Pick The Best CFD Broker With These Defining Metrics
Looking to invest your money with a CFD Broker? Choosing the Right CFD broker is the first step in your investment journey.
Economic volatility affects every section of our lives. Investors are no exception to the economic recessions. Choosing the right tools and platform should be your priority in achieving your investing goals. Investing with a CFD broker has become a popular choice for investors in recent years. Thanks largely to the online trading platforms and brokers. However, with an abundance of online brokers offering CFD, discount brokers, and full brokerage services, it’s hard to pick the right one.
Why Invest with a CFD Broker?
Contract for Differences are derivative products. Investing in these derivatives means you do not directly buy an underlying asset. Making money with CFD trading involves predicting the price movement of an asset. CFD brokers offer several investing advantages. For instance, you can invest in international stocks through CFDs which otherwise wouldn’t be accessible to you. Also, CFD trading offers high leverages on investments. It means you can trade more by investing less. CFD trading is also a risky venture as higher leverage options also mean higher investment risks.
How to Pick the Best CFD Broker?
Almost every CFD broker offers limited access with a demo account. It’s your opportunity to get hands-on experience with the trading platform, tools, charts, comparisons, and explore the product range available. The primary criteria for choosing a broker should be its regulation and licensing information. Not every online broker is regulated by top-tier regulators. For instance, confirm if your preferred CFD broker is regulated by FCA in the UK or the SEC in the USA. Here are some key fundamental metrics to help you find the best CFD Broker:
Total Trading Costs (including non-trading costs)
CFD brokers advertise their spread costs displaying “average” or the lowest possible spreads for certain products. Carefully evaluate the spread costs for your preferred products such as stocks, Forex, or ETFs. Most brokers embed their commissions in spreads. Overnight funding costs are the interest you’ll pay on open positions. You should also review the non-trading costs. Non-trading costs include account inactivity fees, funds withdrawal, and deposit charges.
Range of Products And Markets
Most CFD brokers offer only Forex and Stock products. A lot of them also come short with international stocks and markets. Limited options here mean your trading portfolio will lack diversification.
You’ll need to diversify and hedge your investment bets inevitably. Thus, look for a service provider that covers different financial markets and offer a wide range of products such as stocks, Forex, ETFs, indices, bonds, commodities, and cryptos.
Online brokers come with built-in trading platforms as well as third-party software. So, choosing a broker that comes with a familiar trading platform for you will be important. For instance, MT4, MT5, or Ninja Traders are popular third-party trading platforms with investors and brokers.
Here are a few key factors to consider with a trading platform:
- Multi-Device compatibility
- Indicators, signals, and charting
- Log in security
- Search feature
- Research tools
- Order types
- Portfolio reports and analysis
- Alerts and notifications in real-time
- Easy and user-friendly interface
Deposit And Withdrawal Options
If your preferred broker offers a number of base currencies, it will save you enormous currency conversion costs. Further, a good broker will offer you comprehensive withdrawal and deposit options including credit/debit cards, wire transfers, bank transfers, and e-wallets.
Many brokers will offer you a single trading account type. However, the good ones will always offer you more account types for further flexibility. Tiered account types allow you wider access to products, better spreads, and leverage options.
Whether you are a beginner or a pro trader, you’ll always need customer support. Good CFD brokers will always offer prompt customer support. Ideally, they should offer 24/7 support through live chat, email, or phone.
Lastly, a good broker will come up with a comprehensive range of educational material for you. It will help you to understand the key features of the trading platform, fundamental and technical analysis.
Choosing the best CFD broker requires careful evaluation across several performance metrics. Trading costs, platform, and product range are some of the key metrics. You should also carefully define your trading needs before finding the right match. CFD trading offers different advantages and risks than stock trading.