Choosing from the vast array of CFD Brokers that are in the market can be a difficult decision, but there are a few things to take into consideration when you are making your choice.

Three Ways To Execute Your Trades

There are three ways you can trade CFDs:

- Market Maker

- Direct Market Access (DMA)

- ASX CFDs

When using the market maker execution model orders are placed and traded with the CFD broker. The Broker may then hedge their position by entering the same trade in the underlying market. They do not necessarily enter every trade that their client’s do.

Direct Market Access orders are not traded with the CFD provider, but instead are traded on the physical exchange. Your CFD order is filled when the order on the underlying exchange is filled.

ASX CFDs use a central order book in much the same way as stocks are traded. All orders are placed into the order book and the ASX computers execute the trades by matching together buy and sell orders.

Choose Your Trading Instrument

The easiest way to choose between these three execution models is to determine what you are likely to trade. To trade overseas shares, indices or currencies, you will have to choose a market maker model or a limited selection is available through the ASX CFDs.

Direct Market Access (DMA) is not offered for these instruments. If you choose to trade ASX stocks only, then you can choose any of the different execution models.

Guaranteed Stops, or Not

Guaranteed stops are available through a market maker platform only. The exception to this rule is Macquarie that combines both DMA and guaranteed stops. If you want to use guaranteed stops then this will determine which method of execution is better for you.

On the other side of the coin, if participating in the opening and closing auctions is important to you or your trading strategy, then you will be choosing the DMA model or ASX CFDs.

When you place an order with ASX CFDs or you use the DMA model you will see your orders appear in the underlying security. If this is important to you then opt for one of these forms of execution.

Which Platform Do I Use?

All CFD brokers provide some form of trading platform to execute your trades. Most trading platforms include some form of charting as well as news items and different styles of orders for execution.

To decide which trading platform you prefer, take advantage of the free trials that are available for each platform. This try before you buy approach will help you choose the best platform for you and is one of the best ways to make your choice of broker.

Decide what it is that you want to trade and how you want to do that, to help you select the CFD broker that will work best for you.