CFD Trading - Different fee models

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In order to carry out the trading transactions, you first need the right CFD broker. There are different broker types and fee models to consider, which we would like to present to you in our guide. Together with our large broker comparison, it will then be easier for you to find the right provider.

General information on the broker search

As our large broker comparison shows, there are now a state number of CFD brokers. For CFD trading, it is now important to find the right provider for your personal trading style. To answer this question, the choice of underlying assets is the most important factor. There are sometimes significant differences here. For example, a cheap Forex broker is of little use if you want to trade stocks.

When looking for the best CFD broker, it is worth taking a look at the details. This includes, among other things, the question of which broker type the various providers belong to. You will find important information on this in our guide. There are also other important factors such as a reliable financial market supervisory authority, an easily accessible support service or the level of deposit protection.

A positive aspect of the dynamic CFD market is the great competition among the numerous brokers. Traders benefit from this in particular through favourable trading conditions, fast order execution and good service.

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Real CFD Broker vs. Intermediary

First of all, it is important to distinguish whether a provider is a "real" broker or a so-called "introducing broker". In CFD trading, the latter act exclusively as intermediaries for other, usually larger brokers. The orders are then only forwarded and processed in the background by a real broker. The intermediary receives a certain production for this. For traders, it is not always obvious at first glance whether a broker processes the orders itself or forwards them. In case of doubt, it is worth asking the broker's support before opening an account.

Introducing brokers are not generally worse for CFD trading in Metatrader 4, but the processing of transactions is usually more transparent with a real broker. Due to high customer numbers, some introducing brokers can offer favourable conditions and good service. However, there are also introducing brokers that are more expensive than the affiliated broker. A clear judgement on better or worse can therefore not be made. Nevertheless, you should know which of the two types your broker belongs to, as this may also affect things such as deposit insurance.

Market Maker (MM) vs. Direct Market Access (DMA)

The hallmark of market makers is that they provide buy and sell prices themselves. These do not necessarily have to match the actual price of the underlying on the reference market. In many cases, the spreads of the original market are widened somewhat. With direct market access brokers, on the other hand, traders always find the price of the reference market in question.

Which broker is better suited for CFD trading?

CFD trading originally started with market makers. In practice, they do offer some advantages. For example, MM can offer underlyings as CFDs that are very difficult or impossible to access via a DMA. For traders, it can be worthwhile to operate a trading account with both a DMA broker and a market maker.

Professional traders who trade exclusively in shares usually prefer a DMA broker. This is especially true if the focus is on short-term trading (scalping). In the best case, a CFD trader can even trade within the spread in the DMA model, as he acts in the actual order book of the reference market. In practice, however, this approach is not promising due to the fees incurred - unless one only uses this tactic to optimise the entry or exit.

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