How To Choose a CFD Broker

CFD BrokerIf CFD trading sounds like a good idea to you, your next step would be to look for a decent CFD broker and start actually using their system and getting experience with it. The trading system you choose will matter a lot, but so will the choice of broker that helps you out.

In order to make sure that you’re able to trade with your chosen system the proper way, you will need a qualified and knowledgeable broker by your side. A good broker will help you trade exactly the right quantity of CFDs, to short them or to place the exact type of order that needs to be used. In the process, you should try to minimize the costs of your transactions, something that the broker can also help you with. It’s an important aspect because it raises your profit in the long run, something you should always keep in mind and strive for.

These days, the way you deal with the brokers is usually through the online platforms that most of them will have at their disposal. It’s much quicker to start trading when you don’t have to pick up a phone. The online platform will simply allow you to make whatever order you want, without having to discuss things directly with the broker. If you need help you will still be able to get it, but if everything is running smoothly you will find the whole process to be much faster.

Margin Requirements

In most cases, the margins that a CFD broker will have will stay at about 10%, varying anywhere between 5% and 20%. The leverage in this case is usually at about 10 to 1. That should be enough to give you the option of higher profits while using the CFD, at least when you place it side by side with shares or stocks. In some cases you will find that there are significantly higher margins being used by some brokers, so you might want to avoid them.


The typical commission taken by a CFD broker stands in the 0.10 – 0.20% area, taken out of the total size of the trade. It’s also normal for them to require a minimum amount that is at $10 or higher, so it’s usually a better idea to go for larger traders in order to minimize your loss in this area. You might be able to negotiate this commission in some cases.

How many CFDs

The more CFDs can be traded through this broker, the better. Ideally you should find a broker that will go after the top 300 CFDs instead of someone that only works with the first 100. Some systems do require a minimum number of CFDs in order to work properly, so it’s something you should consider.

Shortable CFDs

This is a feature that will often make CFDs a lot more profitable, so it’s a good idea to make sure that the broker will give you the option to short trade for most of the CFDs that they cover.

Types of Orders

These guys generally allow you to place your orders anytime you like. You can use their platform to place an order even if the market is closed, with the limits for each position in place. That means you have a lot more flexibility, something you need to make sure that the brokers allow.

Interest for Short vs Long Positions

This is one area where the brokers will charge differently. Each broker can have his own rates that they work with and in most cases they will be tied to the overnight interest rate charged by one of the big banks. When it’s a long position, it will typically be either 2 or 3% more than the rate, while the short positions get rates that are 2 or 3% less.

Compare the CFD price with the stock price

Another thing to look out for would be the size of the spread that is widened by some of the brokers by a relatively small amount. The commission might be tied to this practice, so it can be smaller in some cases (with widened spreads) and higher in others (with no widening).

If you’ve followed the tips we had for you above, chances are you will be able to find a great broker to help with your CFD trading.

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