CFD trading is a way to make money trading online. Those who do engage in this type of asset trading, may require minimal technical knowledge about how trades work.
If you are interested in CFD trading from Australia, below is information on how you can get started.
Best CFD Brokers Australia
We’ve checked all brokers that offer CFD trading and which are open to Australian traders.
Here are the top3 CFD Brokers in Australia:
HighLow offers a number of perks to traders. Mainly, they have a highly user-friendly trading platform available in multiple languages. The broker allows users to try a demo before opening a live trade. This is highly advantageous to CFD traders that are just starting out. Highlow still offers binary options trading (Is it safe?, Is it legal?).
The broker offers a number of options to traders as well. Naturally, high-low options are available. In addition, you will benefit from range, short-term, and on-demand trading options. For more information, read our highlow review.
You can start a trade with HighLow for as cheap as $10. Their maximum trade price is capped at $2,000, which is not ideal for high flying traders.
- ASIC licensed trader
- Excellent trading platform software
- Demo available
- Low starting trades
eToro is a well-known trading platform based in Australia. The company offers its services to Australians through a licensed entity in Australia. The platform is most popular in Europe, but Aussies can trade in local currency without an issue.
eToro Australia offers a number of trading options, but it has recently become popular as a CFD broker. Placing trades is very convenient through their software. The platform enables social trading. Users can copy trades of other investors or start thematic investing.
Another advantage is that eToro’s trading fees are low compared to other brokers. However, the fees for non-trading features are high.
- Popular CFD broker
- Superior trading platform
- Social trading allowed
- Low trading fees
Plus500 is another Israel-based broker that specialises in CFD trades. The company has a subsidiary in Australia that is locally regulated. The company lists itself on the stock exchange and has annual financial disclosure statements. So you can be assured that the broker is safe to use.
This broker offers a very popular trading platform with many user-friendly features. One major positive is mobile trading, which is seamless with Plus500.
Unlike HighLow, Plus500 doesn’t offer a demo. It assumes that the trader knows what they are doing. Therefore, this broker might be best suited for CFD traders with some experience.
- Mobile trading possible
- Popular trading platform
- Stock Exchange-listed
- Issues financial disclosures
What is CFD Trading?
CFD stands for Contract for Difference trades. It’s unique in the sense that investors are not trading an actual asset. Users make money by leveraging the price margin of a stock or share market instrument. Essentially, a CFD trade allows investors to profit from price changes of an asset like stock, futures, crude oil, or even gold.
Investors don’t actually own the asset to make a CFD trade. For example, if you want to place a CFD trade on gold, you don’t own the gold. The actual value of the asset doesn’t need to be considered either.
CFD trades are speculative and are leveraged. Users can turn a profit if they correctly speculate the rise or fall of a financial instrument within a certain period. You can purchase these trades with a small amount of money. In other words, you don’t have to pay the full price of asset speculation. For example, if you want to make a $100,000 CFD trade, you will be able to pay a leveraged price of 100:1, or something similar depending on the broker. This is one of the many advantages of CFD trading.
CFD trading is highly advantageous to small-time Australian investors because users don’t need to outright own an asset. Also, you will receive a fairly large market exposure for a small amount of money. It’s not without its risks either. The speculative nature of the trade means you can lose a lot of money with just a small movement in the market forces.
How to Choose an Australian CFD Broker
Australian investors make CFD traders through a broker. You could use a traditional market broker or hire a broker that specialises in CFD exchanges. As CFDs have become quite popular in Australia, you will find many from the latter category vying for attention.
Above all, check if the broker is Australian Securities and Investments Commission (ASIC) approved. If so, that is a sign that you are about to benefit from legitimate and highly legal practices. It’s highly recommended to work only with brokers who have an Australian Financial Services Licence (AFSL).
The determining factor for choosing a broker for many investors is the commission. Brokers charge commissions as a percentage of the overall trade. Some brokers only charge for stock CFDs, but it’s best to ask for which trades the commissions apply.
CFD Brokers Australia – Fees and Commissions
The commission rate varies between brokers. However, make sure that you are not paying for a commission that is higher than usual.
It’s common for traditional brokers to charge about a 5% commission rate.
In Australia, brokerage charges depending on ASX stocks. Therefore, make sure of what the typical charging rates are before you hire a broker.
Other than the commission, you might want to consider the type of currencies the broker is using. If a trade goes south, some may offer rebates and alternatives investors can benefit from. Don’t forget to check out the broker’s software, as it needs to be easy to use. The trading platform itself must offer all the features you need.
Before starting a CFD trade, educate yourself on the intricacies and technicalities of this type of exchange. Always choose a licensed broker. You may have an advantage by choosing an Australian broker over those based in other countries.