With CFDs (Contracts For Difference) gaining in popularity and in press coverage, here’s a useful guide to help you choose the CFD provider that is right for you.
As a general rule of thumb – and this may seem obvious – it really does pay to choose an established CFD provider, one that has been around for a while and is still successful.
{DMA or Market Maker?}
In the long-term you’ll find that it’s useful to have access to both DMA (Direct Market Access) and market maker. With DMA you can trade shares at the underlying market price. You can even enter an order within the spread.
If you’re just starting out or if you want access to the whole range of markets from one single platform then a market maker platform is probably the way to go.
Educational programme
If you’re relatively new to CFD trading it’s important to choose a provider who offers an educational programme to help you get started.
Spreads and Deposits
Do the hard work, who offers the best value for money?. It’s not the only thing you should consider though.
{Risk Management tools}
Also important is the range of tools offered by the CFD provider to help you manage your risk. Guaranteed stops offer complete protection from any market ‘slippage’ while trailing stops can help you maximise profits safely. More important perhaps is you should always remember that as a trader it is your ultimate responsibility to manage your own risk.
Try A Demo Before You Decide.
One of the most important steps is to test-drive the technology and the ease of use of the platform with a trading demo account.
Here’s a check list of features you should look out for from a demo platform.
Platform performance
When trading is slow, or the markets are less volatile most platforms will perform well. It’s during highly volatile times that trading platforms are put under the most pressure. And these are the times you will be grateful for a reliable and robust trading platform.
Charts
Find out if they have simplified charts that’ll help you get a snap-shot of what’s going on and more advanced charts which you can use for a more studied approach.
Market insights
Does the trading practice account give you access to resources and information about the financial markets which will help you make better trading decisions? Take note of how easy the trading platform is to use. But remember simplicity does not always mean reliability.
To answer these questions you’ll need to compare CFD providers, do a bit of research among the CFD trading community online and talk to the companies directly.
Please note also that while trading CFDs can result in magnified profits, losses too can exceed your initial deposit, so always make sure you fully understand the risks involved in any trade.
