If you are a US resident, you CANNOT trade CFDs legally. The CFTC prohibits CFD trading for US persons. You must use Futures prop firms instead (Apex, Topstep, Take Profit Trader, etc.).
This guide will help you understand the differences and choose the right path based on your location.
Want to get funded but don't know if you should trade Forex (CFD) or Futures? This comprehensive guide breaks down regulation, costs, platforms, and which prop firms are best for each type. Essential reading before you choose.
If you're looking to get funded by a prop firm, one of the first decisions you'll face is: should I trade CFDs (Forex, indices via brokers) or Futures (regulated exchange contracts)?
This isn't just a minor technical choice. It affects which prop firms you can use, how much you'll pay, what platforms you'll learn, and even whether you can legally trade at all (if you're in the USA). Making the wrong choice could cost you months of wasted effort learning the wrong system.
What You'll Learn:
By the end of this guide, you'll have complete clarity on which path to take. Let's dive in.
A Contract for Difference (CFD) is a derivative product that allows you to speculate on price movements without ever owning the underlying asset. When you "buy" EUR/USD as a CFD, you don't actually own euros - you're simply betting on the price going up or down.
CFDs are traded Over-The-Counter (OTC), meaning there's no central exchange. Each broker creates their own market. This is why you might see slightly different prices for EUR/USD at different brokers - they're all creating their own CFD products based on the underlying forex market.
⚠️ The Counterparty Issue:
When you trade CFDs, your broker is your counterparty. This creates a potential conflict of interest: when you win, the broker loses (unless they hedge). Some less reputable brokers may manipulate spreads, trigger stop-losses, or delay executions. This is why choosing a regulated broker is critical.
A Futures Contract is a standardized legal agreement to buy or sell an asset at a predetermined price on a specific future date. Unlike CFDs, futures are traded on centralized, regulated exchanges like the CME (Chicago Mercantile Exchange).
The key difference from CFDs: there's no broker acting as your counterparty. When you buy an ES (S&P 500) futures contract, you're matched with another trader who's selling. The exchange simply facilitates the trade and the clearinghouse guarantees it. This removes the conflict of interest entirely.
| Symbol | Name | Tick Value | Exchange |
|---|---|---|---|
| ES | E-mini S&P 500 | $12.50/tick | CME |
| NQ | E-mini Nasdaq 100 | $5.00/tick | CME |
| MES | Micro E-mini S&P 500 | $1.25/tick | CME |
| CL | Crude Oil | $10.00/tick | NYMEX |
| GC | Gold | $10.00/tick | COMEX |
✓ No Overnight Swap Fees:
Unlike CFDs, futures don't charge overnight financing fees. You can hold positions for days or weeks without accumulating swap costs. This makes futures particularly attractive for swing traders.
This is arguably the most important difference between CFDs and Futures. Regulation determines how safe your money is if something goes wrong - and in the prop trading industry, things can and do go wrong.
⚠️ The Offshore Problem:
Many CFD prop firms use offshore brokers (St. Vincent, Seychelles, Vanuatu) with minimal regulation. If these firms or their brokers collapse, you have almost zero legal recourse. We've seen this happen with multiple prop firms in 2024-2025.
Bottom line: Futures offer significantly stronger regulatory protection. The CFTC and NFA are serious regulators with real enforcement power. Most CFD regulation is weaker, especially if you're dealing with offshore entities.
When you click "buy" on your trading platform, who decides what price you get? This is where CFDs and Futures differ dramatically.
Each broker sets their own prices. They take the underlying market price and add their own spread. This means:
One price for everyone, set by the market. The CME aggregates all bids and offers to create a single transparent price:
This transparency is why many professional traders prefer futures. You can see exactly what's happening in the market - every order, every trade, every price level. With CFDs, you're essentially trusting your broker to give you fair prices.
Cost structure is completely different between CFDs and Futures. Let's break it down:
| Cost Type | CFD | Futures |
|---|---|---|
| Spread | Variable (broker sets it) | Fixed by market (very tight) |
| Commission | Often $0 (hidden in spread) | ~$4-5 per round turn |
| Overnight Fees | Yes (swap fees daily) | No |
| Data Feed | Free (broker provides) | $15-100/month |
| Platform | Free (MT4/MT5) | Free or paid options |
If you hold CFD positions overnight, you pay swap fees. These seem small per day (0.01-0.05%) but compound quickly. A swing trader holding for 2 weeks could pay 0.5-1% of position value in swaps alone.
💡 Example Calculation:
Position: 1 lot EUR/USD ($100,000 notional)
Swap rate: 0.02% per night
Holding period: 14 days
Total swap cost: $280
With futures? $0 in overnight fees.
Verdict: For day traders, CFDs might be slightly cheaper (no data feed costs). For swing traders or anyone holding overnight, futures are almost always cheaper due to zero swap fees.
CFD trading is ILLEGAL for US residents. The CFTC (Commodity Futures Trading Commission) banned retail CFD trading in 2010 due to fraud concerns and lack of exchange oversight.
This means:
These are your best option. They operate legally, use regulated exchanges, and many offer excellent conditions:
Apex Trader Funding
From $19.70 (with 90% OFF)
Take Profit Trader
From $49 (with discount)
Topstep
Industry veteran since 2012
Lucid Trading
One-step evaluation
The good news? Futures prop firms are often cheaper and better regulated than their Forex counterparts. What seems like a limitation is actually an advantage.
The platform you use depends on whether you trade CFDs or Futures. Each ecosystem has different strengths.
MetaTrader 4 (MT4)
Industry standard, huge community, thousands of indicators/EAs
MetaTrader 5 (MT5)
More features, better backtesting, multi-asset support
cTrader
Modern interface, better order execution, Level II data
NinjaTrader
Free for sim, powerful charting, automation support
Tradovate
Web-based, no download needed, clean interface
Sierra Chart
Professional-grade, order flow tools, highly customizable
💡 The DOM Advantage:
Futures platforms offer Depth of Market (DOM) and order flow tools that let you see pending orders at each price level. This is impossible with CFDs since there's no central order book. Many professional traders consider DOM trading essential for scalping.
If you're based outside the USA and want to trade Forex/CFDs, these are the most reputable options:
Instant funding option, no time limits, profit split up to 100%
Longest track record, $200M+ paid to traders, excellent reputation
Very cheap entry, fast evaluations, but less proven track record
Futures prop firms are available to traders worldwide, including US residents. Here are the top options:
Best payout consistency, straightforward rules, excellent support
Cheapest with 90% OFF codes, one-step evaluation, fast payouts
Industry pioneer since 2012, proven track record, professional reputation
No daily drawdown, simple rules, 90% profit split
Many traders are surprised that futures prop firms are often cheaper than Forex/CFD firms. Here's why:
MetaQuotes (the company behind MT4/MT5) charges brokers and prop firms $100,000+ annually for server licenses. Futures firms use NinjaTrader, Tradovate, or Rithmic which are significantly cheaper or free for the firm.
Forex firms need to aggregate data from multiple liquidity providers and maintain complex broker relationships. Futures firms simply connect to the CME - one data source for everything.
The futures prop firm market has become extremely competitive in 2024-2026. Companies like Apex regularly offer 80% discount codes, driving prices down across the industry. Forex firms face less price pressure.
Futures prop firms don't need to deal with multiple asset classes, crypto integrations, or complex broker relationships. Simpler operations = lower costs = cheaper prices.
💰 Price Comparison Example:
$50K Evaluation Account:
• FTMO (Forex): €310 (~$340)
• Apex Trader Funding (Futures): $19.70 with 90% OFF
That's nearly 9x cheaper for the futures option.
"If you can trade futures, start there." It's typically cheaper, more transparent, better regulated, and teaches skills transferable to institutional trading. The learning curve for new platforms is worth it. If you're outside the US and specifically want to trade forex pairs or crypto, then CFD prop firms make sense.
No, CFDs are legitimate financial instruments used by millions of traders worldwide. However, the less regulated nature of the OTC market attracts some unscrupulous brokers. The key is to choose regulated brokers (FCA, ASIC, CySEC) and reputable prop firms with proven track records. CFDs themselves are not scams - they're simply derivative contracts that allow you to speculate on price movements.
No, CFD trading is strictly prohibited for US residents by the CFTC (Commodity Futures Trading Commission) and SEC. This regulation has been in place since 2010. US traders who want to trade forex or indices must use futures contracts instead, which are traded on regulated exchanges like the CME. Any CFD broker claiming to accept US clients is likely operating illegally.
Three main reasons: 1) Futures prop firms don't pay expensive MetaTrader licensing fees (MT4/MT5 licenses cost brokers $100,000+ annually), 2) They use centralized CME data instead of maintaining multiple broker feeds, 3) The futures prop firm market is more competitive, driving prices down. These savings are passed on to traders in the form of cheaper evaluation fees.
CFDs offer more flexibility for beginners with micro-lot sizing and familiar platforms (MT4/MT5). However, futures trading teaches better discipline due to standardized contracts and real market dynamics. For long-term career development in professional trading, futures is generally recommended. That said, if you're completely new to trading, starting with CFDs on a demo account to learn basics isn't a bad approach.
Yes, the core trading concepts (price action, technical analysis, risk management) are identical between CFD and futures. The main learning curve involves: 1) New platforms like NinjaTrader or Tradovate, 2) Understanding contract specifications and tick values, 3) Learning about contract rollovers and expiration dates. Most traders adapt within 2-4 weeks of dedicated practice.
Swap fees (also called overnight financing or rollover fees) are charged when you hold CFD positions overnight. They represent the cost of borrowing the leveraged portion of your position. Rates vary by broker and instrument but typically range from 0.01% to 0.05% per day. For swing traders holding positions for days or weeks, these fees can significantly eat into profits - making futures more cost-effective for longer-term trades.
Now that you understand the differences, choose the right prop firm for your situation.