Euro am Sonntag has tested: put it through its paces: who has the best offer for CFD traders | message
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by Stephan Haberer, Euro am Sonntag
AEven for the listed CFD providers, the corona crash plummeted. CMC Markets, IG Group and Plus 500 suffered price falls of between 22.3 and 25.6 percent. But the recovery rally has been even more breathtaking since then: the three titles have been at the top of their home exchange in London ever since between 45 and 150 percent too. All three are currently significantly higher than before the crash. CFD provider as crisis winner! And the reason for that? It’s actually very simple. CFD traders trade significantly more often in times of crisis than in normal times. In other words, business is booming at CFD providers.
This is practically the case with all CFD brokers. Ten out of twelve providers surveyed by € uro on Sunday said that the number of CFD trades by private investors and the total volume moved had increased as a result of the Corona crisis. “The increased volatility resulting from the corona pandemic led to a significant increase in our customers’ trading activities,” says IG Europe. But not only that more was traded, the corona crash also attracted new traders: Ten of the twelve CFD providers surveyed also indicated that the number of private investors dealing in the high-risk contracts for differences had risen in the crisis.
A ray of hope for this industry, which in recent years has been forced into a much stronger regulatory corset by orders of the German and European supervisory authorities than before. As early as 2017, the Federal Financial Supervisory Authority (Bafin) banned CFDs with an obligation to make additional payments. As of August 1, 2018, further restrictions by the European Financial Regulator Esma came into force to protect private investors more from the risks of CFDs.
Difficult times for providers
These changes have resulted in the CFD providers’ business models being put to the test. Because in the course of the regulatory offensive, the number of transactions decreased significantly, the total volume traded plummeted and many traders withdrew from CFD trading. The result: depending on the provider, net sales fell by 30 percent and more, and profits practically pulverized. The result: the listed CFD providers IG and Plus 500 are still trading well below their all-time highs. Others got worse. The German Ayondo branch went bankrupt last autumn. And the provider GKFX stopped the CFD business with private investors in summer 2019.
From this perspective, the corona crisis is now an opportunity for the industry to get more investors interested in CFD trading. But what exactly does which CFD broker offer? Who can you find the best offer for?
These questions prompted the editors of € uro on Sunday to conduct the CFD broker test of previous years in 2020 as well. A total of 19 CFD brokers active in Germany were contacted, of which twelve ultimately took part in the survey – exactly as many as in the previous year.
The current CFD broker test should enable CFD traders to filter out which broker offers them the best deal with as little effort as possible. The twelve test participants had to do this in four main categories – trade; Costs; Security, reporting, taxes & law as well as training & technology – provide information on a total of 714 points (see below “How it was scored”). From the editorial point of view, the detailed scope of the test is necessary, since CFD trading is extremely complex and only in this way can the individual offers be evaluated with the required accuracy. The overview table provides a small extract of the requested aspects.
Similar to the supervisory authorities Esma and Bafin, € uro put a lot of emphasis on security on Sunday: In the category security, reporting, taxes & law, up to 330 of the maximum 1000 possible points were achieved. The cost area was good for a maximum of 200 points. In the trade category, however, there were up to 450 points. The remaining 20 points were reserved for information on the training courses offered and the hardware and software.
The offer of the CFD brokers
While the market interventions by Esma and Bafin meant that the CFD providers were guided by the maximum allowable leverage, there are still major differences in terms of the underlying assets offered: While FXFlat only offers CFDs on 227 underlyings, CMC Markets Germany has 9,735 Underlyings and at IG Europe even 17,001 underlyings. The other providers range between 1,150 and 5,000 underlyings.
However, it must be taken into account that the CFD trading of German private investors has been concentrating on a few underlyings for years: DAX, Dow Jones, Nasdaq 100 and the euro / dollar currency pair. Most CFD traders are already completely satisfied with this quartet. In the present test, this fact was taken into account by the fact that popular underlyings scored significantly more points than others.
The offers also differ significantly for the order types offered. The 33 most important order types were explicitly queried in the survey. While eToro claims to have only nine different order types on offer – one of them only “partially” – WH Selfinvest offers all 33 requested order types and also refers to “hundreds more”.
The trading platforms also differ significantly, only trading directly from the chart, one-click trading and the monitoring of margin and overnight positions all offer. But already during panic closing – the simultaneous closing of all open positions – there are dropouts, for example at CMC Markets Germany, Flatex and IG Europe. And with Admiral Markets UK, CMC Markets Germany, FXFlat, IG Europe and WH Selfinvest, just five providers offer automatic chart pattern recognition.
In addition, the number of available technical indicators varies between 33 (XTB) and 300 (WH Selfinvest). Most providers offer between 36 and 51 indicators. The details of the trading platform at Comdirect Bank, Flatex, Onvista Bank and S-Broker are identical, which is due to the fact that Société Générale acts as a market maker for CFD transactions in the background for this quartet of German CFD brokers. But that doesn’t mean that the offers of these four are completely identical.
The fees for CFD trades, for example, differ significantly depending on the provider. For example, Comdirect and its subsidiary Onvista Bank charge 8.85 euros per roundturn for a precisely specified example trade on the euro / dollar exchange rate, while Flatex has the exact same trade for 4.42 euros. S-Broker is exactly in the middle at € 6.64.
The price differences are even greater if you look at all the providers: IG Europe has the same trade for 0.60 euros. The differences in sample trades on the DAX are similar: Here, depending on the provider, the conversion between EUR 1.60 per round turn and EUR 4.00 is due.
Which CFD broker has the best overall offer? The overall victory went to WH Selfinvest again this year. The fourth time in a row. Respect! FXFlat was awarded silver. This provider also got an overall rating of “very good”. The winner of the bronze medal, Onvista Bank, leads the chasing pack overall eight providers, all with “good” were evaluated. The grade “satisfactory” was awarded twice.
All information about this offer
All information about CFD trading
The following results were found in the sub-categories: WH Selfinvest offers the best retail offer, followed by Admiral Markets. CFD traders who value the lowest costs are best served by IG Europe. In the area of security, reporting, taxes and law, Onvista Bank came first, followed by the “very good” Consorsbank. However, all providers still have room for improvement. So none of them achieved a “very good” in all areas. But on the other hand, this means: The only true CFD broker does not exist. Everyone has different strengths and weaknesses.
CFD broker comparison – the best CFD brokers in the test
CFD broker test – the overall table
So it was judged
Test: € uro am Sonntag evaluated the offer of nationwide active CFD brokers by means of a written survey. Twelve of the 19 CFD providers contacted took part in the survey. Their details were checked for their correctness on a random basis by means of their CFD price-performance lists, the terms and conditions and other documents on CFD trading.
Scoring: There was a maximum of 1,000 points. For this, a total of 714 details had to be provided in four categories, which were rated with points. At the metric level (e.g. costs in €, interest rates in%), the points were assigned relationally, sometimes also in reverse proportion.
Categories: The main category was the area Trade. Here there were up to 450 points. This category was again divided into five subcategories. In the “Underlyings” subcategory (maximum of 75 points), the range of underlyings, trading guarantees, the minimum / maximum number of contracts per CFD class and special features of CFDs with a term limitation were evaluated. A maximum of 100 points could be achieved in the “Price setting and order placement” area. Here, quotes, spreads, price guarantees, requests, slipage, dealing desk, STP and DMA courses were queried. “Orders and trading hours” (75 points) dealt with order types, order routes, order validity, hedging orders, prioritization, partial closings and trading times. The quality of the “trading platform” was up to 75 points. In addition to the features, the offered support as well as the news and research offer was evaluated here. The “trading account” (125 points) dealt with questions relating to margin, margin call, leverage, overnight positions and forced closings.
In the area costs were a maximum of 200 points. This included costs for the CFD trading and clearing account and trading platform, but also costs that arise in roundturns in the individual CFD classes. The spreads were also assessed. In addition, the costs of five sample orders were included in the valuation, as were the costs for overnight financing and securities lending, as well as the costs for long periods of inactivity by the customer.
The area Security, reporting, taxes and law was good for up to 330 points: the subcategory “security” (maximum 220 points) was about risk limitation, deposit protection, reference account principle, market and trading disruptions and mistrades. “Reporting, Taxes & Law” (up to 110 points) raised questions about intraday and end-of-day reporting, German tax reporting, flat tax, financial supervision, validity of German law, place of jurisdiction, legal status and claims for damages.
In the fourth and final category, Training and technology (maximum of 20 points, not printed here for reasons of space), it was about the training courses (webinars, seminars), information about CFD trading as well as hardware requirements and the use of special trading software.
Grading: The best of the overall rating received the grade “very good”. The score he achieved was also the benchmark for the other providers. Whoever scored more than 95.00% of the points of the best also received a “very good”. Up to the limit of 80.001% there was a “good”, up to 70.001% a “satisfactory”, up to 50.001% a “sufficient”, up to 25.001% a “poor”, with less than 25.00% an “insufficient”. The grades in the individual subcategories were made accordingly.
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