What exactly are CFDs?
CFDs have been enjoying increasing popularity for the past years since they are suitable for both institutional traders but also for retail. Beside this, CFD trading provides a potential for high profits in a very short time frame
The term CFD stands for Contract for Difference and describes derivative trading instruments that are the difference between the buying and selling price of an underlying asset.
CFD Broker – What exactly is that?
There are many different tradable instruments. For this reason, it is not easy for a broker to cover the full range of possibilities. Many brokers specialize in certain products and tailor their range of services specifically to these products.
This is also the case with CFD brokers: Such providers focus on trading in contracts for difference – the trading platforms are optimized for trading CFDs and the selection of underlying assets is in most cases particularly large.
There are countless CFD brokers and finding their way in their world is not easy at first. At BrokerDeal we want to assist you in your search and give you the opportunity to find a trading partner that meets your expectations. Depending on your trading strategies and preferred trading instruments, there may be very few potential CFD brokers that are suitable for you. This allows you to realize a targeted CFD broker comparison with BrokerDeal using the many possible selection criteria. Choose one of BrokerDeal’s partner brokers, and you will also receive many valuable benefits. The following are criteria that distinguish reputable CFD brokers.
What are the characteristics of a good CFD broker?
As CFD trading has become increasingly popular in recent years, the number of CFD brokers continues to grow. All trading providers can show specific characteristics in terms of services, costs, and conditions. How can one distinguish a good CFD broker from a bad one despite the many differences? And are there universal characteristics that stand for the good quality of an offer? Yes, they exist and if you are looking for a good broker you should ask yourself the following questions in order to fully evaluate an offer.
REGULATION AND SEAT OF THE BROKER
One of the most important features of a broker’s integrity is its regulation with financial regulators. UK-based brokers are generally regulated by The Financial Conduct Authority (FCA). For other European countries in general, Cyprus Securities and Exchange Commission (CySEC) is an adequate authority. Such supervisors monitor the brokerage business and put a stop to dubious dealings. So if you have discovered a provider with BaFin regulation, it is a sign of the seriousness of the broker. In addition, it is worthwhile to find out how long the CFD broker has been on the market because a long-term provider was already able to convince through its own offer and thus remain on the market for a long time.
WHAT BASIC VALUES ARE AVAILABLE TO ME?
A good CFD broker knows that the needs and preferences of different traders are individual and therefore endeavors to provide you with the widest and most diverse range of underlying assets available for trading. What’s the use of 3,000 different stocks if you prefer to trade indices?
And you too would certainly keep your hands off a broker if you do not have the opportunity to trade your preferred underlying asset. So a good CFD broker always strives to expand its own product range to meet the needs of customers.
WHICH SPREADS DOES THE BROKER OFFER?
Spreads are the most important differentiator for a CFD broker comparison. You will have to pay these fees on each trade, and if you plan to trade frequently, you should pay particular attention to the level of spreads. A good broker will not focus on your own profit in the first place. Rather, he will endeavor to offer the customer attractive spreads.
WHAT OTHER COSTS ARISE?
A good broker offers his customers a free trading account and allows for the free use of the trading platform. The broker also provides the traders free real-time quotes and does not charge fees for deposits and withdrawals.