How to choose the right product from the above CFD trading test or comparison
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the essentials in brief
CFD trading is trading purely on rising or falling prices. A CFD broker is essential for this. Here are the best CFD brokers 2022 put to the test! This can refer to shares and currencies, mineral resources, or stock market indices (such as the DAX).
CFD is not for beginners. It’s day trading! Anyone who has no idea what is going on here should get in with a trial account or very little money to slowly learn the business.
Leverage used in CFD trading can lose considerable sums of money back if speculation goes wrong.
1. What are CFDs?
CFD stands for the English: Contract for Difference – in German: Contracts for difference.
CFDs are closed to bet on a price going down or up, e.g., B. a share. So it is not the share itself or a currency, a mineral resource, or an index that is traded, but only the development.
The stock exchange traders call this actual value the “base value.” A share such as B. Telekom’s is a “base value.” If the price rises, this is called “long”; if the value should fall, it is called “short.”
You can “bet” on anything. Stocks, currencies, natural resources, and other securities are common – but 92% of all stock indices CFDs (e.g., DAX)! Ultimately, it is a bet on rising or falling prices.
Financiers invented this financial product “bet on rising or falling prices” to avoid a tax in London. The British government taxed every official stock transaction. The result is speculation on whether the price rises or falls outside the stock exchanges. Today it has turned into lively trading, still mainly off the stock exchange.
CFDs are highly speculative, as there is a risk of total capital loss and additional payment obligations!
In the US, CFDs are banned – for an understandable reason. In Germany, too, a ban was being considered in 2021.
2. How does CFD trading work?
The CFD business follows its own professional rules. To learn how many CFD brokers offer online courses in the test. Some basic knowledge of chart analysis, CFD strategies, and the recognition of trading signals are an absolute must, as is practicing on a demo account – i.e., a bonus CFD broker – without your own money.
CFDs are not traded on the stock exchange! No bank branch deals with CFDs – that’s why traders need a broker who even offers CFD trading. All CFD brokers are online brokers; hardly any of them offer CFD trading independently. That is why we have tested the CDF brokers here in comparison.
The CFD trade is powered by two things: providers, called brokers who engaged in trade, and someone who “opened” a market in which it offers a bet that they are “market makers,” so named the “market makers.”
To trade CFDs, interested parties need a CFD depot – how it works here – with a broker. A comparison is recommended when choosing the online broker because of a few things to consider.
Very few CFD contracts are concluded on the stock exchange, which is not regulated.
According to the CFD Association, 554.1 billion euros were traded in 2015 – in Germany! The tax revenue of the whole of Germany is only approx. 570.21 billion euros in the year (2013)! That all sounds rather dangerous. Does anyone even do that?
Why do people do this? Because the winnings – if your bet works – are also very high :
Anyone who concludes a CFD contract only has to pay a certain, small percentage immediately. This is called “margin.” That is usually only 10%, sometimes only 1% of the amount due.
2.2. The leverage
But that also means that someone can move 10 to 100 times with their money what they actually could because they only have to pay 1-10%. This is called leveraging.
The leverage of the margin makes it possible to turn over much more significant sums than the available capital.
With CFD trading, investors can thus trade the full price movements of stocks, indices, raw materials, bonds, etc., with a fraction of the capital otherwise required. But then the profits will also be very high, provided you are correct:
CFD Trading share Stock CFD Index-CFD
leverage 1 10 100
Margin 100% 10% 1 %
Capital employed € 1,000 € 1,000 € 1,000
Leveraged capital € 1,000 € 10,000 € 100,000
Profit // loss 1% change 10 € € 100 € 1,000
Gain // loss 5% change 50 € € 500 € 5,000
The term spread is often quoted in CFD trading, and the spread is the difference between the buying price and the selling price.
Spread has two other meanings: A fee is due to the broker for each trade (also called trade). Since trading is based on a spread, the term “spread” has also been used for this, so spread means:
The spread between buying and selling price,
the process itself is the trade, i.e., buying and selling a CFD and
3. What to Look for When Choosing a CFD Broker
A lot is thought about one’s own CFD strategy. Get started, it doesn’t matter yet, but it gets more interesting as each broker specializes. We recommend a good broker for beginners in the conclusion below. A wide range of opportunities and markets for trading is good, and a website that reacts quickly (immediately!) And reliably.
3.1. What are the fees?
The following fees might be charged :
Transaction costs, including, e.g., B. Trading Fees and the Bid-Ask Spread,
Account management fees,
Financing costs if long positions are held overnight is a leveraged deal.
We like brokers who allow you to use your website, platform, and tools free of charge and who take no fees for deposits and withdrawals. Free real-time quotes are also necessary to be on the way to our favorite broker.
Caution – CFD trading is day trading! Anyone who holds a value overnight is considered a bore and has to pay fees! A fee is due for just one night. These are the financing costs mentioned above!
Account management fees are annoying. Some brokers make money for deposits, others for withdrawals! An outrage. Many brokers charge for inactivity. I don’t do anything and have to pay money? Well, our banks are increasingly demanding this for an account.
Transaction costs mean: A fee is charged per trade, also known as a “pip.” The pip varies, so it is impossible to set a value in euros permanently. But our calculator can do it because it calculates up-to-date daily.
3.2. How clear is the website?
Broker websites are also often called platforms. There are high requirements to be met: beginners have to find their way around quickly. Professionals get the tools they need. Professionals use charts and need to look at the past to evaluate a chart and anticipate price developments.
3.3. Minimum deposit and CFD demo account
The minimum deposit should be only 100 euros, and for those who want to train first, a free demo account is excellent.
Since the losses are high with this speculative investment, newcomers and those with no CFD trading experience should use a demo account intensively for at least three months before entering the real trading world.
What else you can watch out for and what effects this has financially can be followed here, albeit a bit lengthy:
3.4. Customer ratings
In addition, you will find customer ratings for many CFD brokers in the review, which gives you a quick overview of general customer satisfaction. That doesn’t always make sense, but here it does. The customer who deals with CFDs is already specialized and considerable. So if he comments on the broker, he will write something meaningful. Otherwise, it is more of a made-up review.
3.5. What underlyings does the broker offer?
Everyone is particularly interested in other values; of course, your CFD broker must be well-positioned compared to those that interest you.
3.6. Admission and seat
Monitoring by a significant state institution should be a matter of course. In Germany, BaFin strictly monitors all financial service providers; we generally like brokers who have at least one seat in Germany, and it doesn’t have to be German CFD brokers.
What we like and don’t like about CFD brokers compared: