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Contracts for difference (CFDs) are a wrapper that lets traders take leveraged exposure to an underlying price without owning the underlying asset. Brokers that offer CFDs are not all the same: they differ in execution model, who holds the other side of your trade, how liquidity is provided, the legal protections offered to clients, and the secondary services that support trading. Understanding those differences is the first operational step for anyone who expects reliable execution, predictable cost, and sensible dispute resolution. The short version is this: the label a broker uses matters less than the plumbing it actually runs and the legal entity that holds your money.
In this article we look at different types of CFD brokers and take a closer look at what they offer and who they are suitable fore. There is no broker that is best for everyone. It all depends on your needs and your trading habits.
Once you have decided what type of broker you want then you should compare CFD brokers using a website that makes it easy to compare brokers. You can, of course, do everything manually in a spreadsheet as well but a good comparison website can spare you hours and hours of work since they have already compiled the data in one place. One such website that I personally like to use is brokerlistings. Brokerlistings.com makes it very easy to compare key data points between different brokers by allowing you to display the key data for different brokers on the same page.
Market-maker / dealing desk brokers (the B-book model)
Market-makers, often called dealing-desk brokers, traditionally manufacture the quote you see and typically take the opposite side of client trades. Their platform shows bid and ask prices that the broker posts; when you buy, the broker may either match you internally against another client, warehouse the risk, or hedge externally. For the retail client this model offers a couple of obvious practical benefits: continuous two-sided pricing, immediate fills on market orders for tiny sizes, and usually no explicit commission because the cost is embedded in the spread. The trade-off is a structural conflict of interest. If the broker keeps client exposure on its books, the broker benefits when clients lose and loses when clients win. Reputable firms mitigate that conflict by hedging flow, disclosing execution policies, and segregating risk operations, but the potential for adverse behaviour under stress is inherent in the model.
The market-maker model tends to be attractive to beginners and light-volume traders because of convenience and low nominal entry cost. It can be poor for scalpers and for users who need guaranteed transparent routing.
I do not recommend using this kind of broker since there is an inherent conflict of interest between the broker and the trader. The broker earns a profit when the trader makes losing trades. This incentivize the brokers to make it harder to earn money. This is not in the trader’s interest. To use a type of broker that has a business model that aligns the interests of the broker with the interests of the trader. This incentivize the broker to make it as easy as possible for the trader to make money and to provide the best possible tools to the trader.
Straight-Through-Processing (STP) CFD brokers
STP brokers describe a routing architecture rather than a single legal status. An STP CFD provider aggregates price feeds from one or more liquidity providers, banks, market makers, ECNs, and forwards client orders automatically to upstream providers. The broker typically presents a blended or best-quote to the client and pockets a disclosed or undisclosed markup. The STP approach reduces direct counterparty conflict because the broker does not necessarily net every trade against house inventory; however, it introduces other questions: which liquidity providers are used for your account tier, whether all accounts share the same pool, and how often the broker internalises mid-size retail flow before routing.
For traders this model usually produces narrower spreads than a pure market maker while avoiding the full commission structure of a pure ECN. The downside is potential opaqueness in routing rules and the possibility of requotes when upstream liquidity withdraws. Practically, STP brokers are a middle ground suited to the majority of retail and semi-professional traders who want reasonable execution without the price complexity and commission structure of ECN. Test an STP broker by measuring fills for typical ticket sizes, comparing the quoted spread to the executed spread during quiet and volatile periods, and asking for routing disclosure. If you trade around macro releases, check whether the broker temporarily suspends routing to protect itself or widens spreads in a way that makes your strategy uneconomic.
ECN / DMA CFD brokers (direct market access)
ECN and DMA providers present an order book-like execution environment where client orders interact with liquidity posted by multiple participants. In pure ECN/DMA models the broker is an execution venue or a gateway to one; execution is venue-driven rather than desk-driven and costs are split between near-raw spreads and explicit commission. For active traders, small ticks add up and ECN-style pricing often delivers the lowest effective cost per pip on liquid instruments because spreads are raw and narrow. ECN execution is also more transparent: you can often see depth and understand exactly where fills originate.
The trade-offs are familiar. ECN accounts usually charge commissions that matter hugely to high-frequency scalpers, the visible depth can evaporate in thin markets, and the broker may enforce minimum order sizes or ticket fees that make tiny-position trading uneconomic. ECN is the model favoured by professional intraday traders and strategies that require predictable matching and minimal broker intermediation. If you value the last millisecond and need to scale a strategy, demand proof of the ECN connectivity, which liquidity venues the broker connects to, whether your account is on the same pool as institutional clients, and how the commission schedule scales with volume.
Hybrid and A-book / B-book split models
Many brokers operate hybrids that mix internalisation with external routing, they route some flow to banks and ECNs (A-book) and keep other flow in house (B-book). The mix can be static or dynamic: some brokers route small tickets internally and hedge large exposures externally; others route based on real-time credit and risk metrics. Hybrid models are pragmatic because they let a broker manage risk and costs, but they can be opaque and unpredictable unless routing policies are disclosed.
For a trader the critical question is transparency and fairness. Does the broker tell you when your trade will be internalised? Are commissions or spreads meaningfully different when you trade in different account tiers? Does the broker use execution reporting that lets you verify that your trades are routed and filled as claimed? If the answers are vague, plan to validate across a funded sample. Hybrids are fine when well governed; they are a problem when secrecy hides discriminatory re-pricing or selective slippage.
Prime brokerage and institutional CFD providers
Prime brokers and institutional CFD platforms offer large clients credit lines, multi-asset margining, consolidated netting across accounts and direct access to deeper liquidity pools. These providers may offer CFDs but the client experience is closer to traditional prime brokerage: negotiated margin levels, bespoke clearing arrangements, and legal agreements that spell out netting and close-out mechanics. They often support algorithmic trading, multi-exchange connectivity, and white-label services for other brokers.
Retail traders rarely need prime services, but advanced funds choose them because of execution quality, bespoke custody options and the ability to obtain financing and hedging at institutional terms. If you are scaling a strategy toward institutional sizes, you will eventually need to move from retail CFD accounts to a prime relationship where liquidity provision and legal certainty are contractually defined.
Introducing brokers, white-label and aggregator models
Some firms act as intermediaries rather than full brokers: introducing brokers (IBs) refer clients to a liquidity provider and take a share of spread or commission, and white-label outfits rebrand an underlying broker’s platform as their own. Aggregators collect multiple retail relationships and route flow to different wholesale providers. Structurally these firms often have less capital and less direct regulatory burden, and they primarily compete on marketing and client service.
Operationally this matters because an IB or white-label agent may not be the legal custodian of client funds. That custody sits with the liquidity provider behind the scenes. Always check the legal entity you actually fund, not the marketer you signed up with. Withdrawal friction and KYC complexity are common surprises with these models because the referral chain can add latency and extra verification steps.
Crypto CFD specialists and synthetic CFD providers
Some CFD brokers specialise in cryptocurrency CFDs. The differences here are twofold. First, underlying liquidity for crypto is fragmented across centralized exchanges and on-chain venues; the CFD provider must choose which sources to use and how to aggregate them. Second, crypto CFDs are often synthetic: the provider maintains a tokenised or internalised representation rather than matching to a single exchange. That can create counterparty concentration risk if the provider’s hedge fails or if a connected exchange suffers a liquidity shock.
If you trade crypto CFDs, check whether the provider hedges on observable exchanges, how it calculates spreads and funding for overnight positions, what happens at forks or when an exchange suspends withdrawals, and whether any insurance schema or proof-of-reserves is published. Crypto CFD spaces are newer and therefore operationally riskier than vanilla spot CFDs on major equity indices or FX.
Social, copy-trading and PAMM/MAM CFD brokers
A subset of brokers offers social or copy-trading where accounts can automatically mirror a strategy or be managed in pooled structures (PAMM/MAM). These arrangements layer manager performance on top of broker execution and introduce both behavioural and legal risks: the signal provider’s track record can be overfitted, replication can fail due to slippage or minimum size mismatches, and fee structures can incentivise excessive risk-taking by the manager.
If you use copy trading, require transparent historic trade logs, realistic slippage assumptions, and the ability to disable copying on short notice. Test the replication with a tiny funded account to verify how fills and timing map to the leader’s trades. Social offerings are convenience features, not substitutes for execution due diligence.
Execution mechanics, order types and platform features to match to the broker type
Different broker types support different operational features. ECN/DMA providers typically expose advanced order types, depth-of-book and API/FIX connectivity. STP providers give simpler order types and may restrict market-making strategies at scale. Market makers often add guaranteed stop products at a premium and may offer simpler mobile-first platforms aimed at retail traders. When you choose, prioritise the features your strategy needs: multi-leg order entry for options-like CFDs, protections for guaranteed stops if you trade news, API access and historical tick data for algos, and fast withdrawal rails if you rely on quick capital rotation.
Always test platform behaviour with live micro-sized trades to validate stop execution, partial fills, cancellation handling and position reporting. What a brochure says about available order types is irrelevant if the platform handles them poorly under real load.
Cost and pricing transparency: how to measure real trading cost
Compare brokers by actual round-trip cost in your account currency for the trades you will make, not by advertised spread or headline commission. Include spread at the time of entry, commissions, financing or overnight swap, and typical adverse slippage observed during testing. Over the weeks and months these items compound and determine whether an edge exists. Beware of hidden costs such as withdrawal fees, conversion margins, data fees for live feeds, and inactivity charges that slowly erode returns. Good brokers provide trade reports that let you export your fills and compute true cost; insist on those reports before you fund significant capital.
How to test a prospective CFD broker in practice
Open a small funded account and use it as a reproducible experiment. Run a test plan that covers normal hours and a scheduled news event, execute the sorts of entries and exits your strategy uses, request a small withdrawal, open a support ticket and time the response, and review post-trade reports for accuracy. Track fills and slippage over a statistically meaningful sample. If you plan to scale, run incremental size tests to detect non-linear slippage. Document anomalies and require written explanations from the broker; evasive answers are a practical red flag.
Red flags and behavioural warnings
Unsolicited promises of guaranteed profits, refusal to disclose the legal entity or regulator, mandatory funding via unorthodox rails, pressure to deposit additional funds after losses, and requests to install remote-access software are immediate warning signs. Other operational red flags include opaque withdrawal delays, frequent unexplained requotes, a pattern of stops being filled at prices that consistently disadvantage clients, and the inability to provide execution or routing reports for your sample trades. Treat marketing incentives and large deposit bonuses skeptically, they often come with conditions that restrict your right to withdraw.
Which broker type fits which trader
There is no universal “best” CFD broker. Scalpers and professional algos typically prefer ECN or institutional STP with DMA and explicit commission schedules and API/FIX access; medium-term traders who want reasonable execution and lower friction often choose STP; beginners and low-frequency traders may favour market-makers for convenience but must accept the governance tradeoffs. Crypto specialists need brokers who publish hedge and custody practices. Social and copy traders need brokers that provide real replication metrics and robust stop mechanisms. In every case the correct test is empirical: fund a small live account, measure actual cost, test withdrawal mechanics, and verify regulator coverage and client money handling.
This article was last updated on: January 15, 2026
