finance

Description

The two main CFD http://www.contracts-for-difference.com/DMA-market-maker.html models on offer at present are Direct Market Access and Market Maker. Choosing a CFD provider can be like asking someone else what suburb to buy real estate in or perhaps buying a car; it depends on a host of circumstances, costs, beliefs and technical factors. Direct Market Access CFDs: 1. Can participate in the opening and closing auction. 2. Orders are processed directly in line with the London Stock Exchange market quantities. 3. Quoted prices are derived directly from the underlying quantity. 4. There is no added liquidity using the provider's own order book. 5. The provider will usually be hedging on a one-to-one basis which becomes expensive. 6. Will participate in dividends . 7. Some limitations on short tradable stocks. 8. May offer indices, International shares and/ or commodities but usually via Market Makers. 9. Slightly higher brokerage and/or finance rates to cover higher costs. 10. Do not usually offer a Guaranteed Stop Loss Order. Market Maker CFDs: 1. The price offer to buy and sell is based on the underlying market and the quantity is relevant to the underlying. Sometimes the prices are referred to as mirroring the underlying (cash/real) price. The companies order book, hedging exposure and access to other derivatives to fill the orders may impact on the quality of your fills. 2. Trade a wide range including sectors, indices, commodities and treasuries. 3. Will usually participate in dividends and stock splits but not franking credits. 4. Can offer a wider range of stocks to be short sold. 5. Often providers hedge their own trades so they can sometimes offer additional liquidity through their own book. 6. Transactions are priced on the group quantity so may be done quicker but at the full volume available. 7. Stop loss orders typically become market orders when triggered. 8. Can widen the spread but many still work to tight ranges.