Our CFD Broker Comparison – How to use it
CFD traders in Australia are somewhat spoilt for choice when it comes to choosing a platform. The popularity of derivatives trading has exploded in recent years and it seems every couple of weeks a new broker appears on the scene.
Each CFD trading platform in Australia will offer a similar core service, but there are still significant differences in how each one operates – including the listed markets, the fees charged and the level of customer service offered. Naturally, this means that not every broker is suitable for every would-be trader.
For this reason, here at Wetten, we have put together a comprehensive broker comparison to give you a one-stop reference for all the top platforms currently on the market.
What is CFD trading and how is it different?
Day trading is more popular than ever before, but some of those entering the markets for the first time are unsure of exactly what it is they are dealing with. There’s no denying that the various derivatives and trading conditions can seem complex at first glance, but with a little research things should soon start to make sense.
What is a CFD?
CFD stands for Contract for Difference. Effectively, entering into a CFD pits you against the broker in a zero-sum game, similar to spread betting. The contract involves speculating on the price movement of a given asset without having to actually own the underlying asset. You can go long if you think prices will go up or go short if you think prices will drop. If you predict correctly, then the broker pays you the difference between the opening price and the closing price.
One of the main advantages of trading CFDs is the use of leverage, which allows you to get much more market exposure with a smaller deposit than you would be able to via traditional investing. Leveraging is effectively a loan from the broker that can potentially amplify your gains. For example, let’s say you have $100 on your account and your CFD broker offers you leverage of 1:30. Effectively, this means that you can make trades valued up to $3,000.
CFD trading is arguably one of the most popular means of trading there is. In fact, many people trading stocks or crypto trading in Australia are in fact trading CFDs – they are simply focusing on one asset class.
The Basics of CFD Trading
Here we will look at the basics of CFD trading. However, this is simply an overview and if you are completely new to the markets then you may want to have a read through of our CFD trading for beginners guide, which will go into more depth.
As we’ve noted above, when you trade CFD in Australia you are speculating on the price movement of a given asset. Let’s say, for example, that ABC plc is trading with an asking price of $25 and you believe the price will increase over a given time. You decide to take a CFD position equivalent to 100 shares. In traditional investment, this would cost you $2,500, but a CFD broker will often provide 5% leverage, meaning you can open the same position for just $125.
If ABC plc’s price then increases to $26 and you close the position, the trade would show a profit of $100 – from just a $125 outlay. Of course, this is a simplified transaction and in the real world, you would need to factor in commission fees as well as the spread – the difference between the brokers listed buy price and sell price for ABC plc.
One final note: CFD trading online is usually carried out day-to-day. Whilst it is possible to leave positions open overnight, this usually involves a fee and cancels out many of the advantages of CFD trading – mainly the ability to capitalise on short-term volatility within a market.
5 Expert Tips to Get Started CFD Trading
The intention of our CFD trading review is to give you an overview of the market and provide you with a strong foundation from which to start your trading journey. Of course, trading education is an ongoing process, but the following tips will help get you off to the right start.
Choose the right broker
CFD trading in Australia is big business and there are plenty of brokerage services on the market, each with its own strengths and weaknesses. Choosing the right broker will depend on your individual goals and existing trading experience, but if you’re serious about learning to trade CFD in Australia then its worth taking the time to find the right platform. Your CFD broker should offer access to all the markets and tools you require and reading our CFD trading australia reviews will allow you to identify the platforms that can deliver what you need.
Try a demo account
One of the best ways to get to grips with CFD trading in Australia is by opening a demo account. Many brokers will offer this service, which allows novice traders to gain experience of the markets without risking real capital. Not only do demo accounts allow you to make trades on the real market, but in many cases, you use the same platform as you would when trading live. As such, they provide the perfect training tool for the would-be CFD trader in Australia.
Stick to what you know
The great thing about CFD trading is that it opens up numerous financial markets. However, whilst advanced traders can take advantage of knowing numerous industries, the those new to CFD trading in Australia should focus on perhaps a single market, until they are familiar with the movements and the process involved in CFD trading in general. CFD trading risks are always present, but sticking to what you know will allow you to better apply your trading strategy as well as making the learning curve more manageable.
Leverage is effectively capital borrowed from your broker to invest in your chosen asset. The concept is very common with CFD traders in Australia as it allows them to gain much more market exposure for the same outlay, which effectively amplifies any potential returns.
However, whilst leverage is great for any trader making high volume transactions, it should be remembered that it can also magnify losses. Novice CFD traders should learn how leveraging works and understand risk management before using it in trades.
Have a strategy in place
CFD trading online is all about strategy. Even the most successful CFD traders in Australia will lose some trades, some of the time. But day trading is a numbers game. having a trading plan with well-defined entries, exits, and position size improves your chances of coming out on top overall. CFD trading with no strategy is nothing more than random results, and even if you have some initial success with this, there is no realistic way to maintain it. For novice traders, the first steps in creating a strategy involve setting aside funds, planning your time and starting small.
Choosing the right CFD Trading Platform
There is an abundance of CFD trading platforms in Australia, but you might find some are more suitable for your individual trading goals than others. As such, it’s important to conduct a little research before committing to a particular platform.
Fortunately, this is where Wetten can help you out. Each CFD trading review we conduct sees our experts taking an in-depth look at the top platforms currently on the market. We look at everything from a broker’s trading platform to its customer service team. We also give a breakdown of the fees, spreads and charges associated with each operator.
Choosing the best CFD trading platform in Australia will largely come down to your personal preferences, but with a reliable CFD trading review, it is much easier to match a platform’s key features with your trading requirements.
Quick Facts About CFD Trading
Learning about CFD trading in Australia can seem overwhelming to those new to the financial markets – but with plenty of research and patience, things will soon start to make sense. However, what follows are answers to some of the most common questions new traders have when getting started.
How do I get started CFD trading in Australia?
Question number one is how to actually get started. After some preliminary research about what CFD trading, you’ll need to find a suitable broker. As you can see from our comparison, there are plenty to choose from and with most platforms opening an account takes just a few minutes. Most operators will also offer educational resources to help you get started and some also allow you to try the markets using a demo account.
What fees will I be charged to trade CFDs in Australia?
You will find that CFD trading platforms are often divided between those that charge a fee for trading and those that are commission-free. However, whilst choosing the commission-free provider may seem like an obvious choice, things aren’t quite that simple. Platforms that do not charge a commission for trading usually have wider spreads – the difference between the buy and sell prices quoted for an asset. A wider spread means you need your trades to climb higher before you will be in profit.
Can I trade other assets with a CFD broker?
Whilst we suggest that new traders stick to a small selection of asset classes to begin with, you’ll find that most trading platforms offer trading in numerous financial instruments. With the exception of forex trading brokers, which sometimes focus exclusively on international currencies, most brokers will offer some choice. However, to the novice investor, CFD trading is often indistinguishable from other derivatives, such as options trading in Australia. It is therefore essential you understand the finer details before getting involved in other trading instruments.
How do I come up with a CFD strategy?
A trading strategy can be as simple as coming up with a weekly budget, allotting time to play the markets or choosing a small selection of assets to trade. However, those looking for a more professional-level strategy might want to start researching things like scalping, fading and daily pivots. You can also explore social trading options, which allows you to copy the strategies used by some of the most successful day traders in the world.
Is it expensive to start trading CFDs?
One of the great things about CFD trading is that it allows you to gain exposure to numerous financial markets with a relatively small investment. In theory, there is no minimum value for trading CFDs. However, it should be noted that smaller traders are very rarely cost-effective once charges and fees have been factored in and most platforms will have a minimum amount that you can open an account with, which will vary from one provider to another.
Is CFD trading safe?
Many would-be traders have concerns over the security and legality of CFDs in general. Fortunately, CFD trading in Australia is regulated by the Australian Securities and Investment Commission, meaning any broker operating within the jurisdiction must meet with strict rules and parameters. Assuming your broker has the necessary regulatory credentials, you can rest assured CFD trading is completely above board.
Where can I find more information on CFD trading?
Many CFD traders in Australia start their careers as complete novices with regards to investment. Thankfully, there are numerous resources available online offering information ranging from beginner guides to in-depth technical analyses. Here at Wetten, we aim to provide a thorough overview of the financial markets and what exactly is involved with trading CFDs. In addition, our range of broker reviews will help you decide on which platform to get started with.
The next steps…
Learning to trade CFDs is an ongoing process and the changing nature of the financial markets means that you never stop learning. With the explosion of CFD trading online, there have also been numerous technological developments to facilitate day trading – including the use of artificial intelligence and social trading platforms.
To get your CFD trading journey off to the best possible start, your next steps should involve doing some careful research – invest time in choosing the right broker, make sure you understand the differences between asset classes and the fundamentals of day trading in general.
It’s also a good idea to start thinking about your basic trading strategy. This might include budgeting and setting funds aside, or coming up with a schedule of when you will carry out your trading activity.
Remember there is no rush – it’s best to start off small and learn the ropes before committing more funds and exposing yourself to unnecessary risks. If done right, trading can provide a lucrative income, but it is a skill that takes time to build.
Conclusion – Getting started with CFD trading
CFD trading is one of the most accessible forms of day trading there is. The nature of CFDs means it’s possible to speculate on price movement in either direction and the plethora of brokers on the market means it has never been easier to get involved. Another great thing about CFD trading is that it is open to all levels of investor, with a much lower entry cost than some traditional assets, such as bonds or commodities.
Choosing the right broker can seem like a big decision, but it should be remembered that you do not have to commit to one provider. More often than not, there are no onboarding fees and many top CFD brokers will allow you to try out their trading platform with a demo account. Trying out a handful of brokers is a great way of finding out exactly what you are looking for in a platform.
Then, of course, you have out expert reviews here at Wetten. Here, you have a one-stop resource for everything related to CFD trading and CFD brokers. What’s more, for those looking to branch out, our site also features numerous guides and articles on every other aspect of trading, including forex trading for beginners, futures trading brokers in Australia or information on the latest crypto exchanges.
CFD Trading FAQ
💲 Where can I start trading CFDs in Australia?
Trading CFDs has become extremely popular in recent years. Whereas day trading was once the preserve of market experts, with something of a boiler-room reputation, it has now become so accessible that many people who have never traded or invested before are supplementing their regular income by getting into CFD trading. If you’re interested in getting involved, but don’t know where to start, then our guide to CFD trading in Australia will tell you everything you need to know about finding an online broker in Australia and opening an account, as well as a few handy tips for beginners.
☝🏻 Is CFD trading legal in Australia?
Anyone entering the world of CFD trading for the first time may have questions about the legality of the activity. This is a sensible consideration, as there are different regulations and tax implications from country to country, so it’s important to be aware of what the law is. CFD trading in Australia is regulated by the Australian Securities and Investment Commission. This, of course, offers a certain seal of approval. All of our CFD broker reviews take a close look at a given platform’s regulatory credentials, to give you complete peace of mind that they are operating within the boundaries of Australian trading laws.
🤔 How do I learn to trade CFDs?
Learning the process involved in trading CFDs is actually very simple. In fact, having read through one or two of our CFD trading reviews, you’ll probably feel more than confident that you can get started right away. However, trading education should be an ongoing process – information is everything when it comes to the financial markets. One of the best ways to get started is by finding yourself a reputable CFD broker and learning what’s involved in making trades. This is where our CFD broker comparison can be of real benefit as you can quickly get an overview of the top operators on the market.
❓ What are CFDs?
CFD is an initialism for contract for difference, which is a form of derivative trading. CFDs represent a great way for investors of every level to gain exposure to numerous financial markets and the abundance of online CFD brokers means that the market has never been so accessible. If you’re interested in finding out more, here at Wetten we have numerous articles and trading for beginners guides related to every aspect of CFD trading and as such, provide a one-stop resource for you to learn all you need to know about what CFDs are and how to go about trading them.
🧳 How much does it cost to trade CFDs in Australia?
Despite many CFD brokers advertising their services as ‘commission-free’, there are inevitable costs associated with any kind of financial transaction. Generally, if a platform is not charging commission, it will have a wider spread than fee-charging competitors. Aside from this, Fees and charges will vary from one provider to another, but you should be able to find a full breakdown of costs in the terms and conditions. Alternatively, feel free to check out our CFD broker reviews, where we take an in-depth look at each platform’s fee structure.