CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
BrokerNotes uses a data-driven approach to create objective reviews to help readers answer the important questions when choosing a broker. The team at BrokerNotes collects over 100 different data points on each broker to help readers decide how well the broker performs in all aspects of trading from customer support to the trading environment.
BrokerNotes has collected data on over 100 brokers including Forex, CFD, Spread betting and Social Trading brokers to help all traders find a suitable company.Two important question that traders want to know before they choose a broker is if the broker can be trusted with your money and if the broker is compatible with them?
The Financial Conduct Authority (FCA) is an independent body which oversees and regulates 58,000 UK financial service firms, including forex brokers. This means that when traders use a UK broker regulated by the FCA they can expect to be protected against different types of fraud and financial crimes. The FCA is also the prudential regulator for more than 18,000 financial firms, meaning it obligates those companies to keep a minimum amount of capital, as well insuring their eligible clients’ investments against insolvency up to £50,000 through the FSCS or Financial Services Compensation Scheme.
Forex Trading is the execution of transactions in the international foreign exchange market by exchanging one currency for another. The forex market is the largest decentralised unregulated capital market in the world, with an estimated turnover of £3-5 trillion per trading day. Major participants in the forex market include central banks, large financial institutions, hedge funds, large commercial banks, major transnational corporations, high net-worth individuals and retail traders. Once the exclusive domain of large financial institutions, the forex market now includes many smaller speculators who engage in trading online through dedicated forex brokers.
Contracts for Difference (CFDs) are contracts written between a ‘speculator’ and a ‘provider’ such as an investment bank or spread-betting firm. At the end of the contracted term, the parties settle by paying or receiving the difference between the opening and closing price of a specific underlying financial instrument, asset or exchange rate, with a CFD speculator taking the opposing side of the financial outcome from the CFD provider. UK traders who use CFDs have the advantage of trading stocks, currencies and virtually any other major financial asset without having to pay stamp duty on gains, although they may be subject to capital gains tax. These products can be highly leveraged depending on the broker’s margin requirements. Margin trades can not only magnify profits but losses as well. Due to the risk involved in CFD trading, losses could exceed deposits.
Widely considered the market standard for online forex trading platforms, MetaTrader4 (MT4) offers traders a complete technical analysis package with an extensive array of indicators and templates useful for both novice and experienced traders alike. In addition, users can purchase or develop their own Expert Advisors (EAs), which are custom indicators or software which can fully automate trading activities, as well as an array of third-party plug-in software directly from its experienced programmer base and user community. The majority of online forex brokers now offer the MT4 trading platform and/or its successor MT5, with both able to run on PCs, Macs, tablets and smartphones.
Spread betting allows traders to speculate on thousands of financial instruments depending on the broker they go with, for example, IG offer over 15,000 different instruments for spread bettors including indices, shares, currencies, commodities, cryptocurrencies, bonds and interest rates. Spread betting involves taking a position on whether you think the market will rise or fall, allowing traders to take advantage of both rising and falling prices. One of the major benefits of spread betting for UK traders is the fact that profits are *tax-free and there is no capital gains tax to pay. Spread betting places traders’ capital at risk.
*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.
Also known as "swap free" accounts, Islamic Accounts have a number of differences from regular forex trading accounts. With Sharia Law forbidding the accrual of interest on funds deposited in an account, traders with Islamic Accounts do not incur or receive rollover swap points on positions open for longer than 24 hours, and they earn no interest on deposited funds. Also, Islamic Account trades must be made with no delay, so currencies must be transferred from one account to another immediately, with transaction costs also paid at the same time.