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CFD Broker

Online trading has evolved drastically in the course of the last few years with Contracts for Difference (CFD) becoming more and more popular among a younger generation of traders. CFDs are a form of equity derivatives which allow the trader to make money from the price variation of the asset without necessarily owning it. A trader will speculate on the direction of the price of an asset and will pay the price difference at a specified date.
CFDs remain popular because of the potential of high profits one can make as well as the ability to use a variety of bonuses. However, it is important to note that there is also the risk of losses when dealing with CFDs.

What does a CFD broker do?

A CFD broker is a firm that offers the trader the trading system and tools necessary to trade in the financial markets. Aspiring CFD traders should open an account with a trusted and well-known CFD broker who has a longstanding reputation in offering CFDs and provides all the tools to trade safely.  Transparency, ease-of-use, clarity and abiding by international industry standards are a few characteristics of reliable brokers.

How to choose a CFD broker

A trader can select the most reliable CFD broker by considering some important factors.

Multi-asset CFD brokers

The best CFD brokers are those who provide access to the global financial markets including forex, metals, commodities, indices, shares and more, so traders can diversify their portfolio and spread risk across multiple assets.

Platforms

CFD brokers typically offer advanced and reliable trading platforms such as MetaTrader 4 and MetaTrader 5 which provide advanced tools, live market news and the ability to automate trading with Expert Advisors (EAs). Regardless of what level the trader is at, the broker’s platform must be user friendly, secure and suitable for the trading style of the trader. MetaQuotes, the company behind MetaTrader, probably doesn’t need any introduction as MetaTrader 4 and MetaTrader 5 are the industry standard, and you can download the platforms, access them online or on the go.

Leverage

Leverage is inseparable from CFD trading but traders should always understand the risks involved. Leverage increases the capital you trade with and your potential profits or losses, so a solid risk management plan should always be in place. 

Negative Balance Protection

Good CFD brokers should educate traders and provide the necessary information for having the right risk management plan in place. They should inform traders on how to use leverage and stop loss, and most importantly, offer negative balance protection. Negative balance protection means that a trader cannot lose more than their initial investment.

Multi-asset CFD brokers

The best CFD brokers are those who provide access to the global financial markets including forex, metals, commodities, indices, shares and more, so traders can diversify their portfolio and spread risk across multiple assets.

Leverage

Leverage is inseparable from CFD trading but traders should always understand the risks involved. Leverage increases the capital you trade with and your potential profits or losses, so a solid risk management plan should always be in place. 

Platforms

CFD brokers typically offer advanced and reliable trading platforms such as MetaTrader 4 and MetaTrader 5 which provide advanced tools, live market news and the ability to automate trading with Expert Advisors (EAs). Regardless of what level the trader is at, the broker’s platform must be user friendly, secure and suitable for the trading style of the trader. MetaQuotes, the company behind MetaTrader, probably doesn’t need any introduction as MetaTrader 4 and MetaTrader 5 are the industry standard, and you can download the platforms, access them online or on the go.

Negative Balance Protection

Good CFD brokers should educate traders and provide the necessary information for having the right risk management plan in place. They should inform traders on how to use leverage and stop loss, and most importantly, offer negative balance protection. Negative balance protection means that a trader cannot lose more than their initial investment.

Getting Started with a CFD Broker

To start trading CFDs, a trader needs to open an account with a reputable broker. Most brokers follow a simple registration process involving identity verification and account funding. Many also offer demo accounts, which allow traders to practice with virtual funds before committing real money. Once the account is set up, traders can explore the platform’s features, execute trades, and develop strategies based on market analysis and insights.

All trading involves risk. It is possible to lose all your capital.

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Thank you for visiting FXCess

This website is not directed at UK residents and falls outside the European and MiFID II regulatory framework, as well as the rules, guidance and protections set out in the UK Financial Conduct Authority Handbook.

Please click below if you wish to continue to FXCess anyway.