How To Choose A CFD Provider?
CFD trading like any new discipline can be a little confusing at first. Once you start to understand the fundamentals though it all becomes a lot clearer, however, taking the next step and choosing the right company to trade with can be just as daunting.
Which provider offers the best all-round service? Maybe it is the trading platform I should be focusing on?
Here are some factors you may want to consider before making your choice.
It seems obvious but it really does pay to choose an established CFD provider, one that has been around for a while and is successful. Every year a new crop of providers springs up offering you all kinds of incentives to hook you in. Always be wary of providers who offer free sums of money if you sign up with them.
If you’re just starting out, be reassured that even professionals are eager to learn more about how to become a better trader. That’s why they are successful, and why they stay successful. So, compare each provider by looking at the kind of education they offer. If they’re really serious they’ll have a range of resources for the newcomer and more experienced trader alike.
Take a look at the range of markets on offer, the more experienced providers will generally have a larger range of markets to choose from.
It’s important that you make sure that their margins and spreads are competitive compared to other providers, but remember, that this is not always the only factor you should take into account.
Also, find out if they are a ‘Market Maker’ or offer ‘Direct Market Access’ or maybe both, if it’s the former your trades will be executed with the provider while with the latter your trades are placed directly into the underlying market.
You might also want to consider the level of customer service on offer as this can really be helpful ¬– especially for the beginner ¬– and it will make it easier for you build a long-term relationship with the the provider.
We like InterTrader who provide a ‘no dealing desk’ CFD trading service, with 100% market-neutral execution with the aim of offering low-cost trading on a wide range of markets through their web-based and MT4 platforms.
It’s important to choose a reliable trading platform, one that’s not going to crash the very moment you want to place a trade and also one that offers fast and accurate execution of trades. Platforms might look similar at first glance but it’s the core technology behind them that is the key.
If the trading platform is browser-based, make sure you check you’re using a recommended browser and have enough RAM on your computer to do it justice. Do your research.
Some platforms don’t offer charting packages, this might be ok for the new trader but you’ll find as you get more experienced that you’ll increasingly begin to rely on charts and the analysis of them to help you hone your trading strategy. Choose a provider who has a variety of charts.
Look out too for those platforms that have free tools to help you better understand the nature of the financial markets, such as news feeds and technical analysis.
When it comes to choosing a trading platform, you don’t want the cheapest broker. You want the best technology, the best customer service, the best execution, and a commitment to transparency that excludes your broker being complicit in routing your orders thru high frequency trading exchanges.
Today, brokerage costs are minimal, go for the best and leave the discount services to suckers. Professionals use proper brokerages, amateurs use robinhood and similar things. Remember, just like Facebook, if you aren’t paying for the product you are the product being sold.
Conclusion – Platform, Provider or both?
Ask a seasoned CFD trader and the chances are they’ll tell you that what influences them is the combination of both the provider and the actual trading platform. Make sure the provider and the platform offers the full range of tools to help you manage your risk. These include guaranteed stops and trailing stops.
Recent technological innovations within the CFD trading industry have included mobile trading and the use of Multilateral Trading Facilities (Chi-X, BATS) to deliver increased liquidity and more competitive pricing to customers.