For traders looking to expand their universe of investable assets, contracts for difference (CFDs) are leveraged products that allow users to place bets on the movement of assets ranging from stocks and global stock indices to commodities and cryptocurrencies like Bitcoin or Ripple. (Note: most North American residents are restricted from trading on CFD platforms). There are several online CFD brokers, each with a different angle. Here, we will compare two quite different CFD brokers: eToro and Plus500. Both are regulated by a European financial regulator and have been around for at least ten years. Social trading is eToro's focus where a trader can see other users' activity and get ideas or follow their lead. Plus500 offers CFDs in more than 2,200 markets and has a streamlined interface for sophisticated day traders.
It's important to understand that CFD trading can be a risky investment. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
- Account Minimum:$200
- Fees: EUR/USD 3.0 minimum pips
- Best for: Social trading
- Account Minimum: £0
- Fees: EUR/USD - 0.6 pips average
- Best for: Cost-conscious traders
Both platforms feature a well-designed, easy-to-use interface. Both pack a ton of information into a clean design without clutter or confusion. Both offer a mobile platform with an intuitive look and feel and full functionality. Each site is available in a variety of languages, including English, Chinese, Arabic, and most major European languages. Overall, the user experience for eToro and Plus500 is what you would expect from a top CFD broker in 2018, and the result is a tie.
- In-depth education center
- Simple trading platforms
- Easy to access cryptocurrency trading
- Mobile app is easy to navigate
- Simple and easy to use
- Customizable technical analysis charts
- Mobile app has the same functionality as the desktop does
- Ability to set price-based alerts
Mobile and Emerging Tech
eToro mobile versions for iOS and Android allow easy synching between platforms, with well-organized menus but fewer charting features and limited customization. The Plus500 mobile applications include all of the functionality available in the desktop application as well, but some traders may be worried about a lack of security measures. In mobile tech, eToro takes the prize.
- Well-organized menus
- Users can set custom price alerts
- Fewer charting features and limited customization
- Traders can access Plus500's 2,000+ trading instruments
- Charting enabled on Android, iPhone, or iPad mobile apps
- No enhanced security measures
News and Research
The eToro platform includes a host of third-party research and analysis tools from providers such as Tipranks as well as some basic fundamentals such as P/E ratio and Beta. You can also use the social trading features to see what other users and professional traders are doing, what their sentiment is, and what others have to say about certain markets. eToro also offers a daily analysis newsletter delivered by e-mail.
At the moment, Plus500 does not seem to have any dedicated research or analysis tools (aside from technical analysis and charting tools).
- Basic equity research
- Pension calculator
- Momentum indicator
- Trader's sentiment-shows what other clients are trading
- Economic Calendar-calendar from Dow Jones
- Technical Analysis Chart-100+ technical indicators
Education and Security
You won't learn how to become a star trader from eToro's educational resources; there is a set of educational videos on markets and investing basics, but these are fairly low quality and offer only superficial information. eToro does offer a series of live webinars to get deeper insight into trading strategies and to learn to use their platform, as well as some e-Courses for intermediate and advanced strategies.
At the moment, Plus500 does not seem to offer any dedicated education section or platform tutorial.
- Platform walkthrough
- Live webinars
- Several online classes
- Plus500 provides no educational material
Instead of charging a commission per trade, the fee structure for eToro is built into the price spread, and its spreads are some of the most competitive in the industry. For example, the spread on U.S. stocks is just 0.09% per side, the S&P 500 index spread is 75 pips, and Bitcoin is 1.5% per side.
Like eToro, Plus500 also builds its fees to into its market spread. Depending on which products you are trading, Plus500 can be cheaper to use. Stock spreads range from 0.10 to 0.50%, the S&P 500 is just 50 pips, and Bitcoin is 0.85% per side. On average, an active trader should expect to pay about the same overall across products on either platform.
- Stock trade fees: 0.09% per side of trade value
- Account minimum: $200
- Stock trade fees: $0.005 per share
- Account minimum: GBP 100
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In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.
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