CFD trading is one of the most tricky markets, so it is needful to find a good platform for trading, particularly because trading is outside the US. But choosing a platform to trade CFD is much more substantial than you can think.
Some platforms for opening CFD trading accounts offer you multiple trading options that others don’t have, which may, in turn, give you better CFD products to leverage on. Others may possess a better user interface depending on the country of origin. So choose a platform that provides you with flexibility and stability in trading. That’s why we’ll be looking into top trading platforms for opening CFD accounts.
But first, let’s solve the question what is a CFD trading account?
Part 1: What is a CFD trading account?
CFD trading is an outstanding financial product that allows traders to speculate on short-term price movements. One of the merits of CFD trading is that you can trade on margin. If you think the price will fall, you can go short (sell); if you think the price will rise, you can go long (buy). CFDs have many advantages and are tax-efficient in the UK, so there is no need to pay stamp duty. You can also use CFD trading to hedge your existing physical investment portfolio.
You will not buy or sell underlying assets (such as physical stocks, currency pairs, or commodities). Instead, you buy or sell multiple units of a particular financial instrument, depending on whether you think the price will rise or fall.
For every point where the tool’s price is beneficial to you, you will get a multiple of the number of CFD units you bought or sold. At every point where the price is not good for you, you will lose money.
1. What are margin and leverage?
A Contract for Difference (CFD) is a leveraged product, which means that you only need to put a small chunk of the total value of the trade-in to open a position. This is called “margin trading” (or margin requirement). Although margin trading allows you to magnify your returns, your losses will also rise because both gain and loss are on the total value of the position. This statement means that you may lose all your funds, but because your account has negative balance protection, your loss cannot exceed the value of your account.
2. What are the costs of CFD trading?
Spread: When trading CFDs, you must finance the spread, that is, the difference between the buying price and the selling price. You use the bid price of the quoted price to enter a buy transaction and use the selling price to exit. The smaller the spread, the lesser the price will move in your favor before you begin to enjoy a profit, or if the price is not suitable for you, you will lose money.
Holding costs: At the close of each trading day (5 pm New York time), any position in your account may get charged a fee called the “contract for difference holding cost.” The cost of holding can be positive or negative, depending on the direction of your position and the applicable holding ratio.
Market data fee: To trade or view our stock CFD price data, you must activate the relevant market data subscription, which will charge a fee.
Commission;(only applicable to stocks): You must also pay a separate commission fee when you trade stock CFDs. The commission for UK stocks on our CFD platform starts at 0.10% of the whole position exposure, with a minimum commission of £9.
3. When developing a trading plan, several factors should be considered, including:
• The asset class you wish to trade
• Transaction funds
• Time commitment
• Risk appetite
• Trading experience
Making an appropriate trading plan and sticking to it is critical to maintaining discipline and implementing a good real-time risk management strategy.
4. List of Requirements to open a CFD account
The documents required to open an account are directly proportional to the account type and applicant. You will get a prompt to provide all the required documents specific to your account during the application process. Usually, they need the following:
A valid government-issued photo ID must be a passport,
National ID card or driver’s license. The ID must be valid and show your full name, full date of birth, and photo. The identity document should be clear and in the original color. With all four corners of the paper visible.
5. Top CFD demo accounts
After few considerations, we have three top platforms you can open the best CFD accounts, include:
- FP Markets
Part 2: How to open a CFD account on IG?
The process involved in opening an account at IG generally involves the following steps:
Step 1: Select your Account
Be sure that you’ve selected the correct brokerage account on the registration page before submitting your personal information. Then proceed to the next step.
Step 2: Provide Personal Information
Next, provide your full name, address, DOB, employment status, and more. The information demanded at this step depends on your brokerage type.
Step 3: Confirm Identity
Here you’ll be asked to upload your proof of identity which can be either your passport or national ID.
Step 4: Complete the process
When you finish confirming your identity, all you need to do is sign a virtual contract after you’ve agreed to the broker’s terms and conditions.
Step 5: Fund Account
Once your account is open and live, you’ll need to transfer the minimum deposit, but if none, send any amount to your broker’s account and start trading.
Part 3: Open a CFD demo account on CMC Markets
To open a CFD demo account on CMC Markets, you need to follow these steps:
Step 1: Apply
Here you need to enter your email address and a password of your choice. Then, check your email for a verification link after clicking on the link to verify your email address to create a free CFD trading demo account.
Step 2: Explore the platform
Go through the products provided by the platform, like the charts, order tickets, and more.
Step 3: Educate
Practice trading CFD with the virtual funds in your demo account. Carry out analysis on free live charts. You can check out other guides and tutorials.
Part 4: How to open a CFD account on FP markets?
To open a CFD account on FP markets, follow the few steps
Step 1: Select an account type
Step 2: Submit your information
The platform would ask for your name, date of birth, and other personal information. Also, you will have to answer some questions to check your status.
Step 3: Identity confirmation
Here you’ll need to provide some critical documents, scan and upload them for verification. These documents include an ID Card, passport, etc.
Step 4: Sign a contract
After registration, then verify the documents for accuracy. After this, you’ll need to sign a virtual contract.
Step 5: Fund your Account
After you complete opening the account, you need to add funds as the minimum deposit for this platform is $100.
Part 5: Some FAQs
1 – How do I open a CFD demo account?
To open a CFD demo account, you need to provide a valid email address, your full name, phone number, and a password you can remember. When opening the demo account is over, you will need to verify your registration by clicking the verification link ina your email address to activate it.
2 – Are CFDs suitable for beginners?
CFD’s are suitable for beginners, as you can quickly profit from its trade regardless if the market is rising or falling. Your understanding of the trade only guarantees this.
3 – Should I buy CFD or stock?
Positive, a lot is going on with stocks and maybe a suitable investment to make. But trading CFDs has few advantages over stocks, helping them grow in popularity over the decades, which means an addition to your portfolio could be possible.
Now you can open a CFD practice account to start trading virtually before opening a CFD trading account to start earning with the simple steps outlined in the article. Don’t forget to learn more about CFD trading and getting a strategy before deciding on the platform to trade on.