Why Trade DMA CFDs

Direct Market Access or DMA is the term often used to describe a type of CFD which has grow to be prevalent in the Australian market, these are generally known as DMA CFDs. With DMA CFDs your deal is passed immediately through to the underlying stock market without dealer or market maker involvement, which means orders are executed at the true market price and in a timely manner without re-quotes. Buying and selling DMA CFDs is much like buying and selling shares on line.

DMA CFDs offer complete order transparency. Traders are able to take part in the market depth of the underlying share over which the CFD is quoted by joining a bid or offer queue and also the open and closing auction phases of the market. DMA CFDs provide all of the benefits of trading shares with the added leverage that CFDs offer.

Buying and selling 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’ve got the potential to enter and exit trades at superior prices.

When trading DMA CFDs you’ll 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 prices and market depth allowing you to see the amount of buyers and sellers at each different price level and participate in order queues allowing partial fills and superior 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 manage their downside risk however these are often overly complicated for the newbie trader.

When trading DMA CFDs traders have the ability to be price makers meaning that as soon as an order is placed it’s always transmitted to the real market and can impact the price of the stock on which the Contract for difference is based.

Trading CFDs 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 Direct market access CFDs will allow them to trade freely without dealer intervention and obtain better prices when buying and selling. DMA CFDs are also suited to active day customers and scalpers who are looking to make the most of small price changes quickly.

There are a selection of CFD platforms that you can trade DMA equity CFDs on, the two most popular platforms in Australia are webIRESS and ProDeal. Both platforms allow customers to participate in the market depth of the DMA CFD on which they are trading. The webIRESS platform is also very popular within the stock trading community, mainly due to variety of order varieties on offer, whereas ProDeal is extremely popular amongst CFD traders, this is because of the broad range of CFDs on offer and its sophisticated charting functionality.

It is imperative to note that prior to commencing to trade DMA CFDs you you think about whether this sort of Contract for Difference fits your trading style, choosing the incorrect CFD type will affect the success of your trading strategy.