With the vast amount of choices of brokers available online today, getting your CFD trading started can be very overwhelming. Most brokers in this day and age are out online with numerous offers and features that set themselves apart with the other brokers available today and choosing the right one for your can be tricky. We have, however, gathered some of the aspects that you can look into first as you choose the best gateway that you will have for the CFD market.
Choosing the right CFD broker with the right software or trading platform can be very crucial as it is the gateway to the market. Most available trading platforms offer software such as MetaQuotes or proprietary platforms that are available only with specific brokers. Most of the time these platforms are the best as it is tailor fit according to the type of client of the brokers and mostly, should have multiple types of platforms as some traders would rather trade using their smartphones while some would rather stick to using desktops.
The most commonly used platform however, is the MetaTrader 4 and is at least being used by the majority of traders in the industry. Highly likely, this is going to be the platform that you will be using and going to be accustomed to as you start trading CFD. Look into the platform that will have a wide range of technical indicators, Risk management tools like stop loss order and trailing stops and a comprehensive charting package as these are the necessary tools you will be needing at the bare minimum when trading.
The CFD market, compared to other traditional financial markets, operates on spreads rather than commissions. Mainly this is the reason why most brokers would market their services having no commissions. Instead, the brokers earn by charging the traders a spread, which is the difference between the buying and selling price. As a CFD trader you will encounter two kinds of spreads: Fixed & Floating. A Fixed spread is a spread that does not change and you are able to know its amount before even trading while a Floating spread is a spread that varies and will be moving depending on the market’s volatility. Most traders refer to fixed spreads as the preferred choice however, which is better will depend on your specific trading needs.
Most CFD brokers offer trader’s accounts that will cater to different categories. A micro account, which is the smallest type of account for traders where the trading lot is to 1000 units of the instrument. Another type of account is called a Mini-Account which is a little higher up and can represent 10,000 units. And the final type of account is called a Standard account and a lot in this type is equivalent to 100,000 units. By having a Micro or Mini account, only a very low initial investment is required to start trading while the standard account will need a relatively higher amount of capital before you can begin trading. Given the different choices, using the right account will depend initially on the investment capital that you plan on using to trading.
Asking the right questions
Not all aspects can be thoroughly covered but maybe a little assessment may narrow down you choices in the very overwhelming world of CFD trading. It is very important to ask the right questions most especially if you have any doubts in the services being offered by a broker. By doing this you are able to clarify some of the services they have or even the most basic knowledge of how they work as a broker. Some of your questions can be:
How does the broker maintain the safety of funds?
What are the instruments that are available for trading?
What is their business model?
What are their customer service hours?