Finding A Good Online CFD Broker And Provide: Top Things To Look For In CFD Brokers

This week we've got a guest writer Marc who writes about his experience with choosing a CFD broker or provider.

He describes how he find brokers and how he monitors how his trading is going with them.

Here's what Marc has to say:

When I first looked for an online CFD broker I used the ones recommended and used by my friends who were already trading CFDs.

So when I started trading with my first CFD provider, I researched their commission rates and interest rates, which were about the same as most of the other CFD provides around, and there was no monthly fee for data (but others had this).

In terms of orders, I used limit orders to enter the stock CFDs and stop losses to exit them intraday.

When I started actually trading with them I started to monitor:

1. The entry slippage

2. The exit slippage

What I found out was that the exit slippage was more than I expected. For example, instead of getting 0.5% slippage that some traders were experiencing with some providers, I got sometimes 3-5% slippage.

This sometimes happened because the orders to exit were executed minutes after the stock traded at the stop loss price, and by the time that happened the price fell by quite a bit.

I found out that some market makers gets you out when the price hits that price, and there was no need for the order to exit to be placed by someone when the price was hit then waiting for the price to trade at that price or lower.

And it wasn't just one trade as you can't judge by just one trade as it coud have been an unusual event or the stock was gappy and less liquid at that time.

Anyway, after a few months of trading, I started trading with a different CFD broker that had much less slippage.

So I gues it pays to monitor the performance of your online CFD broker or provider.

Yes your system performs too, but you've got to see if your CFD broker is performing as well!

So there you have it.

There are certain issues that can be only found out with trading live with a CFD broker.