Attention CFD traders.
OK, let's face it, the most important things in CFD trading success are:
1. A good CFD trading system or method
2. A good CFD market maker that will give you trading features you need
3. Good money management skills
Of course, you should also know the basics about how CFDs work in general.
So what's the importance of a CFD market maker you may ask?
Well, read this article to find out...
The 7 points to consider when choosing a CFD broker online are:
1. Their margin
requirement for their trades be it stock CFDs or index CFDs.
2. Their one way commission.
3. The number of CFDs available to trade.
4. The number of CFDs
that are shortable.
5. What are the order types that are available to be placed?
6. The interest charged for long overnight held positions, and paid for short
positions
7. Do their CFD prices exactly mirror the underlying stock price, or is the
spread widened?
Let's talk about a few of these points in particular....
1. Number of CFDs available
Well, a large enough number of CFDs available to trade is important if you're
trading systems that produce a much greater profit if traded on for example,
the top 200 or 300 CFDs, than if they are designed to trade say the top 30 or
100 only.
If your system is back tested for a certain number of CFDs to produce a certain
amount of profit, then you'll need to check that you can trade this number of
CFDs.
2. The spread widening issue (easy to miss)
Some online CFD brokers widen the spread by a small amount, say 0.05%, or even
further. You'll have to take this in context of the other costs of trading,
as the same provider that widens the spread very slightly may also have smaller
commissions, whereas another provider who does not widen the spread, may have
higher commissions.
3.What are the order types that are available to be placed...
Some providers only allow you to place entry orders during market hours. So
you'll have to be there during the market open.
With most CFD providers though, you can place orders at anytime, that is, when
the market is either open or closed. So if you're working in the day, you can
place all your orders at night, including limit orders to enter a position,
and don't have to watch the prices at all during the day.
So there you have it.
Hopefully you're a bit more knowledgeable now about choosing a CFD market maker.
Also remember to try
their demo platforms first, before live trading.
Keep learning more about CFDs, as they're really stock trading on steroids.
Not a technical term I know, but it's a good way to describe it.