There is a huge amount of curiosity surrounding CFD trading South Africa, and rightly so. Many have asked can you make money trading CFDS, and the answer is yes, but with a higher risk of losing your money than in certain other instruments.
Those that trade CFDs well can be hugely successful, but it takes time to understand how CFDs work and build a good level of knowledge. Many beginners trade CFDs with signals providers or managed trading accounts but taking the steps to learn yourself can be most rewarding in the long term and teach you a skill whilst you are at it!
In this guide, we will help you understand where you can trade CFDs in South Africa, how much is costs, along with information on the markets you can trade CFDs with, before taking a look through the best CFD brokers and trading platforms in South Africa.
Best CFD Brokers South Africa
Our top rated and best CFD brokers South Africa list is a mixture of some of the most well established names in the industry, along with a few newcomers that are making their name locally. Longevity goes some way to building trusted status as recognised CFD trading platforms South Africa, but there are times when things change and a new order comes in to challenge the status quo.
We are not quite at that stage yet, but the volume of new and innovative brokers are really quite exciting also for future updates!
Plus500 Are Best CFD Broker in South Africa 2022
Minimum Deposit – $100 / 1500 ZAR
ZAR Account Available? – Yes
FSCA Regulation Number – FSP#47546
CFD Instruments Available – 2000+
Spreads – from 0.7
Plus500 are one of the best CFD brokers South Africa has to offer, and the same for almost any Country they are regulated to offer services in, in our humble opinion.
As one of the very few online brokers in the forex or CFD trading industry to be publicly listed, this gives additional insight into the value that existing users are seeing from the broker, and how well the company is doing. Transparency is important, and Plus500 are that.
Getting to the main topic at hand of the quality of trading, the trading platform and interface is proprietary which means that it is not bought off the shelf, but rather built by Plus500 and their IT team. Whilst this custom trading platform is great for beginners and is very easy to understand and learn, those who are accustomed to MetaTrader 4 for example might be a little disappointed with the level of charting provided.
The range of instruments to trade truly is amongst the best CFD offers in South Africa, with more than 2000 CFDs on various assets. You have the possibility to trade CFDs on stocks, indices, commodities, crypto, forex, options, and even ETFs. From a localised perspective, South Africa stocks on Plus500 number more than 20, which is not amongst the usual markets covered with International online trading platforms.
Should you wish to consider opening an account with this broker, you have the choice of a fully functioning demo account with Plus500 which is very easy to open, or a real account which can be activated with as little as $100 or 1500ZAR.
This is also something that is a clear differentiator, the fact that Plus500 ZAR account is available and with a minimum deposit of 1500. There are not many other CFD trading platforms in South Africa that have base currencies of ZAR and many users that would like to have one.
From an all around fee perspective, Plus500 are not the cheapest in terms of spreads, but they are very clear on what fees are and are not charged which is helpful. You can see from the example screenshot above that the USD ZAR spread is visible as a number, along with the %. There is also great clarity on the overnight fees you would incur should you hold open your position into the following day.
In summation, Plus500 offer an all around strong CFD trading platform for South Africa, and have support from their users on review portals across the board. With a user base that is growing steadily quarter on quarter, and a transparency that allows you to see this data that has been vetted by proper agencies is comfort in knowing this is a CFD broker you can trust. Whether they are the best CFD broker in South Africa for you is a question that only you can answer, but for us, they remain a strong choice.
Tickmill Offer The Best CFD Trading Platform In South Africa
Minimum Deposit – $100 / 1500 ZAR
FSCA Regulation Number – FSP#49464
CFD Instruments Available – 130+
Spreads – from 0.2
Tickmill offers from a technical perspective, something which in pure terms is up there with the best CFD trading platform in South Africa. The functionality, the execution, the security, and the volume cannot be disputed. What does come into question is whether the range of CFDs offered across all instruments is going to be enough for those that want to trade alternative assets outside of forex.
With 130+ instruments available, there are choices for cryptocurrency CFDs, commodities, and indices, but you wont find as much choice as with other CFD brokers on this list. The important thing to realise here is that if you want the best trading platform in South Africa, and not necessarily the best range of instruments, then Tickmill remains a great choice.
Costs to trade with Tickmill are low, the minimum deposit in South Africa is $100 or approximately 1500 ZAR. Whilst you cannot operate your account in ZAR, you can choose between EUR or USD as the base currency of operation.
If you are a South Africa CFD trader that puts weight behind the ‘trader toolkit’ that a broker offers, then you will certainly not be disappointed with Tickmill trading platform. Charting is detailed, indicators, additional tools, and educational resources are there in great supply, and you will also find execution to be rapid and reliable.
All around, this is a trading platform that does a lot of things really right, and continues to provide a great service to South African CFD traders.
Before all that, we need to answer a very important question regarding regulation and legality!
Is CFD Trading Legal In South Africa?
CFD trading is regulated in South Africa by the FSCA (formerly FSB) so yes, CFDs are legal.
As a highly speculative financial product, CFD trading is not something to jump straight into without a little bit of market knowledge.
There are some advantages and disadvantages to trading CFDs which we have covered in a separate piece, but trading CFDs is safe provided you are using a regulated broker.
Whether CFD trading is a good idea or not for you or not will depend largely on your level of risk appetite, and your experience level as a trader.
CFD : CFD stands for Contract For Difference which means that it is a derivative of the underlying asset.
Leverage : allows you to increase your exposure by paying less than the full amount of the trade value. Using a leverage of 1:10 for example would allow you to trade 10x the value of your account balance.
Spreads : the difference between the ‘bid’ and the ‘ask’
If you are a beginner to CFD trading, take some of the lessons we offer free on how to trade various instruments as these can give you a foundation that will better prepare you for success.
Where can I trade CFD in South Africa?
There is luckily a simple answer to where you can trade CFD in South Africa, our first answer would be to check the regulatory status of any trading platform you are considering. Fortunately the regulator make that easy with a list of FSCA approved brokers that you check.
Most of the CFD brokers or trading platforms that operate in South Africa are online brokers or trading apps that are quite easy to get familiar with. It is the other information relating to contracts for difference and learning how to trade that is more complicated.
How Much Will it Cost for Trading CFDs in South Africa?
The cost to trade CFDs is an important topic, as this will determine how much you are paying to trade and what level of potential profit you get to keep for yourself. There are various fees and small costs that enable CFD brokers to make money without having to charge you additional amounts per transaction.
Going back just a couple of years ago, many online brokers involved in trading CFDs and particularly stocks used to charge a fee per trade which was usually a minimum amount of $9.95 or something similar.
Since the advent of RobinHood and other fee free trading platforms like eToro, or Trading212, brokers across the trading scene have started to move to this model and avoid transaction fees. The brokers do however still need to make money, so how do they do it?
CFD Trading Spreads
Most CFD brokers and trading platforms make money from spreads, which is to say the difference between the bid and the ask of the instrument. If you are trading forex CFDs in South Africa and looking at USD/ZAR for example, even though the actual price may be 14.6624, the bid and the ask may differ from that in what is known as the spread.
Using this example above, you will likely find the price varying by upwards of 10 pips (which is the 4th decimal place in the price above). Therefore you will see pricing usually of 14.6634, or 14.6614 depending on which side of the trade you wish to take, long or short.
The lower the trading spreads in CFD contracts, the better the cost is for you to trade, and allows you to profit from smaller movements in price. If you are trading with 10 pips cost (which is not cheap) then you have to pay 10 pips when you enter a position, and 10 pips when you exit. Therefore every trade needs to be at least 20 pips in your trading direction to even break even.
In many major currency pairs, you can find pips as low as 0.1 with some brokers but you need to evaluate the spreads also against any other costs you may find along the way.
CFD Trading Commissions
Certain online brokers may offer you super low headline rates of spreads, but then introduce trading commissions instead.
This is usually a fixed amount of commission per lot traded and in many cases can make a low spread CFD broker no better than one with mid level spreads but no commissions. You will want to figure out whether the trading platform in South Africa you are considering adds trading commissions before funding your account.
Always consider that brokers are also businesses and that losing fees on one end, may mean they turn up somewhere else as a means to remain profitable. Those which make our list of the best CFD brokers and trading platforms in South Africa will all have low total fee structure, whether that is from a single cost source, or multiple.
CFD Contract Rollover
Some online platforms will charge you a contract rollover fee for keeping your CFD trades open, either over night or longer term. This is in part due to the leverage you are using, and the margin that is being supplied by the broker for you to use higher trading account sizes.
There are various CFD brokers that specialise in this area of the market that regardless of instrument, allow you to roll over your trades with no cost. Plus500 South Africa are one of these that have an excellent track record and no roll over fees.
Other Potential Fees For CFD Trading South Africa
You can encounter some more unusual fees with CFD trading platforms that do not necessarily all relate to the trades you take, but some of those that you do not.
In that we mean the inactivity fees levied by some, the deposit or withdrawal fees you may experience, and some other randomly titled costs that are there to make money from you.
It is always a good idea to check the overall fee structure for any of these unusual fees to be sure you are getting a fair deal.
South Africa CFD Trading Tax Treatment
Whilst it is always advisable to seek professional advice for tax on any income source, CFD trading profits are thought of as income and are usually taxed accordingly. That means that the South African Revenue Service (SARS) will require that you pay income tax on your CFD profits.
When trading CFDs in South Africa, you are trading a derivative of the underlying asset and not buying it outright. This means that you do not have to pay for stamp duty tax as you usually would with a direct share purchase potentially, or other investment asset.
There are some upsides and downsides to CFD trading and tax treatment in general but again, when you get to the point of profitability, it is a good idea to speak to a tax professional to ensure you are getting it exactly right.
We always see one good thing about paying additional tax, and that is that it means you are making money from CFD trading which is not easy!
What markets can I trade with CFDs from South Africa?
One of the great things about trading CFDs South Africa is that you gain access to global markets, on literally many thousands of potential instruments. If you want to trade stocks from the Nasdaq, and at the same time buy ASX shares from Australia, all whilst holding oil CFDs and South African Rand against the USD, you can!
CFD trading in South Africa, and in fact globally, bring you International markets, usually right to your trading app on mobile which is something almost unthought of 15 years ago. The market has changed for online trading and that is a good thing as far as choice goes.
These are some of the main clusters of instruments or markets that you will usually find on the most comprehensive CFD trading platforms South Africa:
- Leveraged Equities (Individual Shares CFDs) – individual stocks from various different global exchanges are commonly traded as CFDs largely due to the huge volume that takes place particularly in the US markets. Volume during this session can drive significant movement, which is exactly what CFD trading is designed to take advantage of.
- Commodities – including areas from oil, natural gas, gold, silver, copper, corn, soybeans, and even coffee. There are certain CFD brokers that have much larger commodities trading ranges than others, but you will always usually find at least the main protagonists of oil, gas, and gold.
- Forex – majors, minors, and exotic forex pairs are the ‘bread and butter’ of CFD brokers. Whilst the foreign exchange market has the most volume globally by a significant margin, it is technical analysis and charting that takes a lot of focus for traders in this area as opposed to volume spikes. Leverage on CFD trading forex varies depending on the classification of the forex pair, with major currencies usually allowing larger leverage than others.
- Indices – this involves trading a whole index and allows you to access global markets as a group as opposed to picking single stocks. The leverage offered on indices is typically higher than that available on individual shares as the index is usually less volatile.
- Cryptocurrencies – trading Cryptocurrency CFDs is a very volatile business and allows you to leverage crypto trades. Most CFD brokers will offer a decent range of cryptocurrency, usually the top 10 tokens or so, although there are a couple on our list that allow a lot more variation than that! If crypto CFD trading is important to you, keep a look out for the best in that class.
- Options – whilst options is a very actively traded medium in the US, it is far less commonly offered in other regions. Options CFDs are based on a limited number of underlying instruments and strike price as opposed to direct options trading which offers huge range of strike prices.
- ETFS – An ETF is a group of stocks typically clustered together in what is then called a fund. Trading ETF CFDs allows you to take a basket of stocks which are usually connected by industry sector. Many prefer ETFs to individual stocks of indices trading as it allows more granularity than index trading, but without the exposure to a single stock.
Choosing a CFD Broker in South Africa – what makes a good broker?
When you are choosing a CFD broker in South Africa you will want to be able to drill through the noise and focus on a few key things that can really help you decide which is going to be the best CFD broker for your own trading plan and needs.
Instruments – The number of instruments available to trade is important from a choice perspective. In our view, there is no use having the best spreads if you have very limited choice of what to trade.
Providing an all around instrument range that is relevant and includes ZAR and if possible local South Africa listed stocks is an advantage if not essential. You will want to confirm that any CFD broker offers the instruments you want to trade before you get started.
Fees – The cost of the trade is one of the most important considerations for evaluating a CFD broker, as you will want the best value per trade to keep more of your balance in your pocket. All businesses have to make money to provide the quality of trading platform you will want, but there is line that is fair.
Keep a look out for brokers with hidden fees that are not easy to spot… if they are hiding fees from you, who is to say what else they may hide. Put value on transparency.
Regulation – You will want to make sure that any broker you are considering is regulated and approved to offer the services you want to use in the Country you live.
In this case, you will want to make sure the CFD brokers in South Africa you consider are FSCA regulated (previously FSB). This way, if anything does go wrong from an operational standpoint, you have the local protection of a recognised agency.
Trading Platform – Make sure that the CFD broker in South Africa you choose has a trading platform that gives you what you need.
Charting, indicators, mobile trading app support, as well as being easy to use might all be on your list of criteria for rating the best trading platform for you.
Do not overlook trading execution, security, and the basics.
Service/ Customer Support – Not just the times that the broker offers customer support, or the methods, but the quality.
You want to know, especially in the world of CFD trading which can be very dynamic that the people in the customer support team are available, but most importantly knowledgeable and helpful.
Broker Reviews From Users – If you can find a broker for trading CFDs in South Africa that has a really strong support from existing users, it is likely they have a good all around culture.
Existing and long term users will have seen good things and bad and will likely have a lot of truly invaluable insights that you will struggle to get from the broker directly.
You need to exercise some judgement on overly positive or negative comments, but by and large this is a good metric to look at when considering your CFD trading broker.
Minimum Deposit – $100 / 1500 ZAR
ZAR Account Available? – Yes
FSCA Regulation Number – FSP#47546
CFD Instruments Available – 2000+
Spreads – from 0.7