The Benefits of DMA CFDs

Direct Market Access or DMA is the term frequently used to describe a kind of CFD which has grow to be popular in the Australian market, these are known as DMA CFDs. With DMA CFDs your deal is passed directly through to the underlying share market with no dealer or market maker intervention, which means orders are filled at the real market price and in a timely manner with no re-quotes. Buying and selling DMA CFDs is very similar to buying and selling shares on line.

DMA CFDs provide complete order transparency. Traders are also able to take part in the market depth of the underlying stock on which the CFD is based by joining a bid or offer queue and also the open and closing auction phases of the market. DMA CFDs offer all of the advantages of buying and selling shares with the added leverage that CFDs offer.

Trading DMA CFDs is extremely similar to trading shares, traders are able to hit the bid or offer or join the buy or sell queue. DMA CFD traders have significant benefits over traders using market made CFDs for the reason that they have the potential to enter and exit trades at superior prices.

When trading DMA CFDs you will be required to subscribe to exchange data, the cost of data varies from exchange to exchange. Once subscribed you will have access to real time quotes and market depth allowing you to view the number of buyers and sellers at each different price level and take part in order queues allowing partial fills and better execution.

One drawback of DMA CFDs is that guaranteed stop loss orders aren't offered, however these are not always necessary as generally DMA CFDs traders use options to deal with their downside risk however these are usually overly complex for the newbie trader.

When trading DMA CFDs traders have the ability to be price makers meaning that when an order is placed it's transmitted to the real market and can affect the value of the stock over which the Contract for difference is based.

Buying and selling Contracts for difference using a Direct Market Access (DMA) model is best suited to frequent traders that trade on an intra day basis. Frequent traders will find that DMA CFDs will enable them to buy and sell freely without dealer involvement and obtain better prices when buying and selling. DMA CFDs are suited to active day customers and day traders who are looking to take advantage of small price changes quickly.

There are a number of CFD platforms that you can trade DMA stock CFDs on, the two most popular platforms in Australia are webIRESS and ProDeal. Both platforms permit traders to take part in the market depth of the DMA CFD on which they are trading. The webIRESS platform is also extremely popular within the stock trading community, largely due to variety of order varieties on offer, while ProDeal is extremely popular amongst Contract for difference traders, this is because of the broad range of CFDs on offer and its advanced charting functionality.

It is imperative to note that prior to starting to trade DMA CFDs you consider whether this kind of CFD suits your trading style, choosing the wrong CFD type will have an effect on the success of your trading system.

Article Source: http://casinoarticles.us

The author Ben McGrath is a professional CFD trader. Ben trades with Australia's most popular CFD provider IC Markets. Ben has published a number of books and guides on CFDs, you can download his most recent guide to CFD trading and understand more about CFDs for free.

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