I have been trading DMA CFDs since they were first launched in Australia by Man Financial (MF Global) in 2004. Since their introduction DMA CFDs have revolutionized day-trading and scalping. These days there are many DMA CFD brokers, giving professional CFD traders an option and ensuring strong rivalry.
In the course of my trading profession I have had CFD trading accounts or traded with all the main DMA CFD brokers in Australia and have had a variety of different experiences with each of them. When talking to traders and investors at educational seminars and expo’s across the nation I often get asked which DMA CFD provider is best. To help you to determine the answer to this question and ensure novice CFD traders carry out fair evaluations of all the DMA CFD providers in Australia I’ve written this quick evaluation based on my own experience.
Amateur traders often get caught out by opening a CFD trading account after seeing a glossy magazine, TV advertisement or review written by a paid journalist not an experienced CFD trader. Real traders with real life experiences are the only ones that can perform a fair and unbiased evaluation according to what a trader desires and wants.
The top 3 DMA CFD providers in Australia are MF Global, FP Markets and IC Markets. It is also worth noting that there is a fourth DMA CFD provider being Macquarie Bank with their Macquarie Prime product offering, however they weren’t incorporated in this review for the simple reason that their product offering is more closely related to a margin loan as opposed to a CFD and is limited to ASX shares only.
When surfing around the web and flicking through the papers and magazines you’ll likely notice more DMA CFD brokers than those talked about here, the reason for this is straightforward, many online share brokers have added CFDs as a complimentary offering which is not part of their principal business. Illustrations of this include Etrade and Comsec who both provide a “white label” version of MF Global’s DMA CFD product offering to their share trading clients.
As an active DMA CFD trader I am of the opinion that the most important elements to consider when choosing the right DMA CFD provider are:
1. Client Service
2. Platform Stability and Useability
3. Product Choice
4. Pricing
It is important to note that these are the factors that I personally believe are important, other traders could have different views and pick a different provider.
MF Global
Client Service: I first came across MF Global at a tradeshow, the service and professionalism of the staff was excellent, so I opened up a trading account with them. After finishing all of the paperwork the account was setup some seven days later (these guys like to take their time). The time taken to set up my account was not a problem for me, the problem was that my account executive didn’t telephone me to let me know, I had to call him to find out if my trading account had been setup. My low customer service ranking is a little biased because of this initial occurrence however they have been excellent to deal with since.
Trading platform Stability and Useability: MF Global use one of the best web based DMA CFD trading platforms in the market, WebIress. WebIress is one of the most stable DMA CFD trading platforms obtainable and offers share, indice and forex CFD trading. The forex trading capabilities of the platform are quite poor compared to others that are available, but for DMA share CFDs WebIress is definitely an ideal system.
Product Choice: MF Global has one of the best product ranges out of all the DMA CFD providers. They’re one of the few to provide share, indice and forex CFDs on WebIress. They have not yet included shares, options and futures onto the trading platform, these products must be traded on separate trading platforms which is often quite frustrating for professional traders needing an all round trading solution. Their ASX DMA CFD product offering is made up of 800 ASX DMA CFDs, a reasonable amount.
Pricing: It’s no big secret that MF Global are one of the most costly DMA CFD providers around, however despite the high rack rate of $12.50 or 0.125% they do offer rate reductions for high volume investors. The frequent trader rate shown on their internet site for DMA CFDs is $8 or 0.08% but to get this price you will need to fund your account with at least $100,000.
FP Markets
Customer Service: I found FP Markets to have a good turnaround time for general inquiries, however when confronted with more complicated general queries their employees gave the impression to be out of their depth. As a professional trader I expect my CFD broker to understand the product they’re selling and be able to answer my queries. FP Markets are a small discount CFD company and as with all small companies these are common problems.
Platform Stability and Useability: Like MF Global these guys also use the WebIress trading platform one of the most established and dependable platforms around, not the most effective for forex but great for DMA share CFDs.
Product Range: These guys have a very limited offering they only offer ASX DMA CFDs, not much good for those wanting to trade DMA CFDs on shares listed on other exchanges. For ASX DMA CFDs these guys have a great offering as they cover the full range of shares listed on the ASX, however do not get caught out by their marketing, many of their CFDs outside the top 500 are offered on 100% margin.
Pricing: These guys have a published rack rate of $10 or 0.1%, somewhat less expensive than MF Global, they too have a frequent trader package where a commission rate of 0.08% without a minimum can be accomplished with a $50,000 deposit. This is not a bad rate if you’re looking to trade ASX DMA CFDs only but not great for those seeking extra products and a long-term affiliation with their CFD broker.
IC Markets
Client Service: These guys are extremely professional and helpful, they actually know the marketplace and also the products that they sell, I can not fault their client service however I will say that I did experience some problems when calling them after hours regarding an accounts question , however I was called first thing the next morning by my account manager who was able to immediately solve my problem.
Trading platform Stability and Useability: These guys are the only CFD provider of those reviewed to offer me a choice of platform. They permitted me to select either WebIress Plus or their other DMA CFD platform, ProDeal. WebIress Plus is a faster and more advanced version of WebIress which is one of the best and most reliable web based trading platforms available. Their ProDeal platform also appears to be very reliable, I have had no problems to date. ProDeal seems to be a bit more user friendly than WebIress Plus and has great charting functionality.
Trading platform Choice: As far as product variety goes these guys have everything global DMA CFDs, Forex, Futures and Indices, there’s nothing they don’t offer. All of these products are offered on both WebIress and their ProDeal trading platform. Their range of CFDs on WebIress covers all listed shares on the ASX and several other markets. On the ASX they offer around 2700 share CFDs and every one can be traded on margin unlike FP Markets offering where most are on 100% margin.
Pricing: These guys have a published rack rate of $10 or 0.10% and like all of the providers in this evaluation they have a frequent trader rate, the difference here though is that the minimum deposit is $20,000 and active investors can pay as little as 0.03%, significantly lower than MF Global and FP Markets charges on the WebIress platform.
Conclusion
After evaluating each DMA CFD broker based the four important factors that I consider significant, choosing a winner wasn’t rocket science. Out of every one of the 3 DMA CFD providers reviewed they were all able to provide a great offering however there was one CFD provider that really came out on top in all of the categories and was able to give me just what a professional trader demands when their money is on the line. Although my primary choice IC Markets came out trumps in all categories my second choice MF Global was a close second but simply couldn’t match IC Markets on price and service. In my view you can’t go wrong with IC Markets if you are an active DMA CFDs trader and value pricing, service, product variety and trade execution speed.
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