CFD Brokers

CFD Trading Brokers

One question that CFD traders often ask is which is the best CFD broker? While there can be no absolute answer to this question as it depends upon so many different things and the 'right' broker for one CFD trader might not necessarily be the 'right' broker for another, some brokers are, without a shadow of a doubt, far better than others. When looking for a good CFD broker that this right for you however I would advise that you consider the following -

1. Regulation: One of the most important questions for CFD traders to ask themselves is which country's authorities regulate their broker. In the UK the Financial Services Authority (the FSA), the body that was responsible for regulating the finance industry has become the FCA (the Financial Conduct Authority). The FCA requires the following of brokers based in the UK -

• That they keep their client's funds in segregated accounts with FCA approved banks which the broker cannot, at any time, treat as their own assets meaning that even if the broker were to go bankrupt its client's funds should still be safe. In addition to the UK's FCA requiring that brokers keep their clients funds in segregated accounts in the unlikely event that something were to happen the deposit would still be protected by the UK's deposit protection scheme.
• That they keep a full and accurate record of all transactions between themselves and the traders so that any dispute between the broker and their client can be settled fairly, by the FCA themselves if necessary.
• That they undergo regular audits to ensure that they are fully complying with the FCA's regulations.

2. Trading platform: What kind of online trading platform does the broker have? A good CFD broker should have a user friendly trading platform and offer this on mobile devices.

3. Demo trading accounts: All good brokers will allow potential customers to test their trading platform with a demonstration account. If a broker is not willing to allow traders to test their trading platform in a demo trading environment I would be very suspicious and wonder why.

4. Commissions and trading costs: CFD trading typically costs around 0.1% per trade. However there will usually be other costs too which also need to be considered such as the cost of leaving positions open over-night (usually around LIBOR + 2.5% / 365 per night) and dividend policies. Most good CFD brokers will usually pay any dividends paid on the underlying instrument to those with an open long position and deduct the dividend payments for those which short positions.