CFDs are derivative products that allow you to speculate on different types of financial market assets. Very popular with traders, this type of asset requires a good knowledge of the product and above all the mastery of its operation. If you are ready to take the plunge, it is essential to surround yourself with good tools and especially a better broker.
Indeed, this intermediary is of great help in measuring the very often high risk of loss. He is a real guide to performing well in CFD trading. This is why his choice should not be made at random. Here’s how to choose a broker for CFD trading.
CFD broker: what is it?
A CFD broker is an intermediary between the trader and the financial markets. This is a natural or legal person who manages buy and sell orders on behalf of the investor. For CFD trading, the broker is essential. Indeed, CFDs have the particularity of being traded on an over-the-counter market. Since it is a speculative instrument, it is the brokers who organize supply and demand.
To have the right to operate in France, each broker must show their credentials by obtaining a license. The latter is issued by the Autorité des Marchés Financiers, for a level of requirement deemed to be among the highest in the world. However, vigilance and caution are the words that should characterize the choice of a CFD broker.
What are the criteria for choosing a CFD broker?
CFDs are derivative products that seem simple at first glance since they replicate the performance of an underlying asset. Their complexity lies above all in the fees they apply. Indeed, the CFD market being relatively unregulated, each broker is free to set his own rules: spreads, commission, amount of leverage…
It is therefore urgent to be careful enough in choosing the ideal broker. To choose the best broker for your needs, make sure they offer:
- A simple, ergonomic and intuitive trading interface;
- Access to the asset you wish to trade (stock, index, commodity, etc.);
- Reasonable brokerage fees;
- A license to practice issued by a supervisory authority (AMF, SEC, etc.)
In addition, a good CFD broker will offer a demo account. This paper account will allow the investor to perfect his trading skills.