How to choose the best CFD Broker

How to choose the best CFD Broker

Are you looking for the best CFD Broker ? If the decision to trade cfds is important for you, so is the decision to choose the right CFD provider. Because once you have signed up with one of them, you are less likely to go looking for another CFD broker.

Switching brokers, as you might think, it is a hassle that can be avoided. Choose the best broker that meets your requirement from the beginning.

It is important that you know all the aspects of your trading needs and make a right choice to start with the broker that is just right for you.

The Parameters Required in Best CFD Broker

There are certain parameters or you can say aspects to look for when finding a CFD broker.

Have a deep understanding of CFD Trading

Any online broker should understand the market fully to develop trader’s needs as the market changes quickly. Because it is their knowledge that will help you execute trading in a successful way. As the word “broker” itself mean working as middleman, they will be with you throughout the process, ensuring guaranteed return.

He should know what suits you the best and help you along with other traders, so that you get other pips without any difficulty. Moreover, there would be no limitations related to cancelling or placing order. You don’t have to purchase or sell with the broker, but ensure to  trade making him/her as your channel.

CFDs Broker should have all updated information on his website

Most of the CFD brokers today have their own website. A good CFD broker has its online presence through a website that is easy to navigate and offer all possible information related to spread betting, CFD, Forex, and more. The website should have easy access to platforms of the given products, and there should be up-to-date research from in-house, professional analysts. The brokers should have access to different types of markets. The website should provide testimonials, technical details, and FAQs that offer you all possible information. The contact details should be provided for analysts and traders, either email address or telephone numbers. Finally all this information should be in easy understandable language so that even a beginner trader can understand and take full advantage of it.

CFD Broker should work according to your needs

A good CFD broker should make sure that both existing traders and beginners get the right guidelines, which can be used to approach CFD through the right path. Hence, the selection of online brokers should be done very carefully, and you should strike a deal with one who’s compatible with all your needs.

What are your needs then that you will try to meet it with your CFD Broker

Your requirements must be parallel to your choice of CFD Broker. There are again certain financial terms you need to understand that will make you easily realize what are your needs and what are you looking for in CFD trading. Review the following questions and answers properly in your mind then decide what your needs or goals are in choosing the best CFD Broker.

Look for Markets and assets that can be traded

Most CFD brokers offer trading in different indices, commodities and the most important forex pairs. There is a number of brokers that offer trading in individual stocks. Often the biggest, worldwide operating multi-nationals. When choosing a cfd broker it is good to think about what assets you want to trade and choose your broker accordingly.

The maximum leverage

There is a big difference in the maximum leverage that CFD brokers offer. Usually leverage lies somewhere between 10 and 400. The highest leverage is often possible on forex-pairs. The lowest leverage on individual stocks.

The minimum position size

The minimum position size should be as small as possible. Otherwise trading some assets could be impossible for you due to a too small trading capital. Information about minimum position size can be found on the website of the cfd broker.

The Trading platform

There are different trading platforms in use with the different cfd brokers. Some are very extensive with a lot of possibilities. These are however somewhat more complicated for a newbie cfd trader. Others are more basic and easy to use. It is important to choose a platform that matches your knowledge and experience level and fulfils your demands. With most cfd brokers you can open a demo account, which is a very good way to try out the trading platform.

Regulation of CFD Broker

It is important to know where and by what institution the cfd broker is being regulated. It is best when the broker is being regulated by a reliable financial authority like the British FSA the NFA in the USA or ASIC in Australia. This will give you peace of mind that you have more security and your money is safe with a reliable broker and that you can go with complaints or conflicts to the authority concerned if required.

Defining the Spread

The spread is the difference between the bid and ask price. Your cfd-broker defines the spread and  also makes money in the form of commission. Cfd brokers often have different spreads for the different asset categories. For example the spread for individual stocks will usually be higher than the spread on major indices or forex. There are differences between the spreads used by the different cfd brokers. It is good to compare them, because this is about the cost of trading. Information about spreads can be found on the website of the broker.

First deposit bonus/Low commission rate

A number of brokers offer a bonus or low commission rate on the first deposit to welcome new traders. This means that a new customer will get a certain amount of money from the broker, on his trading account, on top of the money of his first deposit. Often this is a percentage of the deposit. You will find that the percentage differs per broke and that the bonus comes free, also can be transferred off the trading account after you have done a certain number of trades in combination with a certain volume. The available bonus should not be the most important consideration when choosing a good cfd broker, but it is a nice extra to be taken into account.

A low commission fee may be easily negated by wide spreads, especially if the CFD broker is a non-DMA or Market Maker. Furthermore, your orders may be subjected to slippages or re-quotes. This may affect your entry and exit price. DMA CFD brokers usually have tighter spreads that reflect the actual spread in the underlying market. Their brokerage fees are usually higher than non DMA CFD brokers.

“DIY” CFD Trades

Many CFD trades are “DIY” – to save cost and are placed via the directly internet by the trader. However there may be times when you may prefer to place a trade via phone, or to seek clarification from the broker and talk to personally. Check if the CFD broker can be reached by phone. Are there fees involved? How long do you have to wait for the call to go through?

Fee if any

Check the ease of funding or withdrawing money from your CFD trading account. Does the CFD broker charge an administrative fee if you were to fund your account using credit card? When you wish to withdraw your money, are there any fees or administrative fees imposed? This is especially important for CFD brokers that are based overseas. Some online brokers don’t charge a commission fee, but ensure that they don’t have limited market access.

Also when looking for the best CFD broker you need to compare them to choose right. Many of us overlook this aspect of comparison when finding the right broker due to having misconception that this process is very complex. Though it is not so. But, the fact is that comparison process is very easy, as there are so many resources built only for this purpose. Analyze broker’s trading style and read reviews online, from real traders and get suggestions from those traders.

Thus you can see it is not so difficult only that you have to be a bit more thinker to have your requirements in one hand and then find that kind of CFD broker for you.

Your CFD broker should be focussed clearly on market, meet your expectations and budget with a fair commission for the services he/she is offering. Remember after all CFD broker is a human with weakness and strengths. But it the perfect balance that you have to look for when choosing the right and the best CFD broker.

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Risk warning: Your capital may be at risk. CFD trading is suitable for experienced traders and not beginners.