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 COMPARE
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1DMA = Direct Market Access. Every order placed by the client has an equal order placed by the provider that is executed via the ASX. Clients receive the same price and volume as the underlying market and can participate in the open/close auction.
2MM = Market Maker. Trades are transacted via a synthetic market, which may provide access to a wider variety of markets, but there is the possibility of requotes or additional spreads on trades.
3STP = Straight Through Processing. MM model, but with guaranteed market prices, or prices that generally reflect the underlying market. No possibility of requotes or additional spreads.
4SL = Stop loss
5GSL = Guaranteed stop loss
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Hints for comparing CFDs
Contracts for (CFDs) are the newest kids on the block but their popularity is fast rising.
Novice CFD traders are well advised to spend some time investigating the various providers. Compare providers across all areas rather than basing your decision solely on costs. If you trade a lot then costs can add up - but the costs of trading CFDs aren't just limited to the brokerage to buy and sell a CFD. There's also interest costs on borrowed funds, monthly charges for data feeds and trading software. Some providers also add a spread to the bid and offer – so remember to feed this into the cost equation. And remember, when shorting a CFD, the higher the interest rate the better, and vice versa when going long.
Some CFD providers offer trading across almost every market imaginable, but this doesn’t mean that it necessarily benefits you. If international indices and margin FX don’t get you going, then you clearly don’t need a provider that offers the lot. |
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