What are the Best CFD Brokers in the US?

What is a CFD or Contract for Difference?

The term CFD is the abbreviation for Contract For Difference.

A CFD is a financial instrument in the derivatives category. Indeed, the value of a CFD is based on the performance of one or more underlying assets. The assets represented by a CFD can be diverse, such as stocks, indices, currencies, commodities, bonds, or cryptocurrencies.

One of the particularities of CFDs is that they allow you to speculate on both the rise or fall in the price of a financial asset.

The profit or loss generated when closing the position corresponds here to the difference between the price of the underlying asset at the time of purchase and the price of that asset at the time of sale.

Attention !

81% of retail investor accounts lose money when trading CFDs.

What is a CFD Broker?

A CFD broker is a trading platform that allows investors to speculate on the price movements of a financial asset without actually owning the underlying asset. CFD stands for "Contract for Difference," a derivative product that reflects the price movement of an asset such as a stock, currency, commodity, or stock index.

A CFD broker provides traders with an interface where they can buy (long position) or sell (short position) a CFD on a given asset. The difference between the entry price and the exit price determines the trader's profit or loss.

The main elements that characterize a CFD broker are:

• Market access: Brokers generally offer a wide range of assets in the form of CFDs, including stocks, indices, Forex, cryptocurrencies, and commodities.
• Leverage: Traders can use leverage, allowing them to amplify their market exposure with reduced capital. However, this also increases the risk of losses.
• Trading fees: A CFD broker may charge spreads (the difference between the buy and sell price), commissions, or financing fees for positions held open overnight.
• Regulation: In the United States, CFD brokers must comply with the regulations set forth by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), particularly regarding investor protection and leverage limitations.

Types of CFD Brokers: Market Maker vs STP/ECN

When choosing a CFD broker, it's important to understand the differences between Market Makers and STP/ECN brokers. These models influence order execution, fees, and the trading experience.

What type of broker should you choose?

• Market Maker: Ideal for beginner traders and those who prefer simple pricing with fixed spreads.
• STP/ECN: Suitable for experienced traders looking for lower costs, greater transparency, and direct market access.

What Regulation and Security for CFD Brokers in the United States?

In the United States, Contracts for Difference (CFDs) are not permitted for trading by retail investors. This prohibition is enforced by the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), the primary regulatory bodies overseeing derivatives markets in the U.S. These agencies have determined that CFDs, being leveraged over-the-counter products, pose significant risks to retail investors and have thus restricted their availability. ​RedditLinkedIn+2Wikipedia+2Wikipedia+2Day Trading

Key Regulatory Authorities in the U.S.

While CFDs are prohibited, the following regulatory bodies oversee other financial instruments and ensure market integrity:​

Restrictions and Security Measures

The U.S. regulatory framework imposes stringent measures to safeguard investors:​

• Prohibition of CFD Trading: Retail investors are barred from trading CFDs due to their high-risk nature. ​
• Leverage Limits: For permitted instruments like forex, leverage is capped at 50:1 for major currency pairs and 20:1 for others. ​
• High Capital Requirements: Firms must maintain substantial capital reserves to ensure financial stability.​
• Mandatory Registration: Entities such as Commodity Trading Advisors (CTAs) and Commodity Pool Operators (CPOs) must register with the CFTC and NFA. ​
• Anti-Fraud Regulations: Strict rules are in place to prevent fraudulent activities and protect market integrity.​

These regulations reflect the U.S. commitment to maintaining transparent and secure financial markets, prioritizing investor protection over the availability of high-risk financial products like CFDs.

How to Choose a CFD Broker?

Choosing a CFD broker is an essential step for any trader wishing to speculate on the financial markets. Several criteria must be taken into account to ensure that the broker matches your trading profile and complies with current safety standards.

1. Available Assets

A good CFD broker should offer a wide range of financial assets allowing traders to diversify their investments. Here are the main types of assets accessible in CFD:

2. CFD Broker Regulation

Regulation is a key factor in identifying a trustworthy and secure CFD broker. In the United States, retail trading of CFDs is prohibited, so U.S. traders must often turn to internationally regulated brokers if they choose to trade CFDs from abroad (at their own risk). It's essential to choose brokers regulated by reputable financial authorities.

Here are the main regulatory bodies to consider:

Warning

Avoid unregulated brokers or those registered in offshore jurisdictions like Belize or Vanuatu. These entities offer little to no investor protection and pose high risks of fraud or poor execution practices.

3. Leverage in the United States and Elsewhere

Leverage allows traders to control larger positions with a smaller amount of capital. While it can amplify profits, it also significantly increases the risk of losses.

In the United States, retail traders cannot access CFDs, but leverage on other instruments (like forex) is strictly regulated. Traders using offshore brokers should understand the leverage limits and associated risks.

U.S.-based brokers cannot offer CFDs, but professional traders using offshore accounts may gain access to higher leverage—though this comes with the loss of standard investor protections, including negative balance protection.

4. Available Orders

A good CFD broker should offer a variety of trading orders to optimize strategies and better manage risks.

5. Available Features

The best trading platforms offer advanced features that facilitate analysis and order execution.

• Trading Platforms: MetaTrader 4 (MT4), MetaTrader 5 (MT5), TradingView, proprietary platforms.
• Charts and technical indicators: moving averages, RSI, MACD, Fibonacci, etc.
• Analysis and reporting tools: price alerts, trading signals, real-time market analysis.
• Mobile compatibility: iOS/Android app for trading on the go.
• Trading automation: trading robots (Expert Advisors on MT4/MT5) and API for algorithmic trading.
• Customer service: support in English, 24/7 support via chat, phone or email.

Which CFD Broker is Best for a Beginner Trader in the United States?

Choosing a CFD broker when you're new to trading can be difficult. Here are the essential criteria for selecting a broker suitable for novice traders in the United States.

• Simple and intuitive platform: Choose a broker with a clear interface like eToro or XTB. MetaTrader 4 (MT4) is also a popular option, but a bit more technical. It is recommended to test a demo account before switching to a real one.
• Regulation and security: A reliable broker must be regulated by a recognized authority in the United States (like the SEC or FINRA). It must guarantee protection against negative balance and segregation of client funds. Avoid offshore brokers (Belize, Vanuatu) that do not protect investors.
• Transparent and competitive fees: Compare the spread (difference between buying and selling prices), commissions (some brokers are commission-free on stocks/ETFs), overnight fees (swap), and deposit/withdrawal fees. Opt for a broker with tight spreads and free withdrawals.
• Customer support in English: Check if the broker offers assistance in English via chat, email, or telephone, as well as a detailed FAQ. Support available 24/5 or 24/7 is a real plus.
• Educational resources and training: A good broker for beginners should offer video tutorials, webinars, and trading guides. A free and unlimited demo account is essential for practicing without risk.

How to Trade CFDs with an Online Broker?

Trading CFDs with an online broker involves several essential steps. Here’s a detailed guide to get you started effectively.

1. Choose a Regulated CFD Broker

Before trading, it's essential to select a regulated and secure online broker. U.S. residents cannot trade CFDs through domestic brokers due to regulatory restrictions by the CFTC and NFA. However, some American traders opt to trade CFDs through offshore brokers regulated by trusted authorities such as the FCA (UK), CySEC (EU), or ASIC (Australia). Make sure the broker offers a user-friendly trading platform, transparent fees, and responsive customer support.

2. Open a Trading Account

Once the broker is selected, opening an account requires:

• An online registration with your personal information
• An identity verification (identity card, proof of address)
• An initial deposit according to the broker's requirements (often between $100 and $500)

Some brokers offer a demo account to practice without risk before going live.

3. Choosing an asset to trade

CFD brokers typically provide access to a wide range of financial instruments, allowing traders to speculate on price movements without owning the underlying asset. Popular asset classes among U.S.-based traders include:

• Stocks (e.g., Apple, Tesla, Nvidia)
• Indices (e.g., S&P 500, Nasdaq 100, Dow Jones)
• Forex pairs (e.g., EUR/USD, USD/JPY, GBP/USD)
• Commodities (e.g., Gold, Oil, Natural Gas)
• Cryptocurrencies (e.g., Bitcoin, Ethereum, Solana)

Choose assets that align with your strategy, market knowledge, and risk tolerance.

4. Analyze the market and take a position

Before opening a position, analyze the market with:

• Technical analysis: indicators (RSI, MACD, moving averages) and chart patterns
• Fundamental analysis: economic news, company results, central bank decisions

Next, you can open a position:

• Buy (Long): if you think the price will go up
• Sell (Short): if you anticipate a decrease

5. Defining Leverage and Protective Orders

Leverage allows traders to increase their market exposure with a relatively small capital investment—but it also magnifies potential losses. In the U.S., leverage is limited to:

• 1:50 for major Forex pairs
• 1:20 for minor pairs and commodities
• Leverage is not available for CFDs through U.S. brokers

Offshore brokers may offer higher leverage, but always weigh the risks. To manage exposure effectively, use protective orders:

• Stop-loss: Automatically closes your position if the market moves against you beyond a set threshold.
• Take-profit: Automatically locks in profits once your target price is reached.

These tools are critical for disciplined and risk-aware CFD trading.

6. Monitor and Close Your Position

Once your position is open, monitor its progress via the broker's platform. Depending on your strategy, you can:

• Manually close your position
• Let your take-profit or stop-loss execute automatically
• Adjust your orders based on the market

Attention!

Positions held open for multiple days may incur overnight fees (swap), to be verified with your broker.

7. Analyze Your Performance and Optimize Your Strategy

After each trade, analyze your results to improve:

• Check what worked and what didn't
• Adapt your risk management and entry/exit strategies
• Use the broker's tools such as trading journals and market analysis

What are the fees of a CFD broker?

CFD brokers apply various fees that influence trading profitability. It is essential to understand these costs before opening an account. Here are the main types of fees, with concrete examples.

1. The spread

The spread is the difference between the buying (Ask) and selling (Bid) price of an asset. It is the main source of revenue for commission-free brokers.

Example of CFD spread

A broker offers a CFD on the EUR/USD with a spread of 1.2 pips. If you open a position of 1 lot (100,000 units), the cost of the spread will be:

• 1 pip = $10 on a standard lot
• 1.2 pips = $12 in fees to open the position

2. Fees

Some brokers charge fixed commissions in addition to the spread, especially on ECN/STP accounts, which offer tighter spreads.

CFD Commission Example

An ECN broker charges a $7 commission per lot on a Forex trade. If you open a 1 lot position on the EUR/USD, you will pay $3.50 at the opening and $3.50 at the closing, or $7 in total fees.

3. Overnight Fees (Swap)

Overnight fees, also called swaps, are charged when you keep a position open after market close (10 PM GMT). They are based on central bank interest rates.

Example of CFD swap fees

You hold a long position on the CFD EUR/USD with a leverage of 1:30. Your broker applies a swap rate of -0.7 pips per day. If your position is 1 lot, you will pay $7 in overnight fees each night.

4. Inactivity fees

Brokers may charge inactivity fees if your account remains inactive for a certain period (usually 3 to 12 months).

Example of inactivity fees

One broker charges $10 per month after 6 months of inactivity. If you do not trade for a year, you will pay $60 in inactivity fees.

5. Deposit and Withdrawal Fees

Some brokers charge fees on bank transactions or withdrawals depending on the payment method used.

Example of Deposit and Withdrawal Fees

A broker charges 1.5% on deposits by credit card and $5 on each withdrawal by bank transfer. If you deposit $1,000, you will pay $15 in fees. If you withdraw $500, you will pay an additional $5.

6. Leverage Fees

Leverage allows you to trade with more capital than is available in your account, but it can lead to financing fees.

Example of Leverage Fees

You open a $10,000 position with a leverage of 1:30. Your broker applies a daily financing rate of 0.01% on the borrowed amount ($9,667). Each day, you will pay approximately $0.97 in fees to maintain this position.

What Strategy to Use When Trading with a CFD Broker?

CFD trading offers various strategies tailored to different experience levels, investment horizons, and risk appetites. Here's an overview of key strategies, adapted for U.S.-based traders considering offshore CFD trading options:​

What is the taxation for income from CFDs in the United States?

While CFD trading is restricted for retail investors in the U.S., those who engage in CFD trading through international brokers must understand the tax implications.​

1. Tax Treatment of CFD Gains in the U.S.

The Internal Revenue Service (IRS) treats profits from CFD trading as ordinary income, not capital gains. This means:​

It's crucial to maintain detailed records of all CFD transactions, including dates, amounts, and asset types, to ensure accurate reporting and compliance with IRS regulations.

2. Offsetting Losses and Calculating Taxable Gains

Losses from CFD trading can be used to offset other ordinary income, potentially reducing overall tax liability. For example:

• If you earn $5,000 from CFD trading and incur $2,000 in losses, your net taxable income from CFDs would be $3,000.​

However, the IRS has specific rules regarding the deduction of losses, and it's advisable to consult with a tax professional to understand the limitations and requirements. ​

3. Reporting CFD Income to the IRS

U.S. taxpayers must report all income from CFD trading on their annual tax returns. Key points include:​

• Form 1040: Report CFD income as part of your total income.​
• Foreign Account Reporting: If you hold funds in foreign accounts for CFD trading, you may need to file:​
• FBAR (FinCEN Form 114): Required if the aggregate value of foreign financial accounts exceeds $10,000 at any time during the calendar year.​
• FATCA (Form 8938): Required if foreign financial assets exceed certain thresholds.​

Failure to report foreign accounts can result in significant penalties.

P. Laurore

Finance expert

Co-founder of HelloSafe and holder of a Master's degree in finance, Pauline has recognised expertise in personal finance, which she uses to help users better understand and optimise their financial choices. At HelloSafe, Pauline plays a key role in designing clear, educational content on savings, investments and personal finance. Passionate about financial education, Pauline strives, with every piece of content she oversees, to provide reliable, transparent and unbiased information for independent and informed financial management. To this end, she has tested over 100 trading platforms to help internet users make the right choices.