Why Compare CFD Brokers?
Saving You Money
The first basis for comparison that most traders look at is the cost factor. The CFD brokerage industry works by charging a commission on each trade, often a percentage subject to a minimum commission rate. This can vary depending on both the broker and the specific markets you are looking to trade, but it is an important point of difference between brokers and one that can have a dramatic and often unseen impact on your trading profits.
As an example, assume one broker charges a 1% of transaction size whereas a competitor charges 2%. While the more expensive competitor might have a better service in other aspects, this small incremental different in commission can quickly amass to a significant cost when compared to the cheaper option. Even more alarming, the cost is one that is often covered up by successful trading positions, yet it remains a fee on your trading activity, and effectively serves as a handicap on your trading positions. Given the difficulty in finding the right CFD position at the best of times, more expensive brokers are seldom worth the extra cost for new traders.
Satisfying Trader Needs
Beyond the core concerns of cost, there are also a number of 'softer' bases for comparison, although they remain equally important. The degree to which different brokers try to meet the needs of their clients varies, with some much more responsive than others. This ranges from the quality and usability of the trading platform through to the information and resources that are open to traders through the broker's website.
The most competitive and hardworking brokers consistently compete to offer traders the best possible service when it comes to the trading experience, and so using this as a basis for comparison between brokers should allow you to target your energies on those that will be of most assistance to your trading activities. By looking towards those that are most trader-friendly, and most orientated towards providing their clients with the best resources and tools to do the job, you should hopefully be able to make your trading more efficient and intuitive than with certain other brokerage platforms.
Range of Markets
Another key practical reason to compare different brokers before settling on one is the range of markets they offer. Because contracts for difference are traded between the client and the broker, it is up to the broker as to which CFD markets they open up to their clients. In practical terms, some brokers only lightly scratch the surface of CFDs, while other, specialist CFD brokers offer a wide range of markets for traders to engage with. While it may be the case that you only intend on trading a certain narrow field of markets, it is nevertheless worthwhile to ensure you consider brokers with the widest possible selection to allow you to diversify your trading interests as you become more accomplished.