell will always be lower.

There are several trading tools that CFD trading platforms offer to help improve your strategy and make more informed decisions. Below are the most common and useful tools you should look out for:

• Market research and price alerts: UK CFD trading revolves around predicting whether an asset’s price will rise or fall. While speculation is a natural part of it, successful trading isn’t based on guesswork. Reputable CFD brokers typically provide access to detailed market research, including real-time news, economic calendars, and expert analysis on ongoing market events. I remember using these features during a volatile period in the commodities market – having instant access to commentary and alerts helped me avoid a poorly timed entry and saved me from a significant loss. Price alerts are also incredibly useful; they allow you to act quickly when an asset reaches a target value, so you never miss an opportunity or hold onto a trade longer than necessary.

• Educational resources: CFD trading in the UK involves complex mechanisms, especially when it comes to understanding how leverage and margin work. That’s why the availability of educational content is a crucial factor when comparing brokers. If you’re new to trading, look for brokers that offer structured learning paths, interactive webinars, and access to a community forum. Personally, I found the combination of a beginner’s course and a live Q&A session to be incredibly helpful when I was starting out – it made the whole process feel far less overwhelming.

• Leverage is one of the more advanced tools in CFD trading, offering the potential for amplified gains — but also increased risk. Depending on the broker, leverage can range from 1:5 to 1:30, and it often varies by the asset type. For instance, major currency pairs might allow higher leverage than more volatile assets like cryptocurrencies. When I first experimented with leverage, I used a conservative ratio of 1:5 to understand how my positions reacted to market movements. It gave me a better grasp of risk management before moving on to more aggressive strategies.

• Demo account (paper trading): Practising your trades in a risk-free environment is one of the smartest ways to learn the ropes of UK CFD trading. Most top-tier brokers offer demo accounts, with some – like eToro – providing up to $100,000 in virtual funds. I used a demo account extensively for several weeks before investing real money. It allowed me to familiarise myself with the platform’s interface, test my trading strategy, and make beginner’s mistakes without any financial consequence. Honestly, I wouldn’t recommend skipping this step — it builds your confidence and helps you avoid costly errors later.

Risk management tools

Using appropriate risk management tools while trading CFDs is vital. You should always be on the lookout for a variety of order types that can help you minimise your losses. Here’s a list of the most common order types along with their advantages and disadvantages.

Besides conditional orders, negative balance protection is a common risk management tool CFD brokers in the UK offer. Although it's among FCA regulations, not every CFD broker in the UK offers this service. You can find it with IG, eToro, and Trading 212.