What is CFD liquidity?

May 30, 2021

What is CFD liquidity?

CFD contracts fall into the category of assets characterized by the highest demand among traders. In the broad sense, these contracts empower an investor to obtain profits without holding the underlying assets. Profits result from price movement. Let’s dive into this instrument deeper to understand why CFD liquidity is important for both traders and brokerage companies.

The fast-growing popularity of CFDs

According to statistics, the CFD trading volumes have skyrocketed by 193% in 2020. The instruments attract crowds of newer entrants; this is why brokerage companies understand the potential of contracts for differences. On the other hand, the trading sphere is fiercely competitive and a broker needs to offer the ultimate quality of services.The foremost concern is to understand the legal norms related to CFD trading. For instance, the USA and Brazil ban such an instrument, and your company cannot ignore this factor. As for the vast majority of other jurisdictions, there is no specific regulation, and brokers can offer this instrument for traders.

What are the types of CFD contracts?

Contracts for differences are a deal between traders and brokers; this is why the instrument can be related to diverse assets:Forex (fiat currencies);Cryptocurrencies;Stocks;Metals, etc.When traders open a contract, they don’t buy such assets directly. Furthermore, CFD contracts for a certain asset may exceed the number of its circulating supply. For instance, the circulating supply of Cardano is 32.04 billion but traders may award contracts for more coins, as they don’t purchase them directly. The asset’s price is determinant in such a case.What are crucial factors for traders to select a certain brokerage company? Liquidity belongs to the list of determinant criteria.

What is the notion of contracts for differences liquidity?

First and foremost, we need to understand what liquidity means in the broad sense. The notion refers to the ability of an asset to be purchased or sold by the market price within the shortest terms. The growing interest in CFDs influences its liquidity growth, as the market attracts crowds of new players. Meanwhile, the trading volumes of CFD and FX markets are totally different; this is why CFD brokers need liquidity providers even more than Forex ones.While talking about Forex trading, a brokerage company may theoretically act as a liquidity provider by itself, matching bid and ask orders of traders, and 12 trading pairs form more than 90% of the overall trading volumes. As for CFD contracts, the number of traders is fewer, while contracts are offered for a wide range of assets (FX currencies, digital assets, etc.). This is why a reliable CFD liquidity provider is among the highly demanded factors for a brokerage company.

How to select a trustworthy liquidity provider for CFDs?

While talking about the best liquidity providers, the following aspects do matter:Credit risks. Such providers operate in the over-the-counter field; this is why providers should be reliable and experienced from the viewpoint of credit risks.Available instruments. Some brokerage companies are going to offer contracts for FX or cryptocurrencies only. Other brokers suggest the fullest scope of instruments for traders. The more instruments a provider covers, the better.Innovative technologies. Progressive providers empower a brokerage company to connect API and other technologies.Customer support. Professional and trustworthy CFD liquidity providers guarantee high-end 24/7 support for brokerage companies.This said, CFD liquidity is exceptionally important for brokers offering such contracts for traders. Compare strong points of different liquidity providers to come up with the best decision.

Wondering how these solutions can boost your business?

Leave a request, and let our experienced team guide you towards unparalleled success and growth.

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.

    Subscribe Our Newsletter

    How to Identify Liquidity?

    Liquidity Provider

    How to Identify Liquidity?

    Let's find out how to identify Forex Liquidity, how to identify the liquidity of cryptocurrencies, and how to pick the best LP.

    Liquidity
    White Label Forex Software — Ultimate Guide on How to Choose The Best Industry Solution

    Constantine

    White Label Forex Software — Ultimate Guide on How to Choose The Best Industry Solution

    Today's fast-changing field of finance and electronic trading drives programmers and developers to ideas that create a whole new way to make money and increase the wealth of private traders and institutional investors. In an effort to simplify and facilitate trading in Forex, crypto, and other markets, modern companies offer an incredibly wide range of different solutions, including White Label. These solutions help new business owners save money, gain valuable experience in the FX industry, and take their place among other players.

    Forex Business
    B2BROKER Liquidity B2BROKER Liquidity
    Sponsored
    Milena

    The Destiny Mastercard Outperforms Expectations. However, Why is The Stock Falling?
    Destiny Mastercard sees cross-border volume increase by 21%. Here is why stock is down.

    discover
    Apple Prepares to Expand Into the New Promising Market.

    Alexander

    Apple Prepares to Expand Into the New Promising Market

    Apple plans to open the first brick-and-mortar stores in India and enlarge its presence in the world's second-largest smartphone market.

    Companies
    Contact us bg

    Contact Us

    Contact the Liquidity Provider
    for any questions and advertising inquiriesb2broker

      Please fill out this contact form to get in touch with us

      / 3000

      By clicking “Get in touch” button, you agree to the privacy policy

      Successful!
      Thank you for your request.
      We will contact you shortly.
      Close

      Hazem

      MetaTrader vs cTrader: Which Trading Platform Shall You Choose?

      MetaTrader vs cTrader: The Full Breakdown

      Сonstantine

      Will Dogecoin Reach $1? Tokenomics and Price Analysis

      Will Dogecoin Reach 1 Dollar Analysis

      Сonstantine

      How to Get a Crypto Exchange License?

      How to Get Crypto Exchange License

      Сonstantine

      Best Crypto to Buy Now: Guide for Investors

      Best Crypto To Buy Now

      Hazem

      Grok vs ChatGPT: What’s the Best AI Assistant You Need in 2025

      Grok vs ChatGPT

      Сonstantine

      How to Choose the Right Liquidity Provider for Your Brokerage

      How to Choose the Right Liquidity Provider for Your Brokerage

      Сonstantine

      Low-Latency Trading Defined: Speed, Strategy and Technology

      Low-Latency Trading Explained

      Hazem

      How Liquidity Depth Affects Slippage in High-Volume Trading

      Liquidity depth and slippage in trading

      Hazem

      What is FIX API Liquidity Connection and How Does it Power Institutional Trading?

      FIX API in institutional trading

      Сonstantine

      OTC Trading Strategies and Technologies to Succeed in Over-the-Counter Markets

      OTC Trading Strategies

      Alexander

      What is OTC Trading? A Complete Guide for 2025

      what is OTC

      Alexander

      Synthetic Futures: A Trader’s Guide to Replicating Positions with Options

      How to Trade Synthetic Futures

      Сonstantine

      Order Book Depth: What It Is And Why It Matters?

      Order Book Depth What It is And Why It Matters

      Alexander

      Spot vs Perpetual Futures: Which Is Right for You?

      Spot vs Perpetual Futures explained

      Hazem

      5 Reasons Traders Are Switching to Perpetual Futures

      5 Reasons to Switch to Perpetual Futures

      Constantine

      Top 3 Liquidity Challenges Facing New Exchanges and How to Solve Them

      Top 3 Liquidity Challenges Facing New Exchanges Today

      Constantine

      Financial Planning in the Cryptocurrency Era — Master Crypto and Digital Asset Strategies

      Financial Planning in the Cryptocurrency Era

      Hazem

      Best Platforms to Trade Perpetual Futures in 2025

      Best platforms to trade perpetual futures in 2025

      Alex

      Top 10 Fintech Website Development Agencies for 2025

      Best Fintech Website Development Agencies for 2025

      Сonstantine

      Internal vs External Range Liquidity In ICT Trading Explained

      Internal vs External Range Liquidity In ICT Trading

      Constantine

      Portfolio Backtesting — Tools, Metrics, and Methods Explained

      Portfolio Backtesting

      Сonstantine

      ICT Trading Explained: Smart Money Concepts, Tools and Setups

      ICT Trading Explained

      Сonstantine

      CFD Trading Strategies: A Practical Guide to Risk and Execution

      CFD Trading Strategies

      Alexander

      What is a Fair Value Gap? A Guide to Trading Market Imbalances

      What is Fair Value Gap
      liquidity-provider-logo
      • News
        • Stock Market Forecast
        • Stocks
        • Banks and Finance
        • Companies
        • Crypto
        • Forex
        • AI
        • Technology
        • DeFi
        • NFT
      • Articles
        • Crypto Payments
        • Trading
        • Crypto Exchange Business
        • Forex Business
        • Fintech
        • Liquidity
        • FinTech Awards
        • Blockchain
        • Investing
        • NFT
        • DeFi
      • More
        • Videos
        • Liquidity Providers List
        • Crypto Payment Providers
        • White Label Brokerage Platforms
        • Broker CRM Platforms
      [email protected]

      © 2024 Liquidity Provider. All Rights Reserved

      Privacy Policy Cookie Policy
      This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.