Looking for the the highest rated CFD brokers in the United Kingdom? Forget the hyped advertising as you go about finding a broker. Due diligence is a must and you will need to invest some time, and do the homework.
About CFD Trading
CDF is one of the most popular types of derivative trading today. At the center of this type of trading is a contract between a buyer and seller. Specified in the contract is an agreement for the buyer to the buyer to pay for the difference between the current and future value of the asset at the lapse or end of the contract.
Indeed, this type of trading does not involve any form of forex, stock, or any other such securities. As the investor, you will not own any assets, but will, instead trade-in and receive revenue based on the price changes that particular asset goes through in the course of the contract.
Finding a Broker
In any financial market, the role of an intermediary, that is, a broker, cannot be understated. As you choose a CFD broker, here are some crucial factors to keep in mind
The very first thing to consider, of course, is regulation by a competent regulation agency. Getting into business with a regulated CFD broker will give you a lot of confidence knowing that your choice of broker has met certain standards as imposed by the regulatory body.
Among the standards required of brokers for due regulation include having adequate capital. Similarly, the broker must prove that they maintain segregated accounts, which serves to protect your funds as the client.
Additionally, dealing with a regulated broker you can be sure that the broker upholds the rigorous standards as required of a financial services provider. Lastly, you can be sure off fund protection should the broker become insolvent.
The Financial Conduct Authority (FCA) provides strict regulatory enforcement. With that said, you will do well to find an FCA-regulated broker. The better if you can find a broker regulated under more than one regulatory body.
2. Type and Range of Trading Account
There is a range of trading instruments from stock and equities to derivatives and forward contracts. These options are available for use in the CFD market.
As you look for a CFD broker, find one who gives you the option to trade in more than one instrument. With time, you may want to get into trading in other instruments and it’s always great to be able to do so with one broker.
Again, you will want to find a broker who understands what each trading account has to offer. That means an assessment of how well suited a particular instrument is to your trading preferences, not to mention inherent advantages such as better security.
3. Trading Platform and Software
You want to be sure that the trading platform the broker is using is something on which you can fully rely. After all, it is the gateway to the CFD market.
Does the broker have its own proprietary trading platform? Or are they using trading platforms developed by third-party trading platform providers? Many brokers have taken to developing their proprietary platforms in a bid to stand apart from the rest of the pack.
Again, these proprietary platforms are often a better option as they are designed and developed with the broker’s specific needs in mind.
Similarly, you will want to go with a broker who offers you several trading platforms from which to choose. For each option, find out what features the trading platform has to offer, from comprehensive charting to one-click trading and inherent risk management tools.
4. Trader Education
Knowledge is everything. That being said, you do not need to be too well versed in all things CFD markets before you start out with trading. There’s every reason to improve your knowledge base on the ins and outs of CFD trading.
To that end, you will want to find a CFD broker who is big on educating you about anything you may want to do as relates to CFD trading. Find a broker who readily offers training through one-on-one interactions as with webinars, as well as through their blogs and public videos.
These resources cover everything from understanding the terminologies used in trading, to full courses that will catapult you from being a beginner to an expert.
5. Customer Support
The quality of customer service you can expect is definitely a crucial factor to consider when choosing a CFD broker. The quality of customer support and service will determine your experience.
Find out from others what it is you can look forward to in terms of customer support. Read through online reviews and hear from any referees provided by the broker. Good customer support means a prompt resolution of any issues, as and when they may come up.
Attentive and prompt customer support will give you some confidence in the broker’s service, adding up to your overall experience as a client.
Pay attention to whether or not the broker has several ways through which you can get in touch with customer support. A good broker will make it easy for you to reach their support team at any time over the phone, through live chat, or email, and will respond accordingly and in good time. This is in cognizance of the importance of customer experience for developing the brand.
Be sure to ask about the broker’s customer service hours.
6. Value-Adds and Bonus Offerings
There is no shortage of CFD brokers. With competition being so high, every broker is doing their best to stand out and outdo the rest, and a great way to do this is by offering value-adding extra or bonus services. Such include free market analysis as well as real-time news feeds on how the market is playing out.
Be sure to find out if the broker charges for these services. Some will offer these services for free, while others will charge a small amount for the same. Free or unpaid, these are services you will find beneficial to your trading and as such, a crucial consideration as you pick your broker.
With the right broker by your side, CFD trading should be fairly hassle-free. With attention to the pointers outlined, invest some time and resources towards finding a broker who is a good fit for you.