One of the most important things to consider when choosing a CFD broker is the costs that are involved. Each CFD broker will charge you to make a trade on their platform. When searching for a CFD broker to use, you will need to consider how much they charge as well as what they charge for. You should choose a broker that is transparent about all trading costs. Do not trade with a broker that cannot tell you quickly how much it is to open or close a trade on their platform.
Here are some typical trading costs you should consider before opening a trading account:
- Spreads: The spread refers to the difference between the buy price and the sell price. This is the most common cost to make a trade. When searching for a broker, ask them about how wide the spreads are. The smaller the spread, the less they charge to trade. It is also important to find out if the spreads are variable or fixed.
- Commissions: Another important thing to find out is if there are commissions charged. Typically, a CFD broker will only charge commission for stock trades, but it is important to know ahead of time.
- Overnight financing: Is there a charge for keeping trades open over night? How much is this charge?
- Inactivity fees: There are some brokers who charge fees for not trading. Make sure you find out about any inactive fees that are charged and how long you have to be inactive before this fee is charged.