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Opening A Trading Account

The beauty of contracts for difference is that anyone with some capital and the inclination can trade and see the rewards for their labours over a short period of time, with fewer barriers to entry than other forms of trading and more in the way of upside reward for those that get it right.

Before you can get started, one of the few things a trader must do is open a trading account with a reputable broker, to provide the platform on which their CFD trading will take place and to act as the executor of the traders commands as markets continue to fluctuate. While this might sound like a straightforward enough task, it is of course much more nuanced, and aspiring traders are advised to take their time in making the right decision before placing that first deposit.

In terms of what you need to actually open a CFD trading account, identification is the only out-of-the-ordinary requirement versus, say, opening an account at a forum or blog. Opening an account is an application process, and some brokers subject new applicants to credit checks to ensure they are creditworthy before leverage is extended - as a result, and to give margin calls validity, brokers often require a series of identification documents to prove who you are and where you live before allowing you to start trading.

Apart from the ID requirements, opening a trading account is technically a very easy task - in fact, it's not much different from opening any other form of online account, except that you will usually be required to go in to a little more depth about who you are. The real difficulties come in actually getting to that stage, narrowing down a vast field of brokers both in the online and offline worlds to settle on a choice that will stand you in good stead going forward.

The first decision you'll have to take is whether to go online or offline with your broker. It's a wise recommendation to stick with online brokers unless you have a specific reason for choosing an offline broker - online trading permits instant execution, is cheaper, and allows you to keep a closer eye on your trading performance. But how can it be possible to narrow down the choice of online CFD brokers, with literally thousands to choose from?

Not all CFD brokers were created equal, and there are a number of key points of differentiation between competing platforms. Primarily, the cost of transacting can vary significantly between different brokers, and bears directly on the profitability of your trading. A more costly broker will eat in to your trading profits to a greater extent than their cheap and cheerful counterparts, although that might be balanced with a more advanced, intuitive interface and ancillary tools and market analysis - it's up to you to weigh up whether to go for features or affordability, but it's essential either way that you make a decision you can live with going forward.

It's also worth bearing in mind that pricing is not always entirely transparent, and you should do your homework to ensure you're fully clued up on the terms and conditions that come with your account. In addition to helping clarify the costs you might have to pay, this could also shed light on some of the other hidden policies and procedures of your broker, and a thorough read-through is always advised before you consider committing any funds.

For the novice trader, it's also worth stressing that headline rates aren't always what they seem. A low transaction cost that a broker might be touting in its marketing can have strings attached, and may even be a limited time offer which rises after a certain number of trades or a certain period of time - the only real way to be sure is to read for yourself the terms and conditions that apply. While cost shouldn't be the only factor in making your decision, it remains a vital proponent of what your broker has to offer, and should at least factor in to your decision when opening your trading account.

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Independent Trading Solutions Limited
788-790 Finchley Road,
NW11 7TJ,
England & Wales.

CFD Spy is a informational website based mostly around online trading, with a current focus towards CFDs, Forex, Stocks and Spread Betting. We aim to list and compare the top online trading brokers and brokerages available. Disclaimer: CFD Spy is meant for informational purposes only, whilst we do our best to make sure is up to date and accurate at all times, we do not make any claims that the content or opinions found within are infact accurate or up to date. Any websites, company/s or services referred to/linked to throughout are not directly affiliated with us, and their inclusion within CFD Spy is not meant to/ and does not convey our sponsorship or support of such company/s or website/s, furthermore, we are not responsible or liable for their availability, content, or delivery of services found therein.

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