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Can I Trade CFD Forex Without Broker? CFD Forex Training

Experienced forex traders like having derivatives like CFDsas part of their trading arsenal because they usually have pretty compelling margins and they do not tie up as much trading capital.  If you are looking to get into this relatively new market and don’t know where to start, this brief guide is for you.

Where Can I Purchase Forex CFDs?

The most common question for those who are yet to have a taste of the derivatives markets is usually is where to buy themand how they are handled. In most cases, you will find that a forex trader has a trading platform configured with a traditional brokerage account.

You don’t need a broker in the traditional sense to purchase or trade contracts for futures. However, since you need to purchase the CFD units from someone, there are third parties involved. This is a company or broker that deals with CFDs and one that offers forex CFDs.

Your forex CFD broker in this context is therefore the company that will be taking your bets using the CFDsand debiting or crediting your account depending on the price movement of the currency pair you bet on.  The following are examples of entities that offer forex CFDs where they are allowed:

1.    Investment Banks

Some investment banks offer CFDs and other kinds of derivatives as part of their product offerings. You can purchase these CFDs using the investment banks trading portal or access them through an authorized third-party trading account which is what most traders do.

2.    Forex Brokers

Modern forex brokers offer a wide range of financial instruments to traders which may include contracts for futures too.  If you own a trading account with a forex broker, you can checktheir dashboard or homepage if they offer CFDs under the derivatives section.

3.    Spread Betting Firms

Spread betting firms specialize in the buying and selling of CFDs and other derivatives. Spread betting firms usually have a trading portal that handles user deposits and processes CFD orders. You can also access their services using a third-party online platform. Also, keep in mind that CFD brokers or investment banks that deal with derivatives can also be referred to as spread betting providers in general.

4.    CFD providers

Traditionally, anyone or any company that sold contracts for futures to investors or traders was known as a CFD provider.  In most cases, the investment bank, brokerage, or spread betting firm you use is your CFD provider. However, there are standalone CFD providers out there that deal exclusively with contracts for futures.

5.    Exchanges

Where it is allowed, traditional exchanges also deal with the buying and selling of CFDs and other derivatives. The exchanges usually act as a link or middleman between the CFD seller and buyer and trades or transactions are handled through their platform. Third-party brokerages or sellers can also connect to the exchange through an API.

Tips For Choosing A CFD Provider/Broker

One of the things you should not compromise on when choosing a broker or provider is the quality of their trading platform. At the very least, the platform should allow you to place orders, close orders, and make easy deposits and withdrawals. Even better the platform should allow you access to CFDs on a variety of instruments besides forex.

You should also look at the kind of spreads offered by the broker and whether they are attractive enough to you. Different CFD brokers offer different spreads and may have additional conditions that you need to be aware of before you purchase a CFD. For instance, some brokers limit the number of CFD units you can purchase on a single trade.

Transaction And Processing Fees

CFD brokers usually have additional charges that may affect your profits for each trade you close on their platform.  Pay close attention to these charges and see if they make sense based on the amount of risk you will be taking on for each trade. Sometimes you might find that these additional fees make it impossible to make profits for small trades.

CFD trading can be a profitable venture but you need some experience analyzing whichever instrument or asset whose price movement you will be betting on. At the same time, choosing a provider or broker is crucial for your success in this fast-moving marketplace. Have fun trading CFDs!