Many CFD providers in Asia offer CFDs on foreign exchange, indices, and commodities. However, finding the best CFD provider for your needs can be difficult with many companies available. Here are 12 things you should consider when choosing a CFD provider in Asia:
Other services offered
Ensure the company is regulated by Singapore’s Monetary Authority (MAS). It ensures the company is financially sound enough to provide you with any financial service you may need. You can check if they’re registered online by checking here.
Reputation
The best place to look for reviews on CFD providers is online forums such as “Moneysmart” or “Lowyatforums”. If you want to ensure you have a reputable company, check out CFD trading at Saxo. It’s also worth checking the MAS website.
Minimum deposit criteria
Minimum deposits range from as low as SGD50 to over SGD10,000, and if you’re trading with smaller amounts, it may not be cost-efficient to open an account at some CFD providers. Some companies require either no minimum deposit (and withdrawal) or allow you to start trading without a deposit (withdrawals are only allowed once the trader has deposited enough funds into their trading account).
Leverage ratio
A leverage ratio is the amount of money a CFD provider allows you to trade with. For example, a company may offer a 100:1 leverage ratio, which means that for every SGD1 in your trading account, you’re allowed to control SGD100 assets. It’s both good and bad – if the trader loses SGD50, it won’t have much impact on their trading account, but they could still lose more than their initial investment.
Spreads
CFDs are bought and sold through a bidding process called ‘the spread’. The spread is the difference between the price you can buy at (i.e., bid price) and sell (ask or offer). These spreads can be fixed or variable, but choosing one with a tight spread is best to minimize the amount of money spent on trading fees.
Minimum trade size
Minimum trade sizes will vary depending on the chosen company, ranging from as low as USD1 per lot (contract) to around 10,000 Yen for Japanese traders. It’s best to check the terms and conditions before opening an account with a CFD provider.
Leverage ratios offered
Some companies may offer leverage ratios of up to 500:1. For every SGD1 in your account, you’re allowed to control SGD500 worth of assets. Higher leverage ratios mean higher potential profits and lead to a higher risk of loss if the trader is not cautious with their trading funds.
Assets offered
When choosing a CFD provider, they must offer assets (underlying instruments) relevant to you and an asset list that is diverse enough so that the traders’ portfolios reflect the actual market performance.
Company Policies
It’s essential to familiarise yourself with the company’s terms and conditions to ensure you’re aware of any fees involved in trading, minimum trade size, minimum deposit criteria, minimum leverage ratios offered, etc.
Customer service
Customer service is essential when choosing a CFD provider since you will likely have questions about various features. Some providers offer 24/7 customer support via telephone/email/chat, while others may only provide help during specific times (or not at all). Make sure to check out this aspect before opening an account.
Deposit and withdrawal options
It’s essential to check which deposit/withdrawal methods are available, whether credit card or bank transfer (internet banking), and how much money will be required as a processing fee. Look for a company that offers low prices and processes withdrawals quickly.
Ease of use
Finally, you want to find a CFD provider that is easy to navigate: signing up should be simple, you should be able to use their trading platform without hassle, and there shouldn’t be any complexities involved in making trades, such as having to click through numerous pages to place an order.
