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With CFDs (Contracts For Difference) gaining in popularity and in press coverage, here’s a useful guide to help you choose the CFD provider that is right for you.

As a general rule of thumb – and this may seem obvious – it really does pay to choose an established CFD provider, one that has been around for a while and is still successful.

{DMA or Market Maker?}
In the long-term you’ll find that it’s useful to have access to both DMA (Direct Market Access) and market maker. With DMA you can trade shares at the underlying market price. And also trade within the market spread.

Market maker platforms offer you access to the whole range of financial markets from forex, commodities to shares and indices.

Education
If you’re relatively new to CFD trading it’s important to choose a provider who offers an educational programme to help you get started.

Competitive spreads & margins

It’s good to shop around and find which provider offers the tightest spreads and the lowest deposits. But also remember: it’s not all about the lowest rates, it’s about the service offered as a whole.

{Risk Management tools}

Also important is the range of tools offered by the CFD provider to help you manage your risk. Guaranteed stops offer complete protection from any market ‘slippage’ while trailing stops can help you maximise profits safely. You should always make risk management your responsibility though.

Get A Demo of the Trading Platform.

One of the most important steps is to test-drive the technology and the ease of use of the platform with a trading demo account.

When you’re testing a demo account take a look at the following.

Platform performance
When trading is slow, or the markets are less volatile most platforms will perform well. However, during a ‘perfect storm’ – think back to the recent general election in the UK and problems in the eurozone combining – the impulse to trade is so strong and this leads to periods of high volatility. It’s during these times that you’ll be thankful if you’ve chose a reliable and accurate trading platform.

Trading Charts
Find out whether the platform provides a range of charts that will help you both as a beginner and when you get more experienced too.

Research resources
Does the trading practice account give you access to resources and information about the financial markets which will help you make better trading decisions? Take note of how easy the trading platform is to use. We’re all different so it’s good to get a platform that’ll suit you.

To make a really informed choice you’ll have to be prepared to put some hard work in, talk to the companies and do your research among the trading communities online.

It’s also  important to note that CFD trading can result in losses that exceed your initial deposit, so make sure you understand the risks involved.

Tags: cfd demo account, CFD Trading, cfds, trading practice account