Choosing the best Forex or CFD Broker – 5 things to look for
When choosing a CFD broker, you may want to consider the following five key points before jumping on board.
1. Is their software easy to use?
There is nothing worse than trying to navigate your way around the difficult software. Be sure to open up a free demo account and see for yourself how easy it is to place trades, open a chart, amend orders and receive timely news updates.
You don’t want to spend the first two months learning the software they provide. Ask your CFD broker if they have some basic CFD tutorials on using the software.
Most CFD brokers provide both MetaTrader 4 and cTrader. MetaTrader 4 or MT4 is considered the most widely used and popular Forex trading platforms available. There are so many handy MT4 Shortcuts to make your life easier too.
Our AxiTrader Broker Review highlights a number of advanced features available in MT4.
cTrader, by Spotware, is an incredible program as well, with many built-in features, made for the modern Forex trader.
In the beginning, cTrader was a dedicated Forex platform. But some CFD brokers have started introducing Index CFDs and other instruments to the platform.
2. Is their trading platform fully featured?
- Are you looking for advanced charting features or just a broker to place trades quickly into the market?
- Are you looking for advanced order placement or will the standard orders be sufficient?
- Do they provide daily market analysis provided by a team of professionals?
- Can you receive notifications when certain price points are reached via email or SMS?
- Do they provide a free iPhone and Android app to trade on the go?
When reviewing the best CFD & Forex brokers, keep in mind, commissions are not the be all and end all.
But the one fixed cost all traders have is brokerage. You don’t want to be paying too much so be sure to ask what their Australia Share CFD brokerage rates (for ASX Stocks) are.
For Forex, Index and Commodity traders, you want to make sure the spreads are tight. Also, you need to ask about any other costs associated with trading through their platform.
$5 minimum brokerage and 0.06% is the best standard rate we have heard of for share CFDs.
When it comes to Forex ECN brokers and Pro MT4 or cTrader trading accounts, commission rates are normally $7 round-turn per lot ($100,000 position). So $3.50 per side.
When reviewing your CFD or Forex broker, ask about the following charges:
- Commission charges
- CFD Financing rates
- Software fees (IRESS or other platform fees)
- Accessing relevant exchanges (i.e. ASX data)
4. The range of markets
Reviewing the range of markets of your CFD/Forex broker is a significant consideration.
Market Makers have the upper hand here by being able to offer you nearly all of the world’s markets from the one account including Forex, Indices, Commodities and global shares.
Direct Market Access (DMA) usually focus on the local exchange and costs to trade international markets can be quite high.
5. Reputation and security
With MF Global going bankrupt in 2011, reputation and security have become one of the biggest factors when reviewing the best CFD & Forex brokers in Australia.
- Are they a publicly listed company?
- How long have they been in business?
- What are others saying about them on broker review sites online?
Stick with those with a good reputation who are backed by a solid financial history and you should be on the right track.
Choosing the best CFD or Forex broker is largely a matter of testing their trading platforms and ensuring you feel comfortable with them.
The old saying ‘horses for courses’ is right when it comes to finding the best CFD or Forex broker for your needs. The truth is, the characteristics you value highly may be of no interest to the next person.
So write down exactly what you believe you need with respect to your new broker and start asking questions.
Hopefully, this review of the CFD & Forex brokers here in Australia helps you identify which one will earn your trading business.