CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 51% and 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.
Bonds can play a critical role in a well-diversified portfolio by offsetting the volatility of stocks and providing a source of steady income through interest payments. The bond market is one of the largest securities markets in the world and provides traders with multiple trading avenues.
UK Bonds Market – markets.ft.com
Bonds Terminology
- Par Value: Also known as the face value of a bond, it represents the principal amount that is returned to bondholder at the end of maturity period.
- Coupon Rate: The coupon rate is the rate at which bond issuer promises to pay the bondholder on a periodic basis. For a bond with a par value $100, an annual coupon rate of 5% and maturity 10 years, the bondholder is paid $5 every year for 10 years as coupon payment. At the end of 10 years, the bond matures to pay off the face value of $100.
- Discount: Bonds do not trade at their par value, they may trade above or below it. If a bond trades at a value below its par value, it is said to be trading at a discount. A bond with a par value of $100 trading at $95 can be considered to be trading at a $5 discount.
- Premium: Bonds trading at a value greater than their par value are said to be trading at a premium. A bond with a par value of $100 trading at $105 can be considered to be trading at a $5 premium.
- Bond Credit Rating: The credit rating of a bond is the opinion of an independent rating agency regarding the ability of the issuer to pay the regular interest on the bond and finally repay the principal at maturity. If the payments are not made in full or in time then the issuer is said to have defaulted. Major credit rating agencies such as Standard & Poor’s, Moody’s, and Fitch provide ratings for these bonds which range from the highest down to the ‘junk’ category. As the quality of a bond reduces, the interest on it typically goes up to compensate the trader for the higher risk.
Interest Rates and Bond Prices
Interest rate movements and bond prices follow a negative correlation, i.e. whenever a macroeconomic benchmark interest rate (eg: the repo rate) falls, bond prices increase and vice versa. To take an example, a bond issued last year at a par value of £100 offers an interest rate of 5%, however, due to inflation in the economy, the government increases its benchmark rate (repo rate) in the current year after which market-wide interest rates go up too. So any new bonds issued after the rate hike will carry higher interest in accordance with the increased benchmark interest rate. So a £100 par value bond issued in the current year will offer a higher interest rate, say 5.25%. This makes any of the older bonds less attractive with respect to newly issued bonds and their market price tends to fall. The opposite of this happens when benchmark rates go down and the bonds issued in the past become more attractive thereby increasing their market price. This correlation between interest rate and bond prices is important for traders as it helps them to take an informed stance on price movements.
Types of Bond
Bond issued by federal/central governments: These securities are issued by central treasuries and the money raised through them is used by the government for fiscal spending. The maturity period of these bonds could be 1 year, 10 years or even more. In economically sound countries, these bonds carry the lowest default risk as they are backed by the government’s promise.
Local Government/Municipal bonds: These bonds are typically issued by municipal corporations and state governments to finance public improvement projects. Their interest is mostly exempt from government taxes and sometimes local taxes as well. The credit rating of municipal bonds is often reasonably good.
Corporate Bonds: Corporations borrow from traders through corporate bonds. Independent credit rating agencies rate these bonds and depending on the issuing company their ratings can vary from AAA to junk. Since these bonds carry higher risks than government bonds they often pay higher interest than government bonds.
Bond Funds
Just like stock mutual funds, bond funds invest pooled assets based in a variety of bond instruments. Typically bond funds are of the following types:
Actively Managed Bond Funds: For such funds, the fund managers pick a variety of bonds to include in order to try to outperform bond indexes. These would include mutual funds and closed-end bond funds.
Bond Index ETFs: These funds track the movement of popular bond indexes in the market and their units can be freely traded on an exchange.
Speculative trading – Bond CFDs
Bond CFDs allow traders to speculate on price movements of popular treasury bonds such as US 10-year Treasury notes. They work like a derivative instrument, allowing traders to speculate on bond futures contracts without actually taking the ownership of bond itself. With CFDs, traders can amplify their exposure to relatively small price movements because of the margins at play. Some popular regulated brokers who provide platforms to trade bond CFDs are as below:
- AvaTrade – CFDs are available on 5 Year US T-Notes, 10 Year US T-Notes, 30 Year US T-Bond, Euro-Bund, Japan Government Bond
- City Index – CFDs are available for US T-note 5yrs and 10yrs, US –T bonds, UK Long Gilt, Euro Scatz, BTP Italian bonds
- IG – CFDs are available for US T-note 5years and 10years, German Bund, German Buxl, German Schatz, OAT French govt. bonds
These regulated brokers offer features such as tight spreads, excellent trading platforms, good leverage, actionable trade ideas, anytime-anywhere trading.
Conclusion
Bonds are essentially debt securities that offer periodic interest payments and principal repayment at maturity. They provide an efficient alternative to stocks for those traders who don’t like the risk of equity markets and are looking for a constant source of periodic income. They serve an important role in portfolio design by balancing the overall portfolio risk. Being a widely popular security they have a healthy derivative market growing around them for speculators and traders.
BrokerNotes.co 2025 Overall Rankings
To recap, here are our top forex brokers for 2025, sorted by Overall ranking.
Popular Forex Guides
More Forex Guides
Popular Forex Reviews
Methodology
At BrokerNotes.co, our data-driven online broker reviews are based on our extensive testing of brokers, platforms, products, technologies, and third-party trading tools. Our product testing extends to the quality and availability of educational content, market research resources, and the accessibility and capabilities of mobile platforms and trading apps. We also dive into each broker’s trading costs, such as VIP rebates, inactivity fees, custody fees, bid/ask spreads, and other fee-based data points.
Steven Hatzakis, an industry veteran with decades of experience in the forex market, leads the BrokerNotes research team. All BrokerNotes content is researched, fact-checked, and edited by the research team.
All websites and web-based platforms are tested using the latest version of the Google Chrome browser. Our Desktop PCs run Windows 11, and we use MacBook Pro laptops running the latest version of macOS to test trading on the go. We test mobile apps and products using iPhones running iOS 17 and Samsung devices running Android OS 14.
Note: The online brokers on our site provide the ability to trade forex in one or more ways, such as non-deliverable spot forex (i.e., rolling spot contracts), contracts for difference (CFD), or other derivatives such as futures. The availability of specific markets or features will depend on your country of residence and the broker's applicable brand or entity that services your account(s).
Forex Risk Disclaimer
There is a very high degree of risk involved in trading securities. With respect to margin-based foreign exchange trading, off-exchange derivatives, and cryptocurrencies, there is considerable exposure to risk, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or related instrument. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable, or that they will not result in losses. Learn more about foreign exchange risk.
About the Editorial Team
Founded in 2014 and acquired in 2021, BrokerNotes.co provides unbiased forex broker reviews and ratings to help traders and investors find the best broker for their needs. With over 60 brokers reviewed, our editorial team has published thousands of words of research to help our readers make informed choices.
FOREX.com
City Index
Capital.com
OANDA
AvaTrade
FXCM
Pepperstone
XM Group
Admirals
FP Markets
IC Markets
FxPro
Tickmill
Markets.com
BlackBull Markets
FinecoBank
Vantage
ThinkMarkets
DooPrime
HYCM (Henyep Capital Markets)
HFM
Trading 212
Questrade
ActivTrades
Trade Nation
Moneta Markets
BDSwiss
TMGM
Eightcap
Spreadex
MultiBank
ACY Securities
easyMarkets
Exness
VT Markets
IFC Markets
RoboForex
Octa
IronFX
Axi
Earn
ATFX
iFOREX
FXPrimus
FXOpen
Markets4you
GBE brokers
Alpari
FXGT.com
Xtrade
Libertex (Forex Club)
TopFX
LegacyFX