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There are many CFD (Contract for Difference) brokers (sometimes referred to as providers) in Australia, but the best is, of course, a personal choice. All brokers offer a variety of financial instruments and different CFD trading experiences, such as social trading, copy trading, educational resources, various financial markets, and an economic calendar for Forex trading.
A CFD is a financial contract (a derivative) that pays the difference in the settlement price between the opening and closing prices of positions. The CFD market allows traders and investors to trade on the underlying price movement without owning the underlying asset classes; hence, it is a derivative contract.
- Trading Platforms
A trading platform is a software package provided by a brokerage or financial institution that enables trading online. A trading platform lets investors access markets, conduct trades, check positions, and control accounts online. Platforms, among other features, provide various advantages, including real-time quotations, business, and financial news feeds, streaming and historical financial data, and technical analysis tools.
MetaTrader 4 (MT4), MetaTrader 5 (MT5), Iress, and Webtrader are some of the CFD trading platforms with user-friendly functionality. Offering technical indicators, such as Fibonacci, Bollinger Bands, a variety of charting tools, one-click trading, and so much more, this is generally sufficient for beginners and experienced traders.
A broker operates as an intermediary between an investor and a securities exchange, which is the marketplace for the buying and selling of financial assets. Since securities exchanges only accept orders from members, a broker is needed to trade on your behalf to execute buy and sell orders.
FP Markets, eToro, Avatrade, and Pepperstone are some of the most well-known CFD brokers operating in Australia (CFD brokers differ from those working at securities exchanges). Some CFD brokers may entice novices with the promise of big leverage, but this comes with a high-risk warning. Therefore, it is advisable to educate yourself on CFDs before committing real money. Always use a regulated broker.
Attributes to Look for In a CFD Broker
- Track Record
Look for a broker with a proven track record. How long have they been operating?
Do they operate from physical offices is another key consideration? One way to check this is to use Google Maps and look at the location (the address given by the broker or shown on their website), enabling you to see the validity of the address. If there is no building, as stated in the address, it’s advisable to give these brokers a wide berth.
The operating country’s regulatory body regulates reputable brokerages. In Australia, FP Markets is regulated by the Australian Securities and Investments Commission (ASIC), whilst in Europe, operations are overseen by the Cyprus Securities and Exchange Commission (CySEC). FP Markets is also a registered company in St. Vincent & the Grenadines.
- Customer Service
One of the most important aspects of an online broker is its customer support. If things go wrong, customer service is the first place investors will contact for assistance. Test these out on a demo account, especially if you’re a beginner.
- Does the broker employ live agents to assist you? Some brokers use virtual agents (robots), and some have a mix of both live and virtual. Most traders prefer a live assistant, so it’s crucial to find out when the live agent session is online.
- Assess the customer service by compiling a list of scenarios to put to the agent and log the response time and outcome. Various issues can be resolved instantly, but some can take longer, depending on the complexity of the problem. For example, banking issues could take longer because of security reasons. Always log the conversations and the time to resolve the issue.
- Fees, Funding, and Withdrawing from Your Account
- A reputable broker will ask for verification, a passport scan, an ID card, and proof of address to fund your account. If a broker asks for passwords or sensitive information, avoid this broker.
- Trading fees and spreads should be transparent; if they are not, avoid the broker.
Are there any withdrawal or inactivity fees? Does the broker offer negative balance protection?
These are simple questions; the answers should be on the broker’s website or answered promptly.
- Withdrawing from your account. There are some horror stories on the internet about withdrawing from some broker’s accounts, so ensure the broker you choose has the payment method you wish to use in place before funding your account. If you have deposited funds, test the chosen method by withdrawing a small amount. Many brokers will advertise no withdrawal fees but be aware your bank or another method you choose could have fees attached. Research this before beginning.
Which Broker is Best?
There is no definitive answer to this question as CFD traders have unique needs.
Here is an example of a reputable online trading broker and what it provides.
- FP Markets: A CFD and Forex broker with many years of expertise and full regulatory compliance, offering extensive customer service and a call-back service (multi-language).
- Deposits and withdrawals: Credit cards, debit cards, bank transfers, and PayPal make deposits and withdrawals simple.
- Assets: 60+ currency pairs (Forex pairs), cryptocurrencies (crypto), equities, indices, and metals. Investors looking to trade currency pairs such as the EUR/USD, AUD/USD, and GBP/USD, or commodities can do so with high leverage and tight spreads.
- Trading Account Types: Demo accounts, Standard and Raw accounts, and Retail Investor Accounts for beginners and professional traders are available.
- Mobile trading APP: Android and apple iOS for mobile CFD trading.
- ECN Pricing: ECN Pricing at FP Markets refers to how pricing is derived and ensures that competitive prices are offered.
- Platforms: MT4, MT5, Iress, Webtrader, and the Mobile App.
- ETFs: FP Markets offer exchange-traded funds (ETFs).
- Education: Videos, webinars, articles; find out how CFDs work with FP Markets.