Is CFD Trading Legal in Australia?
Yes, it’s totally legal! Australia is one of those countries where CFD were adapted early, and today they have become very popular in the country. Australian commodity traders are very savvy, and among the first to figure out correlation patterns. There’s more explore when for example you have gold, offered in CFD form, valued in Australian dollars. If your broker offers that you can investigate specific correlations existing between this market and various forex pairs, and against gold priced in other currencies, provided by different CFD brokers. Most of these correlations are not easy to detect, because most charting software doesn’t even have these charts, whereas the brokers who offer these markets, also offer charts. Australian traders were the first to figure out correlations in the gold market, by comparing one CFD broker to another. So they are by far, very savvy and competent traders.
CFD trading today is focused on three major types of markets, where most money can be made, these are:
- Specific currencies
Cryptomarkets are Important, CFD Make it Easier and Safer to Trade Them!
CFDs are now valuable for cryptocurrency trading, even at very low leverage, because CFD brokers are much safer to trade through, as opposed to online crypto exchanges where the volume of clients and the load of work causes long delays in customer support. Moreover, concerns over the possibility of hack attacks, force crypto investors to limit their investments to just $500 per exchange. That’s a huge limitation! With CFDs, there are no hack attack risks, no delays in customer support, and no such problems. CFD traders can invest many $1000s in any new hot cryptocurrency, without worries. The only worry used to be the high leverage, but you can invest in cryptocurrencies through a low leverage CFD account, where you can get all the benefits of crypto trading action, without the risks. And this is possible through the superior liquidity of CFDs, which already are proven to be superior to classic stock dealing and other forms of classic trading.
How to make money on CFD trading in Australia
Most Australian traders are savvy commodity traders and investors, who already understood share and commodity trading, even before the advent of CFDs. Australia is a big gold exporter, and even on gold alone is a commodity which has got the attention of many commodity traders. These traders will also trade gold mining stocks from all countries, as well as various currency pairs which are greatly impacted by the value of gold. The AUDUSD exchange rate itself is greatly, almost 90% impacted by the trend of gold.
All you need to make money trading CFDs, while living in Australia, is a good CFD broker, and enough funds to finance some trading strategy. The trading account can be opened in various currencies that the broker may offer. However the stocks and commodities offered will be listed in their original currency. So US stocks will be listed in US dollars, gold and crude oil also in US dollars, whereas British stocks will be listed in British pounds. This is how CFD trading differs, and the trader needs to take into account the fluctuating exchange rates. Especially when holding trades for many days at a time. Other than that, you will have no difficulty in trading CFDs, and you will see the superior liquidity that CFDs provide.
In reality, if you really know what you are doing, and no matter what market you are trading, you can ignore asset currency fluctuation against the Australian dollar. Because in the majority of cases it will be so small, that it won’t really matter. What matters is to get the trend of the asset right, so as to win, and to win without excessive drawdown. To really become a good trader, I believe you have to find your comfort zone and choose a strategy that first your personality. I advise you not to just copy someone else’s strategy, just like that, because you will lack motivation and judgmental ability. Motivated trading requires 4 things:
- Find your comfort zone
- Find your market
- Motivation to trade at least slightly different to other traders
- Ability to judge opinions, challenge and disagree with other traders
Simple ‘copy and paste’ strategies will not really work. Even if you use social trading, and copy other traders’ signals, you still have to think hard and select 2-4 different signal providers. And you have to make the selection based on what markets these providers trade, how frequent the traders are and a whole lot more factors. So be bold and dare to differ from anybody else out there, because third party opinion can be misleading. Good wise CFD traders are original thinkers, as good as the inventors of CFDs themselves.
I do believe that gold and crude oil are two great commodities to start trading. You can directly extend your trading strategy to AUDUSD and USDCAD respectively, based on these two commodities alone. Moreover, these two commodities form a solid base for making market predictions, in ways that small stocks and stock indices cannot offer. Once you start winning on these, you can choose to move onto trading stocks, or other forex pairs.
You can also trade EURGBP, or EURJPY, as two currency pairs that are independent of the US dollar, this is separate strategy where swing trading theory and classic indicators will work much better, as opposed to say EURUSD.
List of CFD Brokers in Australia
There many good CFD brokers in Australia today, each comes with minor differences, so as to better fit the needs on one particular type of trader. But in general they all can be used with ease and efficiency. Some of the best are:
eToro was established in 2006, it’s a fully regulated broker and licensed to operate in Australia. it offers CFD markets, on a wide range of assets, including several popular cryptocurrencies now. This is a CFD broker which is very suitable for beginners, because the platform is designed to be simple and easy to use. If you are new to trading and cannot handle MetaTrader4 or other complex platforms, then eToro’s platform is perfect for you as a beginner. But advanced traders also use eToro, because the platform offers a lot of information and sophisticated social trading tools. It also offers swap free trading accounts, and minimum deposit is just $50, making it seriously easy for beginners to test their trading skills.
Markets.com was established in 2008, and is regulated both by the CySEC in Cyprus and according to the MiFID directive in the EU. It is also regulated by the FSB in south Africa, and it is licensed to operate in many countries, including Australia. It offers impressive range of markets, all classic markets and more than 10 cryptocurrencies, all available for CFD trading. Their platforms offer a wide range of educational and market analysis tools, so that the trader will always find some new trading idea, every day. One of their tools is called Trading Central, and offers insightful analysis on popular markets.
AvaTrade was established in 2006, it is fully regulated in the UK and in Cyprus, and licensed to operate in many more countries, including Australia. It offers all the classic assets you can imagine for pure CFD trading, as well as spot forex, and several CFD markets on cryptocurrencies, including even Dash, Monero and other coins. It’s a good broker which offers very strong educational tools, it actually has two levels of education. It also offers the popular MetaTrader4 platform, as well as other platforms, and even a web based version of MetaTrader4 for busy traders who may want to access their MetaTrader4 from another device. This web based MetaTrader4 is quite unique and it was missing in the industry.
24option was established in 2010, in Cyprus. It’s now a regulated and licensed broker which offers both binary option and CFD trading. It offers a very good trading platform, many classic assets to trade, and even free trading signals for traders who lack trading skills. This particular broker is good for strategies utilizing both CFDs and binary options at the same time, and is well worth the attention of commodity CFD traders.
Plus500 was established in 2008, it’s already long regulated in Europe and Cyprus, and separately regulated in Australia by the the Australian Securities and Investments Commission. Plus500 offers full range of classic assets for CFD trading, plus option products, and now it offers an impressive range of the hottest cryptocurrencies too. It offers Bitcoin, Bitcoin Cash, Bitcoin Gold, Ethereum, Litecoin, Neo, Ripple and Monero. It also offers guaranteed stops on all CFD trades, which is also quite impressive.