CFD Brokers and Accounts

By mosesbet · Filed Under CFD Trading Leave a Comment 

Most CFD brokers offer leverage of up to 250:1, and excellent order placing tools, they rank however differently in terms of client ratings.

Cityindex.co.uk

Cityindex is the best rated broker for CFD trading, or at least one of the best, and probably the best trading platform in terms of reliability, execution speed and availability of markets it ranks significantly high. It has one of the highest spread commission, much higher than IGindex, but if you price in the real cost of reliability and execution speed, then IGindex and others will end up being more costly.

Plus500.co.uk

Plus500 have low margin and deposit requirements, they seem to better match the needs of a beginner CFDs trader, and while a broker ,may be well rated on small size CFDs dealing nobody knows yet, their real performance when it comes to bigger size trading.

Igmarkets.co.uk

IGindex has a below average rating on CFDs dealing, it is known to have issues with their trading platform, it does offer very competitive spread commission, one of the lowest in the industry but this is meaningless on its own,  a broker can offer you the lowest dealing commission but the slightest delay or inability to fill an order, may end up costing you ₤100s in a single trade! So please don’t be fooled by low commission costs, it is the trade execution speed, reliability and overall efficiency that is the real cost of trading, and usually runs in tens or hundreds of pounds, not the few pounds of the spread commission. It is expected that IGindex will catch up to the competition and will improve on these issues, remember IGindex one of the best in the spread betting market already.

CapitalCFDs.com

CapitalCFDs offer a great, and well rated service to the beginners,  there’s no minimum account size, they have competitive pricing structure,  and they can be tested by any small to medium size trader, again no specific information is available on their performance on big size CFDs dealing. These issues cannot be investigated through the use of small size accounts, let alone demo accounts, but all these brokers keep on improving due to fierce competition, and capitalCFDs manage to rank high.

Other considerations

Generally speaking,  CFD brokers come in two types,  market maker type (MM),  and direct market access (DMA) type, sometimes the same firm may offer either type of account,  as is the case with IGindex. MM type CFD brokers offer lower spread commission but may not be suitable for large size delaing, or may have problems with execution speed and price efficiency, thereby being actually more expensive that DMA brokers who charge higher spread commissions but offer more efficient filling price when you open or close your trade. Generally most traders don’t encounter price slippage and such issues when trading at low frequency and at low size,  brokers such as City index are MM type, and yet they perform impressively well for most traders, at the dealing costs of a typical MM broker.  Other brokers however such as CMC markets, also a MM broker have performed extremely poorly for many years, so being a MM broker doesn’t necessarily mean that they have to be bad.

There are many more CFD brokers out there, but we feel that these few listed here can meet the needs of all traders, Cityindex is a good choice for beginners whereas IGindex (DMA type) CFD account is the best choice for professional investors, big size traders.

Please make sure you choose the CFD broker to match your specific needs,  and seek impartial advice on specific issues, if for example you wish to use a CFD broker for short term trading, and are willing to commit say up to ₤5,000 it would be wise to narrow down your list of options by contacting real traders, with the same trading strategy, that is trading at the same time of the day, executing similar size trades, and ask them how they were treated by this specific CFD broker,  you can contact such independent traders in the free forums of Trade2win.com  their insight is priceless!

CFD demo trading

Demo trading should only be used to help you familiarize yourself with the trading platform and order placing steps, it does not in any way simulate the problems and filling price issues associated with the real thing.

Case in point with CMC markets; In recent years CMC markets trading platform performed extremely poorly, orders wouldn’t fill, automated orders would not be triggered, and there was a sense of chaos in their trading software. I can confirm at least one occasion where I lost  ₤150 in less than an hour, all because I attempted to place a trade, and received no confirmation, after several attempts still no confirmation was received, I was left guessing whether my trades had gone in or not, around 40 minutes later I received confirmation via email, 3 trades were confirmed, and were at  a loss, I had to close at a total of  ₤150 loss.  After 40 minutes the trading objective was not there anymore, neither had I received any confirmation for these trades, this is the kind of thing that you never encounter with their demo account, yet it happened in the live account! Similar issues have happened to many other traders, and with more brokers not just CMC, but CMC topped the list of problems.  Demo trading can never be used to judge a CFD broker, not even small size live CFD trading can be used efficiently to form an educated opinion, it is during peak hours and at real money when the inefficient broker will reveal their weaknesses.

 

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