Lowest Spread CFD Broker

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CFD refers to the contract for difference and is among the fastest growing trading instruments in the world. It is basically an agreement between two parties that are speculating the movements of an asset price. CFD is quite a useful tool for many investors as it allows them to postulate on markets and instruments that would otherwise be difficult to trade in. It also enables them to benefit from a particular stock’s capital gains without necessarily owning it. CFD dealing simply needs a small initial margin and therefore much cheaper than its traditional share trading counterpart. The low spread CFD brokers tend to offer more leverage and minimize the financial risks associated with CFD trading. This, in turn, provides more flexibility, trading power, and increased opportunities for investors.

Recommended Top 10 Best CFD Brokers

Broker Info Bonus Open Account
HYCM Forex broker Min Deposit: $100
Spread: From 0,2 Pips
Leverage: 1:200
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FBS Markets Inc forex broker Min Deposit: $1
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Leverage: 3000:1
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OCTAFX forex broker Min Deposit: $5
Spread: From 0.2 Pips
Leverage: 500:1
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xm best forex broker Min Deposit: $5
Spread: From 0 Pips
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exness forex broker review Min Deposit: $1
Spread: From 0 Pips
Leverage: 2000:1
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iq option best binary options brokers Min Deposit: $10
Spread:
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No Deposit Bonus Instaforex Broker Min Deposit: $1
Spread: Fixed Spread From 3 Pips
Leverage: Up to 1:1000
Regulation: CBR, CySEC and FFMS
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Pepperstone review best forex broker in Australia Min Deposit: $200
Spread: Starting 0 Pips
Leverage: 500:1
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FXOpen ECN Broker Min Deposit: $300
Spread: floating, from 0 pips
Leverage: 500:1
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ThinkMarkets Forex Broker regulated by ASIC and FCA UK Min Deposit: $250
Spread: as low as 0.1 pips
Leverage: up to 400:1
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CFD Trading

Top 10 Lowest Spread CFD Trading Brokers

The CFD trade offers an opportunity to both traders and investors to benefit from the movements in price even if they don’t own the underlying asset. The profits are simply computed from the price movement between the assets entry into the market and its exit. The contract exists between the broker and the client and doesn’t involve any commodity, forex, stock or futures exchange. One of the benefits of CFD trading is that you can make profits notwithstanding the upward or downward movements in the market. All you need to do is to set your preferred position in the market and wait for the preferred movements to happen.

In order to maximize your returns in CFD trading, you need to understand the trends in the market. This would enable you to make accurate predictions that would bring you profits. If you expect an increase in price, for instance, you can unlock a buy position. If on the contrary, you expect the price to decrease then you can unlock a sell position. The other benefit of CFD trading is that it is more flexible than the traditional share trading. It enables you to benefit from a falling stock, unlike the classical stock market that requires a rise in stock in order to generate profits. The stock market brokers usually use a 50 percent margin whereas the CFD brokers just need a 5 percent margin.

CFD trading offers you the same type of order services given in a typical stock market. These include limits, stops, and contingent orders. Some of the contingent services that a CFD broker would offer you include ‘If Done’ and ‘One Cancels the Other’. Some of the CFD brokers would provide you guaranteed stops probably at a fee. Most of the CFD brokers don’t charge fees or commissions and make their money through the spread. The spread is basically the difference between the ‘bid price’ and the ‘ask price’. The ‘bid price’ is normally set by the trader who wants to sell an asset. The ‘ask price’ is what is paid by the trader in order to buy the asset. Depending on the volatility of the asset, the spread may be either low or high. The market also offers you the option to go for fixed spreads.

Benefits of trading with the lowest spread CFD brokers

The lowest spread CFD brokers usually offer a reduced spread for traders which is quite an exciting thing. Most traders would do many transactions as a result of the reduced spread. A number of trading systems have also been optimized for low spread trading and scalping. In trading with the low spread CFD brokers, you have to consider a number of factors. They include:

  • a) ATR – this is a measure of volatility and it helps in projecting the low and high range. It is a direct indicator of volatility that is obtained via calculations.
  • b) Account type – various accounts offer different limit orders to the traders. Depending on your entry or exit value out of the market, you may get a reduced spread cost and limit orders that are filled at your prices.
  • c) Stop-loss vs. stop grab – the number of stops that are hit during CFD trading has implications for the movement of the price. Whenever a stop-loss order gets to the market, the resultant spread is usually large. The stop-loss order can also create a pattern for collecting all the stops below and above it.
  • d) Correlation – this is a numerical indicator of the association between two variables. It varies between -1 and +1 where -1 implies movement in the opposite directions while +1 implies movement in the same direction. The value of 0 means that the correlation between the two pairs is arbitrary.
  • e) Spread percentage – this refers to the fluctuation in the market spread. It may depend on other factors like liquidity. A liquid market conducts many trades in a day and has many active traders. The percentage is an indicator of what the spread costs. Lower numbers are great and lead to great profits.

Most traders would find these factors quite beneficial in their dealings with the CFD financial markets. Apart from acquiring easy access to the global markets, having lower margin requirements, and no extra fees, the other benefits of trading with low spread CFD brokers include:

a) Flexibility

Most CDF brokers offer different trade and contract sizes for their clients. As an investor, you require a proper trading strategy that would propel you towards success. The low spread brokers have smaller lot sizes that would work well with new investors. Experienced investors can also benefit from low spread brokers by confidently placing more money at risk.

b) Implementation of hedged positions

The low spread brokers are better placed to implement hedged positions in order to limit the potential risks to the investors. A stock that has been accruing loses for a long period can, for instance, be an opportunity to open a short CFD in the opposite position. This helps in balancing the loses, limiting the risks, and preventing any future loss.

c) Higher leverage and lower outlay

The low spread brokers offer a higher leverage in CFD trading. With a standard margin of 2 percent, most traders would be able to make substantial gains without necessarily incurring a higher risk.

Conclusion
The low spread CFD brokers are an important link in the CFD trade. Apart from enabling investors to access the markets, they also limit the risks associated with CFD trade. In choosing the right low spread broker, it is important to compare the various brokers on the market as well as their products. A number of them would claim to be low spread just to attract customers. We have shared some of the factors that would help you get a reliable broker from the market. We have also looked at some of the benefits that you get by trading with the low spread brokers.

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Risk Warning: Trading CFDs is a high risk activity and you may lose more than your initial deposit. You should never invest money that you cannot afford to lose. FXDailyReport.com will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets.