When you want to start trading CFDs, one of the first decisions you need to make is to choose a reliable broker to work with. There are many differences between CFD brokers, and the list below shows some of the key things to look for when making your decision.
1. Regulator Approvals
Make sure that the broker you work with is legitimate, above board, and follows appropriate laws and regulations when handling trades. One way to do this is to check their regulator approvals. For top CFD brokers, you should be able to easily find this on the company's website.
2. Markets Covered
Different brokers can handle CFD trades on different markets. For instance, you may be interested in CFDs based on corporate stocks, market indices, commodities, currency exchange rates, or interest rates. Once you know the type of CFDs you are interested in trading, you can find a broker that takes care of those needs.
3. Financial Criteria
There are a couple of financial criteria which can be of high importance. What is the minimum account size? Can you start small and then expand? What is the maximum leverage the broker allows on CFDs? One of the major advantages of trading CFDs is that you can leverage your investment.
4. Fees and Costs
The fees that a broker charges can make a big difference to how much profit you get to collect on a trade. CFD commissions are usually very low, but worth checking. Spreads are often more important, so check these for the investments you want to make. Financing fees are also important, since you are working on the margin.
5. Trading Platform
Look at the software used in their trading platform, to get an idea of how it will work for you. Does it have all of the information you need available to you in real time? Does it include price information, charts, and news feeds? Is it easy to make trades, and place a stop loss or take profit order? Do you need to install the software on your computer, or could you access it from anywhere?
How much personal support can you get from this broker? Can you reach a live person when you want to? When you have questions or need assistance, this can be very important.
When you're researching and evaluating CFD brokers, you will find that a service like CFD Spy can be very helpful. This site has collected information on a number of different CFD brokers, so you can see easy comparisons.