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Direct Market Access CFDs or DMA CFDs are considered one of the most transparent different types of CFDs available. DMA CFDs have the advantage of allowing participation in the underlying market of the share over which the CFD is based. DMA CFDs are fairly new and have only become popular in Australia during the last couple of years however, they continue to become prevalent as traders understand the transparency offered by this variety of CFD.

DMA CFDs have significant advantages over the more established over-the-counter (OTC) variety in that they permit the trader to participate in the opening and closing phases of the market. Having the ability to trade in these phases of the market offer major advantages to traders as they can obtain the opening or closing price of the day. Traditional over-the-counter CFDs do not permit the trader to participate in these phases of the market thus preventing the trader from being able to obtain among the best prices of the trading day. Despite the disadvantage of not having the ability to participate in the opening and closing phase of the market, over-the-counter CFDs do have the benefit of allowing the trader to buy or sell volumes that may not be obtainable in the underlying market during standard trading hours.

DMA CFDs have become common amongst day traders and scalpers. The key reason for their attractiveness is because DMA CFD providers allow CFD trades to flow onto the underlying market in the equity on which the CFD is based allowing active traders to take advantage of relatively small price movements. Using DMA CFDs also permits day traders to get set at the opening price at the start of the day and clear their positions during the closing price during the closing match phase.

One of the disadvantages of DMA CFDs is that generally DMA CFD companies don't offer guaranteed stop loss orders. Guaranteed stop loss orders have the advantage of permitting the trader to manage their downside risk. Slippage often occurs when using stop-loss orders, guaranteed stop-loss orders eliminate this risk completely.

It is important to be conscious that prior to opening a CFD account you must bear in mind that when trading DMA CFDs you'll required to deposit a higher initial margin amount than the over-the-counter (OTC) variety. As well as higher margins many DMA CFD companies will not be able to offer you CFDs over indices and currency contracts due to these contracts being over-the-counter in their very nature.

There are relatively few platforms available that offer DMA CFDs, one of the most widespread platforms in the Australian market is webIRESS. WebIRESS offers the speed and reliability day traders and scalpers need along with a variety of different order types such as trailing stop-loss orders. Another popular platform is ProDeal, ProDeal offers all the advantages webIRESS offers with the additional benefit of being able to trade over-the-counter CFDs through the same platform enabling traders to trade CFDs on indices and forex from their DMA CFD account.

It's important that before making the commitment to start trading DMA CFDs that you realize the risks connected with the product. Like all leveraged products trading CFDs can offer large rewards however there are also risks involved that if not managed right can lead to losses larger than the investors initial deposit.

Prior to selecting a DMA CFD provider you should make sure that you trial their demo platform and read their Product Disclosure Statement which outlines in detail the fees and charges, gives trading examples, and outlines the sorts of CFDs offered together with the risks and benefits of buying and selling CFDs. You ought to ensure that the Contract for difference provider you decide on is able to offer you the platform and products that fit your trading plan.

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The writer Craig Bushell is an experienced CFD trader. Craig trades with Australia's most popular CFD provider IC Markets. Craig has published a number of textbooks and manuals on CFDs, you can download his most up to date book on CFD trading and learn more about CFDs free of charge.

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