Summary: Contracts for Differences (CFD) trading has gained a lot of traction among Australian investors seeking an accessible approach to participating in the financial market. Australians interested in CFD trading can easily get started by creating an account with one of the best CFD brokers in Australia, such as Plus500.
Recommended Multi-asset Broker for Online CFD Trading
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Reliable & Regulated by CySEC (#250/14) - Plus500 Ltd is a FTSE 250 company listed on the London Stock Exchange
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Wide range of instruments - CFDs on stocks, crypto, forex, commodities, ETFs, and more
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Low cost investing - No commissions and tight spreads.
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Transparent pricing on overnight funding, currency conversion fees, guaranteed stop orders, and inactivity fees.
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Advanced platform - Top notch analytical tools, real-time quotes, fast order execution, secure withdrawals
About CFDs
What are CFDs?
Since CFD trading is all about prediction accuracy, traders have the chance to make profits no matter whether the market prices are going up or down, provided they can figure out how the prices are going to behave. This, therefore, makes CFD trading a solid choice for investors in search of versatile and readily available trading prospects.
Where to trade CFDs in Australia
There are several reputable CFD brokers available in Australia, all regulated by the Australian Securities and Investment Commission (ASIC). Although alike in principle, these platforms all differ in fine detail, so you will have to consider several factors when comparing and contrasting them. Among the most important things to consider are:
- Spreads: Spreads are the difference in price between the bid and ask prices, that is, between the highest price the market is willing to pay and the lowest price at which it is willing to sell the asset. Lower spreads indicate more competitive pricing and reduced trading costs;
- Commissions and fees: Some brokers offer commission-free trading. However, others may charge a brokerage fee for accessing specific markets or asset classes;
- Leverage: Leverage allows traders to work with a larger position in the market compared to their capital, amplifying both their potential gains and losses. When you use leverage, you borrow funds from the broker to increase your exposure to an asset;
- Margin: Margin is the amount of money demanded by the broker to open and maintain a leveraged CFD position. Essentially, it acts as a security deposit to cover potential losses.
Some of the best CFD brokers in Australia include:
- Plus500;
- eToro;
- Interactive Brokers;
- Pepperstone;
- IG.
Note
1. Plus500
Recommended Multi-asset Broker for Online CFD Trading
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Reliable & Regulated by CySEC (#250/14) - Plus500 Ltd is a FTSE 250 company listed on the London Stock Exchange
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Wide range of instruments - CFDs on stocks, crypto, forex, commodities, ETFs, and more
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Low cost investing - No commissions and tight spreads.
-
Transparent pricing on overnight funding, currency conversion fees, guaranteed stop orders, and inactivity fees.
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Advanced platform - Top notch analytical tools, real-time quotes, fast order execution, secure withdrawals
Our go-to broker, Plus500, is one of the leading CFD trading platforms in Australia and a broker you can directly invest in on the London Stock Exchange (LSE). It features over 2,000 CFD financial instruments, including Forex pairs, cryptocurrencies, commodities, and stocks. The platform is ASIC-regulated and provides negative balance protection for added security.
Moreover, Plus500 features a user-friendly mobile app, allows users to create free demo accounts to familiarize themselves with the platform, and offers completely free withdrawals. Additionally, the it provides competitive spreads and no commission fees.
Pros and cons
Pros
- No deposit fees;
- A large number of markets;
- Publicly traded and well-established platform.
Cons
- No third-party platform support;
- Higher account minimums.
2. eToro
Highly Rated Stock Trading & Investing Platform
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Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
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0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
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Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
eToro is a global CFD trading platform known for its social and copy trading features that allow traders to follow and mimic the trading moves of more successful investors on the platform. This makes eToro a solid choice for beginners.
Moreover, the platform gives users access to a large number of markets, including cryptocurrencies, stocks, and Forex pairs. eToro requires a minimum deposit of $10 and comes with a user-friendly mobile app for trading on the go.
Pros and cons
Pros
- Copy trading;
- Low rates;
- User-friendly platform;
- Low account minimums.
Cons
- Withdrawal fees on non-USD payments;
- Just account base currency.
Disclaimer: 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. This content is not intended for US users. eToro USA LLC does not offer CFDs, only real Crypto assets, Stocks and ETFs are available.
3. Interactive Brokers
Best Platform for Worldwide Stock Trading & Investing
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Highly trusted multi-asset broker with clients in over 200 countries
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Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)
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Low commissions starting at $0 with no platform fees or account minimums
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Easily fund your account and trade assets in 26 currencies
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IBKR pays up to 4.58% interest on cash balances of $10k or more
Interactive Brokers is one of the largest CFD brokers, boasting over 8,500 CFD markets, a number of order type configurations, and the availability of advanced third-party trading tools. Moreover, thanks to being listed on NASDAQ under the ticker symbol IBKR and regulated in six tier-1 jurisdictions, Interactive Brokers represents a secure and diverse trading environment.
Pros and cons
Pros
- Low fees and commission-free trading;
- A lot of research tools;
- Supports a solid range of currencies.
Cons
- The platform can be hard to navigate;
- Some features are not available to all account types.
4. Pepperstone
Pepperstone is an Australian-based CFD trading broker known for low fees and competitive spreads. It offers a range of instruments, such as forex pairs, cryptocurrencies, commodities, and indices. The platform supports popular trading platforms MetaTrader 4, MetaTrader 5, and cTrader, providing traders with various options. Of course, Pepperstone is also regulated by the domestic ASIC.
Pros and cons
Pros
- Fast order execution;
- Free deposits and withdrawals;
- No inactivity fees.
Cons
- Customer support not available 24/7;
- Few analytical tools.
5. IG
IG is a prominent British CFD trading platform that has been available in Australia for more than two decades. It features over 19,000 trading instruments, including Forex pairs, stocks, and commodities. The platform has a strong customer support network and a good selection of educational materials, as well as an ASIC license. Moreover, it offers a solid range of market analysis tools, helping traders make informed decisions and adapt their trading strategies.
Pros and cons
Pros
- 0% commission trades on all non-stock CFD markets;
- Third-party platform support.
Cons
- US clients have access to Forex CFDs only.
Pros and cons of trading CFDs in Australia
Pros
- CFD trading can expand your trading horizons without forcing you to own any underlying assets;
- You can take both long and short positions to profit from both falling and rising asset prices;
- CFDs can act as a hedge, providing a form of insurance against market volatility;
- Brokers like Plus500 offer demo accounts, so getting the hang of it is doable for free;
- CFD contracts often lack fixed expiry dates, meaning they are a flexible trading option.
Cons
- CFDs trading can take some time to learn, and even with a good grasp of the theory, you might still lose due to the unpredictable nature of the market and price volatility;
- If you leverage, losses suffered during CFD trading can exceed your starting capital;
- In CFD trading, you don’t possess the underlying asset.
What to avoid when trading CFDs
When trading CFDs , there are several common mistakes that traders should avoid to enhance their chances of success and protect their capital:
- Lack of trading plan: Failing to create a defined trading plan with clear entry and exit strategies, risk management rules, and specific goals can lead to impulsive decisions;
- Overleveraging: Using excessive leverage can amplify both profits and losses. It’s essential to use leverage prudently and consider the potential impact on your account;
- Ignoring risk management: Neglecting risk management principles, such as setting stop-loss orders and position sizing, can result in significant losses. Always protect your capital by managing risk effectively;
- Chasing losses: Trying to recover losses by increasing trade sizes or taking on higher risks can lead to a downward spiral of losses. It’s crucial to accept losses as a part of trading and not let them cloud your judgment;
- Lack of diversification: Concentrating all your trades on a single asset or market increases risk. Diversifying your CFD portfolio can help spread risk and reduce exposure to individual assets.
Conclusion
Australia offers a dynamic CFD trading landscape, and picking the right broker is the crucial first step for any trader looking to explore it. In this article, we’ve explored the 5 best CFD brokers in Australia, each ticking the most relevant boxes, including competitive spreads, legal licenses, and financial instrument availability.
Note, however, that successful CFD trades depend on more than just a good broker selection. On the contrary, CFD trading is risky, and you should never invest before you’ve done your own research, allocated a portion of your funds to a safety fund, and made sure you can afford to lose your starting capital.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about CFD trading in Australia
What is the best CFD broker in Australia?
When searching for a CFD broker in Australia, you should consider factors such as the range of available instruments, fees and commissions, regulatory status (i.e., whether the platform holds licenses issued by reputable financial authorities such as the Australian Securities and Investments Commission), customer support, etc. Some of the best CFD brokers in Australia include Plus500, eToro, Interactive Brokers, Pepperstone, and IG.
Is trading CFDs legal in Australia?
Yes, CFD trading is legal in Australia, and CFD brokers operating in Australia must be regulated by the Australian Securities and Investments Commission (ASIC).
What are the risks associated with CFD trading?
All investments are inherently risky. However, CFD trading can be especially risky due to leverage. Additionally, market volatility and sudden price movements can lead to quick losses, so it’s important to develop a solid trading strategy.
Can I trade crypto CFDs in Australia?
Yes, Australian CFD brokers, such as Plus500, offer cryptocurrency CFD trading.
What are the risks associated with trading CFDs, and how can a reputable broker help mitigate them?
The risks associated with CFD trading in Australia primarily include the potential for significant losses due to leveraged positions, market volatility, and the possibility of losing more than your initial investment. Reputable CFD brokers help mitigate these risks by implementing risk management tools, providing educational resources, and adhering to regulatory requirements, ensuring a safer trading environment for their clients.
Recommended Multi-asset Broker for Online CFD Trading
-
Reliable & Regulated by CySEC (#250/14) - Plus500 Ltd is a FTSE 250 company listed on the London Stock Exchange
-
Wide range of instruments - CFDs on stocks, crypto, forex, commodities, ETFs, and more
-
Low cost investing - No commissions and tight spreads.
-
Transparent pricing on overnight funding, currency conversion fees, guaranteed stop orders, and inactivity fees.
-
Advanced platform - Top notch analytical tools, real-time quotes, fast order execution, secure withdrawals
