What are the Best CFD Brokers in South Africa?

What is a CFD or Contract for Difference?

The term CFD is the abbreviation for Contract For Difference.

A CFD is thus a financial instrument in the category of derivative products. 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 shares, indices, currencies, commodities or even bonds or cryptocurrencies.

L'une des particularités des CFD est qu'ils permettent de spéculer à la fois sur la hausse ou sur la baisse des prix d'un actif financier.

Le bénéfice ou la perte engendrée lors de la clôture de la position correspond ici à la différence entre le prix de l'actif sous-jacent au moment de l'achat et le prix de cet actif au moment de la vente.

Attention !

81% des comptes des investisseurs de détail perdent de l'argent en tradant des CFD.

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 share, 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:

• L’accès aux marchés : les brokers proposent généralement une large gamme d’actifs sous forme de CFD, incluant les actions, les indices, le Forex, les cryptomonnaies et les matières premières.
• L’effet de levier : les traders peuvent utiliser un effet de levier, leur permettant d’amplifier leur exposition au marché avec un capital réduit. Toutefois, cela augmente également le risque de pertes.
• Les frais de trading : un broker CFD peut facturer des spreads (écart entre le prix d’achat et de vente), des commissions ou des frais de financement pour les positions maintenues ouvertes pendant la nuit.
• La régulation : en South Africa, les brokers CFD doivent être enregistrés auprès de la Financial Sector Conduct Authority (FSCA) et respecter les réglementations en matière de protection des investisseurs et de limitation de l'effet de levier.

Types of CFD Brokers: Market Maker vs STP/ECN

When choosing a CFD broker, it is 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 to 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, better transparency and direct access to the market.

What Regulation and Security are in Place for CFD Brokers in South Africa?

In South Africa, the regulation and oversight of Contracts for Difference (CFD) brokers are managed by the Financial Sector Conduct Authority (FSCA). The FSCA ensures that financial markets operate transparently and that investors are protected.​Day Trading+6Good Money Guide+6TradeInformer+6Here are the primary regulatory bodies relevant to South African traders:

CFD brokers operating in South Africa must adhere to specific FSCA regulations, which include:​

• Licensing Requirements: Brokers offering CFDs are required to obtain a license from the FSCA, ensuring they meet the necessary standards for operation. ​
• Operational Standards: Licensed brokers must maintain transparent operations, including clear disclosure of trading terms and conditions to clients.​
• Risk Warnings: Brokers are obligated to provide clients with comprehensive risk disclosures, highlighting the potential risks associated with CFD trading.​
• Capital Adequacy: Brokers must have sufficient capital to cover operational costs and potential client claims, ensuring financial stability.​

By complying with these regulations, the FSCA aims to create a secure trading environment, safeguarding South African investors from potential malpractices.

How to choose a CFD broker?

Choosing a CFD broker is a crucial decision for any trader looking to speculate on the financial markets. Several factors should be considered to ensure that the broker suits your trading profile and complies with proper safety and regulatory standards.

1. The assets available

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. The Regulation of CFD Brokers

Regulation is one of the most important factors when selecting a reliable and secure CFD broker. In South Africa, brokers must be licensed by the FSCA, but South African traders also commonly use international brokers regulated by well-known authorities.Here are the most trusted regulatory bodies to consider:

Warning

Avoid unregulated brokers or those based in offshore jurisdictions (e.g., Belize, Vanuatu), as they often lack transparency and do not offer proper investor protection.

3. Leverage in South Africa

Leverage allows traders to increase their market exposure with a smaller capital outlay. However, it also increases the risk of significant losses.In South Africa, the FSCA does not impose the same strict leverage limits as ESMA in Europe. Brokers regulated by the FSCA may offer higher leverage, often up to 1:200 or more, depending on the asset and client classification. Here's a general comparison:

Professional traders can often access higher leverage by meeting certain criteria. However, higher leverage comes with increased risk and usually fewer protective measures such as negative balance protection. Always assess your risk tolerance before opting for high-leverage trading.

4. Available Orders

A good CFD broker should offer a variety of trading orders to optimise 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 South African trader?

Choosing a CFD broker when you're starting out in trading can be difficult. Here are the essential criteria for selecting a broker suitable for novice South African traders.

• 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 the FSCA or a recognized authority in South Africa. 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), 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 you begin trading, it’s essential to select a regulated and trustworthy online broker. In South Africa, you should ensure the broker is licensed by the Financial Sector Conduct Authority (FSCA). Alternatively, you may also consider international brokers regulated by reputable authorities such as the FCA (UK), ASIC (Australia), or CySEC (EU).
A good broker should offer:

• A user-friendly trading platform (e.g., MetaTrader, cTrader, or proprietary apps)
• Competitive spreads and low fees
• Customer support that is responsive and available for South African traders

2. Open a Trading Account

Once the broker has been 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 ZAR1,700 and ZAR8,500)

Some brokers offer a demo account for practicing without risk before trading with real money.

3. Choosing an asset to trade

CFD brokers provide access to a wide variety of global and local markets. South African traders often focus on assets that reflect both international trends and domestic economic movements, such as:

• Stocks (e.g., Naspers, Tesla, MTN, Apple)
• Indices (e.g., JSE Top 40, S&P 500, FTSE 100)
• Forex (e.g., USD/ZAR, EUR/USD, GBP/ZAR)
• Commodities (e.g., Gold, Crude Oil, Platinum)
• Cryptocurrencies (e.g., Bitcoin, Ethereum, Solana)

Select an asset class that matches your trading experience, strategy, and market knowledge.

4. Analyse the market and take a position

Before opening a position, analyse 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 your leverage and protection orders

Leverage allows you to open larger positions with less capital, but it also increases the potential risk. In South Africa, FSCA-regulated brokers often offer flexible leverage, up to 1:200, depending on the asset and your account type.Typical leverage levels:

• 1:200 for major forex pairs (e.g., USD/ZAR)
• 1:100 for gold and indices
• 1:20 for shares
• 1:10 or lower for cryptocurrencies

To protect your capital, always use risk management tools:

• Stop-loss: Automatically closes your position if the market moves against you beyond a certain point
• Take-profit: Automatically locks in profits when the price hits your target level

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 according to the market

Attention!

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

7. Analyse your performance and optimise your strategy

After each trade, analyse your results to progress:

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

What are the fees of a CFD broker?

CFD brokers apply various fees that influence the profitability of trading. 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 price (Ask) and the selling price (Bid) of an asset. It is the main source of revenue for commission-free brokers.

Example of CFD spread

A broker offers a CFD on 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 fee to open the position

2. Commissions

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

Example of CFD commission

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

3. Overnight fees (swap)

Overnight fees, also known as swaps, are charged when you keep a position open after the markets close (22h GMT). They are based on the interest rates of central banks.

Example of CFD swap fees

You hold a buy 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

A broker charges ZAR10 per month after 6 months of inactivity. If you don’t trade for a year, you’ll pay ZAR60 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 ZAR 85 on each withdrawal by bank transfer. If you deposit ZAR 17,000, you will pay ZAR 255 in fees. If you withdraw ZAR 8,500, you will pay an additional ZAR 85.

6. Fees associated with leverage

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

Example of leverage fees

You open a position of ZAR 10,000 with a leverage of 1:20 (maximum leverage allowed for retail traders in South Africa). Your broker applies a daily financing rate of 0.01% on the borrowed amount (ZAR 9,667). Each day, you will pay approximately ZAR 0.97 in fees to maintain this position.

What strategy to trade with a CFD broker?

CFD trading allows you to implement various strategies depending on your experience level, risk appetite, and investment time horizon. Below is a summary of the most common CFD strategies, adapted to the preferences and popular markets of South African traders:

What is the taxation for income from CFDs in South Africa?

In South Africa, profits derived from trading Contracts for Difference (CFDs) are subject to taxation. The specific tax treatment depends on whether these profits are classified as income or capital gains, based on the individual's trading activities and intentions.​

1. Tax Treatment of CFD Profits in South Africa

The South African Revenue Service (SARS) assesses CFD trading profits under either income tax or capital gains tax (CGT), depending on the nature and frequency of the trading activities.​

Note: The annual capital gains exclusion is R40,000 for individuals. 

2. Offsetting Losses and Tax Implications

• Offsetting Losses: Losses incurred from CFD trading can be offset against other capital gains. If classified under income tax, trading losses may be deductible against other forms of income, subject to SARS regulations. ​Bydfi

Example:

• Scenario: An individual realizes a capital gain of R100,000 from CFD trading.​
• Annual Exclusion: R40,000.​techfinancials.co.za+1IFX+1
• Taxable Capital Gain: R100,000 - R40,000 = R60,000.​
• Inclusion Rate: 40% of R60,000 = R24,000.​
• Tax Liability: R24,000 taxed at the individual's marginal tax rate.​

3. Declaring CFD Income to SARS

Taxpayers must declare all income, including profits from CFD trading, in their annual tax returns submitted to SARS. Accurate record-keeping of all trading activities is essential for compliance and to substantiate any claims or deductions. ​

Important Considerations:

• Classification of Income: The distinction between income and capital gains is crucial, as it affects the applicable tax rate. SARS evaluates factors such as trading frequency, intention, and the nature of the transactions to determine the classification.​
• Consultation with Tax Professionals: Given the complexities involved in tax regulations, consulting with a tax professional is advisable to ensure compliance and optimal tax planning.​

Note: Tax laws and regulations are subject to change. It is recommended to consult the latest guidelines from SARS or seek professional advice for the most current information.

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.