How did Trading Brokers choose our best CFD trading platforms?
Following on from our best CFD trading platforms of 2020, we will now look at what CFD trading platforms are used for and some of the most important factors to consider when looking for a reliable CFD trading platform.
What is an online CFD trading platform?
An online CFD trading platform allows traders to access different global markets for speculating on the price movements of various trading instruments without physically owning the underlying asset. This can include Forex, Commodities, Cryptocurrency, Stocks, Shares, Indices, Metals, Energies, Options, Bonds, ETFs and CFDs.
Best CFD Trading Platforms: Desktop, Web & Mobile Platforms
In the past, investors and traders would have had to go through an offline broker which meant that the markets were less accessible than they are today. As technology has improved over the years, there are now many online CFD brokerages to choose from. Anyone aspiring to be a successful trader can open a CFD trading account with an online broker and gain access to the brokers CFD trading platforms for online trading from anywhere in the world with an internet connection. Most brokers provide these platforms free of charge and for use on desktop and mobile devices.
Best CFD Trading Platforms: MetaTrader
Through a CFD trading platform you can view real time bid/ask prices of various assets and load charts that show the historical and current prices of chosen assets over multiple timeframes ranging from tick to yearly charts. You can add technical indicators to these charts to help identify potential trending and ranging market conditions. These indicators can provide trading signals and are often used as part of an overall trading strategy that involves technical, fundamental, sentiment and price action analysis. When you find a suitable trading opportunity, you can execute, manage and close your buy or sell position directly through the CFD platform.
What makes a good online CFD trading platform?
CFD trading platform regulation
When you choose an online CFD trading platform it is very important to ensure that the brokerage providing the platform is regulated by a respected government authority. The most respected regulatory authorities to look for include the Australian Securities and Investment Commission (ASIC), Cyprus Securities and Exchange Commission (CySEC) and the Financial Conduct Authority (FCA) in the United Kingdom.
Investors have more protection when using a regulated CFD broker as they have to conduct business according to strict rules and regulations put in place to protect investors. If a broker claims to be regulated, you can verify this by checking the broker’s license number with the relevant authorities to ensure the regulation is legitimate and up to date.
CFD trading platform instruments
Each CFD broker will offer a range of different markets and CFD trading instruments to trade via their online CFD trading platforms. If you wish to trade a particular asset class such as forex, stocks, cryptos, etc, you should check whether the broker offers that market through its CFD platforms. It may also be wise to consider if you plan to diversify your investment portfolio in the future. If so, the more trading products and markets offered by the broker, the easier it could be to expand your portfolio when the time is right.
If you would like to trade particular CFDs then you should check that the broker has these amongst its selection of CFD trading instruments. Some brokers will only offer popular CFDs whereas others will offer a wider range of CFDs.
CFD trading platform tools
All CFD trading platforms come with a range of free built in trading tools to assist with your online CFD trading, helping to improve overall efficiency and performance. These can include technical indicators for analysing charts such as a moving average, MACD, Bollinger Bands, RSI, CCI and many more. Some platforms offer fundamental analysis tools such as built in economic calendars to efficiently keep track of the latest market news releases. They may also have trading calculators to help with planning your trades. The more advanced platforms will have depth of market (DOM) with level 2 pricing and sentiment tools that show how many traders are buying/selling a particular instrument.
If you require a specific set of trading tools or would like access to as many as possible, you should check what CFD trading platforms the broker offers along with the trading tools included. Some trading tools are stand alone and thus will not be incorporated into the CFD platforms but can still be very useful.
CFD trading platform fees
Most CFD brokers will provide traders with free online CFD trading platforms although there are some who charge monthly and volume-based fees, usually for specialised trading platforms that have specific features a professional investor may need. That being said, the free CFD platforms will most likely be sufficient enough for the average retail trader.
CFD trading platform commissions
In addition to potential fees for gaining access to the brokers CFD trading platforms, you should consider other online trading costs. Most online brokerages will charge a commission for placing trades in addition to the spread and overnight swap fee. These costs can vary significantly from broker to broker so it is important to consider the overall costs you will incur and the affect that will have on your money management.
CFD trading platform spreads
The spread is the difference between the buy and sell (bid/ask) price which can vary depending on the volume of liquidity and quality of liquidity providers that an online CFD broker has. Some CFD brokers offer fixed and variable spread accounts, some will offer commission free accounts but instead mark up the spread to make up for this. In general, the more liquidity that the broker has, the tighter the spreads can be. It is important to account for the spread when planning your trading strategy, especially if you are planning on using scalping strategy.
CFD trading platform swaps
If you hold a position with your CFD broker overnight then you will probably need to pay a swap fee. This is an interest fee for the procedure of moving open positions from one day to another, also known as the rollover. This is another cost to factor in to your money management planning. Some brokers offer swap free Islamic trading accounts that conform with Sharia law which allows Muslims to engage in online trading through their CFD platforms.
Other CFD trading platform fees
Along with CFD trading platform, spread, commission and swap fees, most online brokers will charge additional fees that should be checked and clearly understood. Other fees that are worth considering include withdrawal and inactivity fees.
CFD trading platform usability
If you are already familiar with a specific CFD trading platform then it could be a good idea to choose an online CFD broker that offers that platform. However, if you have yet to use a trading platform then it may be a good idea to start with a broker that offers a user-friendly CFD trading platform which has plenty of tutorials available to help you learn how to trade online. MetaTrader 4 (MT4) platform is often considered as one of the most intuitive and easy to use trading platforms which makes it a popular choice amongst new traders.
CFD trading platform leverage
Nearly all CFD brokers offer leveraged trading via their CFD platforms. Leverage basically means that you can open a position larger than you could without it. If for example you had leverage of 1:50 and a trading account balance of $1,000, you could effectively open a position size of $50,000 (1,000 x 50 = 50,000). Although leverage can increase profit potential, it also increases trading risk and thus, can lead to large losses. It is imperative that you have a thorough understanding of leverage and the significant risks involved before you start trading online. Check the broker offers a leverage that you require via your preferred CFD platform.
CFD trading platform education
Some brokers also provide traders with educational resources such as videos and trading guides to help them improve their trading knowledge and skills. They may include detailed tutorials on how to use trading platforms which could be helpful for those who are new to online trading and need help to familiarise themselves with the different CFD platforms available to them.
CFD trading platform minimum requirements
You will need to make sure that the CFD trading platform will run on your computer, VPS or mobile device by checking the specification requirements. Each CFD broker trading platform will have a minimum deposit requirement which is worth considering.
Trading platform funding
Each CFD broker will offer different options for making deposits and withdrawals to and from the trading platform. Most brokers accept bank wire transfers and credit/debit cards but some traders prefer online payment processors such as Skrill, PayPal, Neteller, etc. Ensure that the CFD platform supports your preferred method of funding your CFD trading account.
CFD trading platform customer service
If you have an issue with your CFD trading platform that you need help with, it is important that the broker has a prompt and efficient customer service team. Online chat is often the quickest way to speak with someone whilst other options include telephone and email. The more hours the CFD brokerage support team is available, the better. Some run 24/5 whilst others are available 24/7. You should also consider the brokers office locations as they may be in a different time zone to you which could affect the response time. Check that the broker has a method of contacting support that is most convenient for you and available in your language.
How to start trading CFDs online?
Now that you have had a brief overview of what CFD trading platforms are and what to look for, you may be considering opening a trading account with an online CFD broker to gain access to their CFD platforms. This can be a quick and easy process that requires completing an online registration form. Simply choose a CFD broker, follow the account opening process and you will be able to start trading CFD sonline through one of their CFD trading platforms. You may refer to our guides on how to choose a CFD broker and how to open a CFD trading account if you would like to learn more.