The constant fluctuations in the markets are a real pain in the ass, especially for long-term investors. For short-term traders, on the other hand, this leads to very good profit opportunities. Traders can best enjoy fluctuating markets with Contracts for Difference (CFDs). Likewise, the financial instruments referred to as differential contacts provide a thrill for gamers and day traders alike. Particularly large sums of cash are moved when trading CFDs. The trading volume is therefore in the three-digit million range, which is particularly due to the special construction of the papers. The choice of CFD brokers is correspondingly large, which doesn’t always make the choice for a provider very easy.
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| Forex Brokers | Minimum Deposit | Trust | Rating | Visit Site |
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CFD trading increasingly popular
Although there is a certain risk associated with CFD trading , it has a special appeal for investors. This inevitably leads to strong competition among CFD brokers. But which providers are convincing in terms of performance and service and who have defects?
Five criteria were taken into account
The test is divided into five different parts. The following were assessed:
- Customer service
- Trade offer
- Trading costs
- platform
- website
The costs are largely defined by the spreads. The spread results from the difference between the bid and ask price. Since the spreads vary depending on the underlying and are therefore constantly changing, it makes little sense to create a “cheapest provider” category. It is better to set the costs in relation to the existing offer and thus determine the CFD broker with the best price-performance ratio. Of the brokers tested in 2020, three achieved an overall rating of “very good”. If you are a Canadian trader, we strongly recommend that you check out the CFD trading guide in Canada.
CFD Trading platforms
There was hardly anything to complain about in the test on the trading platforms and websites. All offers stood out thanks to their clear structure and ease of use. An order is often placed on the various platforms with just a couple of clicks. All brokers point out the prevailing risks on their websites and offer a wealth of data on how exactly trading CFDs works.
It was also assessed whether the trading software has got to be installed on the pc or can be used web-based. the web site category was given the least weight at 5 percent. Additionally, to user-friendliness, criteria were also the information provided such as risk warnings, FAQs, information brochures and terms and conditions.
Differences In The Price-performance Ratio
In order to evaluate the price-performance ratio, the prices were compared with the results of the category offer. The testers took account of account management fees, interest, credit, telephone trading costs also as financing and inactivity fees.
Positive: Account management is also free of charge with eleven providers. XM is the only CFD broker in the test to offer credit interest without a minimum amount. Apart from the market index, all tested CFD brokers charge fees when short positions are held overnight.
Conclusion
The term CFD is an abbreviation for Contract for Difference, which may also be translated as a difference transaction. Placing a CFD order doesn’t acquire an underlying asset like a share or a commodity. The trader doesn’t buy any physical values, but rather speculates on the difference between the buying price and therefore the asking price of the respective underlying. The advantage here is that traders only need to deposit a fraction of the traded underlying asset as security. thanks to the resulting leverage effect, traders participate disproportionately within the movements of the underlying. Investors have the chance to take a position on rising as well as falling prices.