CFD Dealing: What You Should Know About Trading CFDs

Provider	Commission	Real Time Trading	Online	Phone	Go To Site
	0.1%				CMC
	0				Plus500
	0				Ava Index

If you're starting to trade CFDs, then have a look at this overview on what is essential when it comes to trading CFD products.

When CFDs first became available, they were provided by commission free CFD providers, including CMC. This was an advantage as there is no fixed cost in a trade. Later CMC were no longer commission free in Australia, and other providers came along which also had commission.

But now there are more CFD providers, and some of these have zero commission.

So keep these things in mind when choosing a CFD provider to trade a system.

1. Firstly, choose a CFD provider where you are happy with their costs, conditions and stability. This means have a look at their commission rate (including zero commission), the spread (which you can see on their demo or real account), and lack of fees (some providers charge a monthly fee for data, but most do not). These make a difference with your online cfd trading results.

2. Ensure that you have a good CFD trading strategy.

A good CFD strategy or system means that you have a profitable system that you can trade. There are many types of CFD systems, fromones based on fundamental analysis to technical analysis and price action or chart patterns. The main thing is that the system rules should be clear and understandable and most importantly, profitable. Rules consist of entry rules, exit rules, stop loss rules, training stops rules and which markets to trade eg which stock market and the type of CFDs, such as stock CFDs, index CFDs, commodity CFDs and others.

3. Practice on a trading platform out to see that you can easily place trades.

Most platforms are similar, but you should still get used to it to ensure that you can easily place a trade without mistakes. If you have a system that uses charts to plan an entry, then check that you can use these. If you use them for trailing stops, then of course ensure that their charts are fine to use. Even if your system is mechanical, you may still want to look at the charts of each CFD (be it stock or share, commodities, indices or other derivative) that you enter to get an idea of what it has been doing recently.

Check that the types of entries you want to use are available. For example, if you use limit buys or sells, or simply market orders, or stop entries (buy or sell), then make sure that you can use these. With stop losses, including trailing stops, then make sure that you can place these too. Most providers offer stop losses at a specified price, while some may offer a trailing stop at a distance or percentage distance away from the current price. Just make sure that it has whatever you want to use. Not all providers necessarily offer stop entries.

4. Check the instruments that are available to trade with the CFD provider.

For example, if you trade CFDs on shares in a particular market be it the ASX, the US stocks, commodities or indices (such as ASX S&P 200, DAX, FTSE, Nikkei, Dow Jones, S&P 500, etc) then when you're on their demo platform, then check that you can trade these. With some providers you can trade various intruments on the same account such as forex, shares, commodities as well as CFDs in these various categories. This is an advantage if you trade more than 1 instrument and do it at the same time of the day, and want to watch everything from one platform, instead of having to switch between them.

5. Finally, check to ensure that you're happy with the other details such as how to transfer funds, customer service, and how support is handled as well as their stability.

Most CFD providers offer phone and email dealer desk support depending on your question or the type of help needed.

Also ensure that the company is stable. Do your own due diligence on a broker before investing with them. Of course, this is not financial advice, as you should seek your own financial advice before trading or investing.

As mentioned above, commissions associated with trading CFDs vary between providers. An example of the ones to consider is demonstated here:

For example, costs include:

1. Commission as a % and also remember the minimum commission as well.

2. Financing charges (interest) for overnight held long positions: depends on number of days in trade and reference bank rate used.

3. Any monthly data fees for the particular exchange data that you require nd whether this is waived if you have a certain number of trades per month.

So keep these points in mind when dealing CFDs, to ensure that you have the information you need for trading CFDs.