How to choose a CFD broker in Singapore?
If you want to invest in forex, commodities, stocks, and indices in the Singapore market, you need a local broker. Most CFD brokers allow you to trade on those markets using popular international trading accounts such as MetaTrader 4 and cTrader (read more here).
CFDs are not newbie-friendly, so it is best that you first find out if this type of investment suits your needs and personality before choosing a broker. Let’s review some important aspects of CFD trading that can help you choose one that fits your profile:
Trading conditions
Make sure the platform has everything you need for successful trading. Some features to look out for include:
- Copy-trading allows traders to follow and copy successful traders’ actions in real-time. This feature is only available for higher account types, so you may want to opt for a type that offers it.
- Backtesting – this feature enables traders to simulate trading strategies using historical data. It can help them choose the right strategy and select the best settings before trading with real money.
- MetaTrader 4 is a platform used by many brokers in Asia and worldwide, including Singapore’s major forex players such as Saxo Capital Markets. Most international brokers allow you to trade on CFDs.
Account types
Most CFDs are traded on margin, meaning that traders only need to put down a small percentage of the total amount for opening the trade. It allows them to get more exposure than buying the underlying asset outright. So you must think about how much money you want to invest and what kind of risk profile you have before choosing your account type.
There are two account types in Singapore: cash accounts and margin accounts. The former can be used in case you don’t want or cannot use leverage, while in the second case, there is a predetermined maximum exposure allowed by the brokerage firm when trading CFDs based on margins. Ideally, choose an account that offers both options for your convenience.
Commissions, charges and spreads.
Trading CFDs is not free of charge. Consider the following:
- Commissions – look into the commission schedule to see what fees you will be charged depending on your trading volume. Also, check any hidden commissions outside the schedule, like inactivity fees or withdrawal fees. Some brokers tend to change their policies often, so keep an eye out for changes too.
- Charges – make sure that the price displayed by the platform has all costs included (like commissions or taxes) because sometimes they aren’t displayed together with trading prices, which may mislead you into thinking something is cheaper than it is.
- Spreads – It’s the difference between the bid and asks the price of a CFD. Spreads for most markets are extremely low, but they can be higher on exotic products such as currencies and futures. Look into the spreads schedule and see how much you will need to pay for opening different types of trades.
Deposit and withdrawal options
It would help if you looked into that before signing up with a broker because some payment methods don’t support all countries or specific accounts. If your primary method does not work for you, make sure your backup methods do. Also, check out what limits there are per transaction and their frequency – daily, monthly, etc.
Customer service
If you have questions or problems when trading. Some brokers offer live chat or phone support, while others prefer to use e-mail and sometimes take longer to answer. Make sure you know all the contact details and hours of operation before starting.
Education
Ensure there is a learning centre with educational materials where you can find all about trading CFD s and other products like stocks or futures. Also, check out what kind of courses your brokers provide, such as webinars and seminars.
Research tools
To manage your trades successfully, you need access to quality research tools that can help you determine entry points, potential risk/reward ratios, etc.
