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Contract for Differences (CFDs) are financial derivative products. CFDs work when two parties enter an agreement (a position) that’s settled in cash (calculated through the opening and closing prices of a position). As such, void of physical delivery, CFDs are a popular market to trade among both beginner and experienced CFD traders. In the United States, however, CFD trading is prohibited.

The advantages of CFDs include access to a broad range of financial markets at a lower cost than buying the financial instruments outright, together with ease of execution—the ability to go long or short—as well as the availability of leverage. Often referred to as ‘margin trading’, gaining access to leverage involves financing an ‘initial investment’ of the total cost (the notional value) of an underlying asset (deposit margin) and essentially ‘borrowing’ the remaining value.

4 Must-Have Features in a Trading Platform

Every trader, irrespective of experience or trading strategy employed, requires a robust trading platform to operate effectively in the CFD market. Below list 4 must-have components used to determine a good platform, from a not-so-good platform.

1. User-Friendly Interface

Working with a simple, easy-to-use platform, allows traders to focus on what’s important: trading. Having the ability to execute trades using a selection of order types is a welcomed feature, in addition to being able to manage trades with a single click (one-click trading). Having access to a wide range of trading tools that are easily applied to the traded chart is also demanded by many market participants. If a platform includes extra charting styles and tools, they should be relatively easy to access and use. This is crucial for traders, such as scalpers or day traders, who are more reliant on the trading platform’s functionality than medium or longer-term traders.

2. MT4 or MT5

Most CFD brokers offer both MetaTrader 4 (MT4) and MetaTrader 5 (MT5).

MT5 is a widely used multi-asset trading platform for foreign exchange (Forex) and CFD trading. Not that many traders will notice, but MT5 is more powerful than the MetaTrader 4 (MT4) platform, offering enhanced social and copy-trading features, on top of improved backtesting and analytical functionalities which is more suited to experienced traders. However, MT4 is the first trading platform that you will probably encounter. The platform consumes a low amount of system resources; therefore, it has a minor effect on your computer or laptop. Depending on your level of expertise and strategy demands, this will help determine which platform you select.

3. Mobile Trading

More investors are becoming dependent on mobile trading in today’s world of internet activity. Both MT4 and MT5 offer mobile applications that support iPhone/iPad, Android, and Huawei. It’s never been easier to conduct business online, with the ability to trade the financial markets using technical indicators and technical analysis tools.

Below are some trading options available on the mobile app. Most of the functionality of the pc version is supported on the mobile app. One downside, of course, is screen size.

• Various account types are available with mobile trading.
• Real-time quotes and price movements of the Forex market and other financial markets are available, including widely watched cryptocurrency products such as Bitcoin, Litecoin, Ethereum and Ripple.
• All types of trade execution support: order types. The capability to apply for protective stop-loss orders and take-profit limits, for example.
• Detailed online trading history and view past performance.

4. Automated Trading Capabilities

Automated trading (Algorithmic trading) is employed by market participants to program trading strategies that automatically execute your trades. As with all investing, there is no assurance that using automated trading will help attain consistency, though it can reduce the emotional component.

For this article, let’s assume you have selected your Forex brokerage and are happy with the platforms on offer. MT4 and MT5 both offer a good automatic trading experience. As the trader, using your expertise, you’ll often combine a thorough technical analysis approach and set parameters for your trading positions, such as opening and closing the trade, protective stop-loss order and take-profit targets. Once set, trades will be automatically implemented. For beginner traders, As with most things in trading, this will be a learning curve.

Final Words

As you can see, there are a number of key elements used to define a good trading platform for CFD trading. All Forex traders must have a user-friendly interface and solid customer support. It’s difficult to answer what is the best CFD trading platform as investors all trade differently, so our needs may be different.

Overall, both MT4 and MT5 are suitable for much of a trader’s needs.