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Frequently Asked Questions (FAQ) About CFD Trading

When planning to join CFD trading, it is advisable to choose the best broker before anything else. Normally, you want to achieve high profits. Therefore, you must consider a couple of aspects when choosing the most appropriate CFD broker for you.

What are the markets being offered?

Different brokers offer different markets to prospective clients. Some brokers are offering CFD over ASX while others offer CFD instead of stocks available on a lot of global exchanges. Make sure you know the type of CFD that you want to trade-in and pick the best provider who can offer this CFD.

What are the margins and fees that I have to pay?

No CFD provider is the same. They have different requirements and different fees as well. Most of the time, CFD providers charge you with these fees;

     Exchange Data

     The holding of a Position Overnight

     Transaction Fees (commission)

     Negative Account Balances

What is a Trading Platform?

A lot of new traders only consider the commission fees without thinking of the other charges that the CFD provider charges such as when the trader holds a position overnight. It is very important to take a closer look at the charges that are being taken out of your account. You must also take note that almost all CFD providers won’t be paying you with as much interest in free cash as what banks offer.

What is the best trading platform to use?

Since there are now a lot of CFD providers out there, you will have a wide range of options. So to test the efficiency of their platform, you must be able to try it personally. You can do this by trying on their demo trading account. There are different types of trading platforms, some are user-friendly while others are more advanced and complicated. You will be the one to decide on this.

Some traders opt for advanced charting packages while others want to have it as simple as possible. Bear in mind that the platform that you must choose should be suitable for your style in trading and can offer you the best possible features.

What is the range of CFDs that my broker has to offer?

There are a variety of instruments that are offered in CFD aside from shares. This includes commodities, exchange contracts, and indices. But not all CFD providers offer the same instruments. For this reason, you have to find a provider that is capable of offering the instrument that you need, suitable for your trading strategy.

What is spread?

Understanding spread in CFD trading is knowing how much you’ll be paying your provider. Spread is the difference between the ask and the bid price. It is normally applied in Forex exchanges and index CFDs. When you cross the spread, it might seem like paying commission. This is the way CFD providers make money.

Is your provider operating for a long time already?

Since you will be trusting them with your money, you need to make sure that your provider has a good track record with positive customer reviews.

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