The Growth of CFD Trading in Australia

Australia has been providing traders the opportunity to trade contracts for a difference (CFD) since 2003 and today it has become one the fastest growing financial products.

By 2007, a number of CFD providers entered the market in Australia due to the popularity of CFD trading.

According to a report by research firm, Investment Trends, the number of active CFD traders in Australia in 2015 were 49,000.

Then in 2016, the number dropped to 37,000 and climbed to 39,000 in 2016.

As you can see…

There was a drop in the number of active users between 2015 till 2016

This was firstly because of market turbulence, which likely drove traders the sidelines because of the market volatility.

The other factor was the focus of ASIC watchdog regulators who stepped up regulations which forced many of the foreign providers to stop providing their services in the Australian market.

That’s not all…

Traders found that CFDs gave them access to much higher priced shares that were previously unaffordable and were affordable only for wealthy long-term investors who bought dividends for their growth potential.

Here’s an interesting figure:

In 2005, there were only 9,000 CFD traders.

You can understand from this number the huge growth Australia has undergone in the CFD’s market attracting big businesses.

Now, according to the most recent figures of Investment Trends, the number of active investors have climbed from 9,000 in 2005 to 32,000 in 2009.

And it continued its climb in 2010 to 39,000. In 2011, there was a total of 41,000 traders and it continues to rise. Today, the Australian CFD market is valued at around $350 million.

Today there is a turnover in CFD shares and indices worth around $10 billion a month with 35% of their business in currency CFDs, 25% represent Index CFDs and commodity CFDs have overtaken equities.

The renewed interest in trading CFDs has attracted the return of CFD companies. Presently, there are around 35 CFD companies operating in Australia including the world’s leading social networking provider eToro together with the original players, namely IG Markets and CMC Markets having the lion’s share of the market.

The bottom line is that…

Australian traders have discovered that they can enjoy CFDs trading on all the major international markets of indices, currencies and commodities outside of an exchange.

The lure of CFD trading is that with a little equity, investors can buy on large margins (depending on the contract with your broker). They profit (or lose) on the difference of the buy and sell price.

Australia Ranks No.1

Today, approximately 35% of CFD volumes account for the Australian Securities Exchange (ASX) turnover and is the most common financial product for private traders in Australia.

They have the largest per capita share ownership worldwide.

Before the Australian Securities Exchange introduced exchange trade CFD’s in 2007, CFDs were quoted only with the market maker model or DMA.

Although exchange-traded CFDs has greater transparency and conformity, it still does not give traders access to a range of assets that they can get from brokers.

There is a limited range available on the exchange and it is more expensive to trade than from market makers or direct market access.

Traders are charged, service fees, brokerage fees with costs such as the clearinghouse and exchange making it an expensive exercise.

Traders in Australia seems to prefer their over the counter CFD brokers.

However, trading CFD’s with an online broker you have to make sure that the broker is able to take on liabilities that he can meet, there is the risk of counterparty.

But then again it should not be an issue, as today there is such a large selection of brokers to choose from in Australia and if the broker is regulated and authorized by the Australian Securities Exchange then they have a clearinghouse to protect your funds.

The good news is…

The world’s leading social networking provider eToro is authorized by the Australian Securities and Investments Commission, the United Kingdom and Europe, making it safe to trade.

They have a very unique and innovative platform that allows traders to copy other successful trader’s portfolios where you can also interact, share trading strategies and comment via LinkedIn, Facebook and other social networks.

Their platform has a huge variety of trading instruments to choose from, 1,000 assets which include stocks, commodities, indices, currencies and even popular cryptocurrencies like Bitcoin, Ether, Bitcoin Cash, Ripple, Dash, Litecoin, Ethereum Classic, Stellar Lumens and NEO.

What’s more, on their eToroX exchange you have more options to trade with, the eToro Gold (GOLDX) and eToro Silver (SL VX) commodity-stablecoins.

In addition, they have added 2 fiat-stablecoins: the eToro Ruble (RUBX) and eToro Yuan (CNYX) – and an addition of 15 fiat pairs to its crypto exchange.

They offer some really amazing perks:

  • A free unlimited demo account with virtual money
  • Highly advanced trading tools and graphs
  • Leverage of up to 400:1
  • Educational resources with videos, webinars, e-books and more
  • Trading on your mobile or android device which comes with alerts
  • Highly competitive
  • Lots more!

Now for the kicker!

eToro has dropped their low minimum deposit in Australia to just AU$50

Bottom line?

Australian speculators have come a long way from wagering in penny shares to CFDs making them today one of the fastest growing financial products ever.

The first thing to do is…

Trading at eToro, you can reach all your financial goals with their initiative and innovative platform and dedicated support team to assist you along the way!

Get Started with eToro!

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results.

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.


We will be happy to hear your thoughts

      Leave a reply