There are several ways that a CFD broker will make money. This includes by charging a commission fee, spread charges, trade losses, overnight financing costs, etc. It is important to find out what your broker charges. Here is a break down of some of the standard costs that brokers will charge.
- Spread costs: A smaller spread means a lower cost and the higher the chances of making a profit. Find out if the spreads are variable or fixed. Also find out if there are commision charges involved with trading.
- Overnight financing charges: Is there a fee for keeping a trade open overnight?
- Inactive fees: There are some brokers that charge fees if you do not make a trade in a certain period of time. Ask your broker about any inactive fees that are charged.
It is important to research CFD brokers before opening an account. Make sure that the broker is regulated by the ASIC. If the broker is regulated by the ASIC they will have a license number from them. This is the AFSL number. This should be noted on the website of the broker. If there is no number listed, call and ask them for it. Do not deposit any money and trade on a site that is not certified.
The advantage of trading with a company that is regulated is that the CFD broker will be monitored by a governing regulation committee and be in compliance with local laws.
It is also a good idea to see what other traders say about the broker. Is the company listed on a stock exchange? How long has the broker been in operation?
It is important to choose a broker that offers a trading platform that is easy to use. It is best to try out the platform before depositing any money. This will help you determine whether or not the mobile applications and trading platform is suitable for your needs.
There are many poor trading platforms available. You should not settle for one of these.
Open a demo account with several brokers and test out the systems before you make a monetary commitment to one of them.
Make sure that the broker that you choose offers the markets that you are interested in trading. Not every broker will offer cryptocurrencies and if they offer some, they may not be the ones that you are looking for. It is important to make sure that you check this out before you open an account.