Choosing a CFD broker can a daunting task. There are so many things to thing about that sometimes the decision-making process can get confusing. The task itself needs to be broken down first into two elements being personal choice and general choice. The personal choice is related to how you trade Contracts For Difference. So if you are a part-time trader only being at your screen morning and evenings then you may want a CFD broker that is able to give excellent mobile platforms. Conversely you may have the privilege of trading for a living so you may believe the pip spread is a more salient competitive factor in your decision-making process. Whichever factors are important to you by reading on you will have some tools and information to be able to make the correct broker decision that is right for you.
The spread is the difference between the Ask and the Bid. This is effectively how the CFD providers make money. Generally the less traded the pair then the higher the spread. If you have a pair with high volume in the market then the likelihood is the spread will be lower than others with a lower amount of transactions. The important note here is the higher the spread the more you need to make before you are in profit. If the spread is 3 pips then you start out the trade at negative 3 pips so you need to make this back to break even. This is especially important when you are deciding what to trade.
Finding a CFD broker with a strong level of educational resources may appeal to you especially if you are a new trader. However you maybe seasoned pro and not get any real benefit from the educational resources. Even if you do not use the educational resources it is still a good idea to find a broker who has the knowledge bank. This is because it demonstrates the professionalism of the broker. It is also a good idea to want to keep learning and brushing up on your knowledge and understanding is never a bad idea.
As part of the CFD education offered online some brokers also provide either live or web seminars. These are an excellent resource for meeting fellow traders or gaining knowledge from someone else’s opinion and expertise. Trading is a dynamic industry so a broker that provides an opportunity to continue learning by sharing expertise is definitely worth further investigation.
There is so much to learn in trading so having a broker that provides an unbiased forum for learning can be a great resource to help you become a consistently profitable CFD trader. You must also consider information overload so if you know the broker provides excellent education then you may not need to waste time and possibly money looking for development material elsewhere.
The main types of CFD platform offered are:
- Program download – usually MT4
The type of trader you are will dictate the platform you favour. So if you are trading part-time and would like to log on at work or in your breaks then you may find that the broker offering a mobile and web platform the best option. If you are at home most of the time then a program download will probably suit address your needs. I would recommend that trading on MT4 as early as possible is the best way forward. Most reputable brokers supply MT4 so downloading this should not be a big issue.
You must ensure your CFD broker is correctly licensed before you commence trading with them. This may seem obvious and most brokers are. However there are some brokers on the internet that are not registered and could well be unethical processing your orders. Ensuring the correct licensing and that the broker is part of the syndicate of financial authorities is essential for your protection.
A very important aspect of CFD trading that you must be careful of is over leveraging. Trading can offer great returns however it can also lead to losses that you may not be prepared for. Speak with your broker and understand the leverage being offered. Be sure to understand that the higher the leverage is not always the best because you are ultimate putting more at risk. Some brokerage firms offer 400:1 or more leverage which if you trade at this level could lead to substantial profits or losses.
Friendly Help Desk
You will be conducting a business transaction with your broker possibly on a daily basis. It could even be that you are dealing several times in one day. Although I would not recommend trading too often because it is quality of trade as opposed to quantity. However there will be times, especially in the early days, that you want to discuss certain things with your broker. You will want to ensure the helps desk of the broker is professional and helpful so you are able to trade as effectively as possible. After all trading is difficult enough without having to deal with any unnecessary nuances.
The exciting part! Taking money out. For sure you do not want to be waiting or debating for days on end when you have finally mastered trading and you wish to take money out of the account. When deciding which broker to use be sure that money transfers happen in a timely and accurate manor. The method of transfer must also be acceptable so you will need to understand how this process works. The quality of the broker can often be shown in how they manage the financial transactions and the external support they have to do this.
This guide should help you out in finding the right CFD broker for you. It is essential that you do your homework thoroughly. Choosing the correct broker that suits your trading style is a difficult process however following the above guidelines should put you well on your way to making the correct choice. Getting the correct broker will enable you to concentrate on the important aspects of trading. With the right broker you can rest assured you can do your analysis and trade efficiently and effectively. By following the above detail you will well on your way to find the perfect CFD broker for you and your trading style.