Direct market access (often written as DMA)
allows traders to see the actual exchange bid and offer of the
share together with the market depth showing all bids and offers in
the market.
This insight into the market has provided CFD traders with more
information than ever before and enabled many to make trading
decisions based upon the flow and momentum of trades and orders
placed by other retail, professional and institutional
investors.
DMA Explained
CFD Trading has evolved quite dramatically recently resulting in
traders receiving access to the world's markets via the internet
and mobile apps. Technological advancements have also provided
traders with access to the underlying market and, in some
circumstances, even allow them to see the order book and to place
their own buying and selling orders directly into the market with
no further reference to the broker.
Direct market access (you'll see this written on some broker
sites as DMA) can come in various shapes and sizes from basic entry
DMA showing a limited number of prices to a comprehensive service
where the trader gains access to the market in ways never before
available to the retail investor.
Understand the potential
Before rushing to your CFD Brokers to demand full DMA access to
the stock market it's worth understanding what the potential
benefits are as well as the increased costs involved.
Costs
If you are unlikely to be an active trader you may find that the
costs that are passed on by your broker make this type of account
unsuitable for your needs.
Costs for DMA access will vary but most CFD brokers simply pass
on the exchange charges directly to their clients. For example if
you wanted to see the full order book for shares traded on the
London Stock Exchange you could expect to pay in the region of £175
per month. If you then added in a US and a European exchange you
could expect a monthly bill of at least £350 so make sure that the
added benefits of seeing the order book and placing your orders
directly into the exchange are not outweighed by the increased
costs.
Benefits
An active day trader may find a view of the full order book of
the underlying market a very useful tool when trying to get a
feeling of which way the share or market may move in the short
term.
Having a view of the complete order book can also prove
advantageous when you are looking for entry and exit points.
CFD DMA trading
CFD DMA trading is probably the purest form of trading available
in the retail market with the broker simply providing the software
and clearing facility for your trades. You see what the traders in
the square mile see and you have total control over where you wish
to place your orders and can see them working in the market with
the other orders from speculators, fund managers and hedgers from
across the globe. It's as close as you'll get to sitting in a
trading room at a major city broker; just make sure you don't end
up paying for something you don't really need!
Further resources on CFD trading
Make the right choice with Trading.co.uk
Opening a CFD trading account is relatively straightforward with
many companies offering an online application process. Below is a
table of CFD brokers with a few key account-opening criteria that
we believe should be considered when you are deciding which broker
to open an account with. It's not always about price; finding a
broker that suits your style of trading and your technical
requirements is as, if not more, important than shaving a few pence
off of your dealing costs.
Start comparingCFD brokers
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