Direct Market Access CFDs

Submitted by Share Trading on 29 January, 2010 - 08:15

Learn about Direct Market Access CFD providers

Direct Market Access CFDs offer identical prices and liquidity to the underlying sharemarket price for the stock. Direct Market Access CFD trading has each CFD order placed as an actual buy or sell order ticket on the Australian Stock Exchange (ASX) – an order which appears on the trade queue and follows typical stock trading rules. Therefore your CFD order (unlike marketmakers) can influence the market and participate in the pre-opening trade (7am to 10am) and pre-closing (4pm to 4.15pm) price auction on the ASX and also receive partial fills.

Choosing Direct Market Access (DMA) over MM also depends on strategy. Direct Market Access gives you the opportunity to scalp because of the speed of the transaction and because you can see the real depth of the market – the actual buyers and sellers in the market -unlike a synthetic market provided by market makers.

With a quote-driven service the trader is simply presented with the company's bid and offer. These are derived from the underlying cash market prices and, when dealing in normal market size, will generally be identical, with the company making its money from the commission on the transaction.

A direct market access CFD provider operates differently from a market maker. Whenever a share trader places an order to trade an Australian CFD, the CFD provider will instantaneously create the equivalent position in the underlying cash market to hedge the exposure.