Trading CFDs (Contract for Differences) offers several major advantages that have increased the instruments’ enormous popularity in the past decade.

Before we get started, let’s outline exactly what CFDs are: 

As the term implies, CFDs are contracts between a buyer and seller. They allow the seller to speculate on whether the price of an asset will rise or fall. After a certain period agreed upon in the contract, the buyer must pay the seller the difference between the opening and closing price of the trade. 

A distinct advantage of CFDs is that they are financial derivatives, meaning that traders don’t own the assets, they are simply speculating on their price movement. Sound familiar? You may be reminded of spread-betting, and you would be correct. In fact in the UK and Ireland, the terms CFD and spread-bets are often used interchangeably, with only minor differences in their execution. 

In this article, we’re going to focus on the software that facilitates CFD trading, covering everything you need to know, from launching a CFD brokerage to the trading tools required for securing a competitive edge. 

What is a CFD trading platform?

A CFD trading platform is software brokers use to provide investors with a service: using their platform, traders can speculate on the price movements of various financial instruments without owning the underlying assets. 

Using a broker’s CFD platform, traders can take long (buy) or short (sell) positions. These online trading platforms typically offer advanced charting tools, real-time market data, and various order types to help traders make informed decisions. 

CFDs are legal and widely traded in the UK, where they are regulated by the Financial Conduct Authority (FCA). However, CFDs are not legal in the United States due to restrictions imposed by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). These regulators have deemed CFDs too risky for retail investors in the US. 

How to start a CFD brokerage?

Starting a CFD brokerage does require completing several processes. Here is a simplified compilation of 4 key considerations to get you started on the right foot. 

Licensing and jurisdiction

The very first step is to identify where you will launch and base your brokerage operations, and which financial markets you will provide access to. This is important because it will determine which regulatory bodies you will fall under. Each jurisdiction has its own regulatory body with specific requirements for CFD brokers. Here are a few examples: 

Brokers will also need to obtain the appropriate licenses. This process will depend on the jurisdiction. The following are examples of common requirements: 

  • Financial services license: Most jurisdictions require a financial services license to operate a CFD brokerage. This could include criteria like proof of financial stability, and having a physical office. 
  • AML/KYC: Complying with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations normally involves demonstrating that you have strict customer verification and record-keeping processes in place.
  • Capital requirements: Many jurisdictions have minimum capital requirements that must be met to ensure the financial stability of the brokerage.

To build or to buy your platform

Next up, deciding on whether to build or buy a CFD trading software platform. This is a critical decision because it will impact the performance and longevity of your operations. Here’s a brief comparison to shed some light on the pros and cons of each. 

Building a platform from scratch

Pros: tailored solution, with full ownership and control of the platform. 

Cons: the amount of resources, costs, and time needed is a significant risk. 

Buying or licensing platform software from a vendor

Pros: cost-effective, accelerated timelines, faster to launch, ongoing maintenance support, market-tested performance, leverage the vendor’s expertise and experience. 

Cons: less flexibility—however, you can counter this by choosing a vendor that allows customization and tailored features. DXtrade CFD for example allows their clients to apply their logo and branding and is flexible with integrations and liquidity providers. 

Note: Devexperts is renowned for offering brokers enterprise or source code options, meaning that once you grow and scale up as a broker, you are not locked in and still have the option to increase your control, or even obtain full ownership of your platform. 

Features to set yourself up for success

The CFD trading industry is lucrative, however it is not a niche. Therefore your platform must feature components that will help you stand out from the competition, and give you a competitive edge. 

DXtrade has won numerous awards for its design and performance. Here we’re going to share with you some insider insight into the features that have allowed it to receive this recognition, and become a trusted go-to software vendor for major CFD brokers. 

UX/UI

If you take a look at DXtrade CFD’s design, you will notice it’s distinctly modern and sleek. CFD and forex traders come in all shapes, sizes, demographics, and experience levels. To engage with all of these audiences, the platform interface must be super easy and intuitive to navigate, with an appealing design. 

OMS

The order management system (OMS) is the engine behind platforms that can make or break a brokerage’s reputation. It takes care of the orders, positions, and account balances in real time. 

Mobile apps

Web Trader platforms are vital, but in this app-based era of technology, mobile versions of platforms are also a must for attracting and retaining users. DXtrade managed to excel in this arena by providing brokers with high-performance Android and iOS app versions of the DXtrade CFD forex trading platform. 

Customer Service 

Unfortunately, brokerages are not known for 5-star customer service. The silver lining to this is that it creates an easy way to differentiate yourself in the market! Like any service industry, tailored and personalized service is a surefire way to build rapport and brand loyalty. 

This was a huge motivation behind the creation of Devexa, an AI-powered omnichannel platform for brokers and prop firms. She combines live chat, video calls, screen sharing, broadcasting, chatbots, and back-office operations into a single interface.

Functioning as a widget embedded inside trading platforms, Devexa performs different roles simultaneously with remarkable efficiency and expertise to increase engagement, satisfaction, and trading volumes.

Marketing 

DXtrade CFD comes packed with impressive features and capabilities — the trick is to get this across to your users. Here is a ’15-steps for success’ guide on how to effectively promote your brokerage services.

What broker tools do I need for my platform? 

For this section, we’ll break the must-have tools into two categories.  

Operations and client management

  • Control over all aspects of user accounts
  • Configuration and management of financial instruments
  • Swap and swap-free accounts 
  • In-platform rebates
  • Diverse commission plans
  • Client reporting 
  • Sessions 
  • Broker hedging accounts 

Dealing and risk management

  • Real-time exposure monitoring 
  • Setting up your risk management groups and profiles
  • Price stream management 
  • A/B-book execution strategies for revenue maximization 
  • Client position and trading on behalf

Find more details on all the above here: Broker tools for CFD trading software. 

Ready to launch a CFD brokerage?

If you’ve made it this far, we will assume you have also realized DXtrade CFD is incredibly well-positioned to help you launch a white-label CFD platform. We get most of our clients up and running within just a week, and with 20 years of experience in the field, you can have peace of mind that you are in good hands.

Reach out to our team to get started!