CFD Brokerage Rates

If you're trading CFDs or contracts for difference, then you would want to look at brokerage rates.

Brokerage is one of the fixed expense in trading, yet is linked with 2 other important factors.

The brokerage rates for various providers vary from zero to 0.1 to 0.15% or beyond.

The 2 factors to consider as well as the CFD brokerage or commission are:

1. Spread

2. Slippage

If you use leverage in trading CFDs, these factors are even more important.

The spread is the difference between the bid and ask.

With DMA CFDs (Direct Market Access), the spread reflects the underlying market.

With non DMA or market made CFDs, the spread may differ from the underlying market, the amount of which is usually small, but may differ between CFD providers and vary in different market conditions.

The way to check spread is to look at the trading platform to see if the spread is reasonable.

Slippage on the other hand is a different matter.

Slippage is the difference between the intended entry or exit price and the actual entry or entry price.

Sometimes this is related to gapping in the price on open, or lack of liquidity in the market. If this is the case, this will affect any type of CFD.

At other times, it may be due to the different method in which the CFD provider enters or exits trades. For example, if your CFD providers adds CFD trade volumes to the underlying volume such as in some market made CFD providers, this may help with liquidity and reduce slippage.

As another example, if exits or stop losses are triggered rapidly by the provider, then this will result in less slippage than if executed with delay.

So as you can see, the choice of a broker is not just about the brokerage cost - both the percentage and minimum brokerage.

To see the list of things to consider when choosing a CFD provider, see this page here on CFD brokers and CFD brokerage here.

Factors when looking at CFD dealers include:

1. Brokerage

2. Margin requirements

3. Platform fees if any

4. Trading platform

5. Stability and reputation of company

6. Customer support and dealing desk support

7. List of products you can trade with, and how many shortable stocks

CFD trading or contract for difference trading involves a trading system that is effective, together with a provider who is able to provide the platform required to trade and effective commissions and brokerage.

Note:

All trading involves a high risk of financial loss, and the information on this site is for general information purposes only and is not financial advice in any form. Seek your own financial advice before taking any action.

All forms of trading involves risk of financial loss.

Also note that CFD trading is not legally permitted in some countries.

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We cannot guarantee the accuracy of information, or that any information published has not changed since time of publication.

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