Best CFD Brokers Comparison

Compare Top CFD Brokers for 2018 in the UK
Use our comparison tables to compare the best UK Regulated CFD Brokers authorised by the FCA. Choose or switch to a CFD provider that offers the most assets, best pricing and customer security.
In this UK’s Best CFD Brokers Comparison you will find the most suitable broker for your trading requierments.
When you short-sell, you are in effect borrowing the asset you are trading from your broker. For instance, if you believe Rio Tinto shares are going to drop in price you can borrow 100 shares from your broker, then sell them for the current market price. If they then drop in value, you can buy 100 shares at the new, lower price, and return them back to your broker for a profit.

Whether you’re new to trading or looking to refine your knowledge, we have a range of educational videos and online courses that will suit your needs. In addition, our experts run a series of webinars to help you broaden your understanding of CFD trading and seize market opportunities.

In effect, CFDs are financial derivatives that allow traders to take advantage of prices moving up (long positions) or prices moving down (short positions) on all underlying financial instruments. They are often used to speculate on markets. A CFD is a tool of leverage with its own potential profits and losses. It allows an investor to enter the global trading market without directly dealing with shares, indices, commodities or currency pairs. For example, when applied to equities, such a contract is an equity derivative that allows traders to speculate on share price movements, without the need for ownership of the underlying shares. CFDs may be traded like stocks, bonds, futures, commodities, indices, or currencies. CFDs are also known as contracts for difference.

CFDs were originally developed in the early 1990s in London as a type of equity swap that was traded on margin. The invention of the CFD is widely credited to Brian Keelan and Jon Wood, both of UBS Warburg, on their Trafalgar House deal in the early 90s.

CFDs are leveraged trading instruments; they are traded on margin. Instead of paying the full value for the underlying shares, you pay an initial margin to open the position and are required to maintain some minimum margin level for open positions at all times. You may be required to satisfy the margin calls at very short notice, especially in volatile markets. If you fail to top up your margin when required, you risk having your position liquidated at a loss.

This is the risk that the CFD provider fails to meet a payment obligation due to you, for example, if your CFD provider becomes insolvent. As a CFD buyer, you have no recourse to the underlying shares as you have not actually bought the underlying shares.

But as it’s out of hours you can’t access a price, so by the time markets open the next morning the share price might be up 20 percent and you might have lost significantly. “But you can’t do anything about it,” says Browne.

Shortly afterward, the price of ABC rises to £1.65. You need to close out to meet your obligation to the lender by returning the same number of shares. You buy 2,000 shares of ABC for £3,300 (2,000 x £1.65). Your broker then returns these to the lender, who accepts the same quantity of shares.

Reference
CFDs | Saxo Group. (2018). Retrieved on October 12, 2018, from https://www.home.saxo/products/cfds.

Contract for Differences. (2018). Retrieved on October 12, 2018, from http://www.moneysense.gov.sg/understanding-financial-products/investments/types-of-investments/contract-for-differences.aspx.

Contract for difference. (2018). Retrieved on October 12, 2018, from https://en.wikipedia.org/wiki/Contract_for_difference.

Short selling won’t make you popular but the profits can be enormous. (2018). Retrieved on October 12, 2018, from https://www.irishtimes.com/business/personal-finance/short-selling-won-t-make-you-popular-but-the-profits-can-be-enormous-1.2241822.

Short selling: what is it? | Learn to trade. (2018). Retrieved on October 12, 2018, from https://www.ig.com/au/learn-to-trade/short-selling-what-is-it.

InterTrader. (2018). Long vs Short. Retrieved on October 12, 2018, from https://www.intertrader.com/eu/cfds/cfd-trading-strategies/long-vs-short/.

Comments are closed.