Why your CFD broker can make or break your trading system!

The key points to consider when choosing a CFD broker online are:

• How many CFDs are available to trade in your market eg AUS, US, UK, Singapore, DAX
• Number of short CFDs
• The order types that can be placed
• Leverage offered
• Commission
• Interest charges, and...
• Is there spread widening?

Let's talk about a few of these points in particular....

Spread widening:

Some online CFD brokers widen the spread by a small amount, say 0.05%, or even further. You'll have to take this in context of the other costs of trading, as the same provider that widens the spread very slightly may also have smaller commissions, whereas another provider who does not widen the spread, may have higher commissions.

The broker's number of CFDs available:

A large enough number of CFDs available to trade is important if you're trading systems that produce a much greater profit if traded on for example, the top 200 or 300 CFDs, than if they are designed to trade say the top 30 or 100 only.

Their margin requirement:

Most CFD brokers' margin requirements are around 10% (usually from 5-20%), thus offering around 10 to 1 leverage. This is a good amount of leverage which makes the high profits from CFDs possible, when compared to stock and share trading. Note however that some CFD brokers require a margin of 30-80%, varying for each of their CFDs, so the leverage available is much more limited with these brokers. So if leverage is important for you to use (which it is for most of us), check the amount of leverage available.

These all affect your risk management rules in CFDs

So now that you know these 7 keys, keep them in mind when choosing a CFD broker online, to ensure that you can trade your system as designed, and that your profits are maximised!

There are 5 more hints on choosing an online CFD broker, in part two of this article, on thecfdtrader.com website and blog.