STOCKHOLM, June 10, 2021 / PRNewswire / – Online CFD Trading in Australia has grown similarly to many other online services in 2020, bringing convenience and accessibility to retail merchants. The number of active traders increased by 20% year on year to 710,000 and the trading volume increased by around 100% in the first quarter of 2021. The new peak is mainly due to the rapid recovery from the decline caused by the COVID fears and the global trend of online commerce on social media due to memes and cryptocurrency stocks.
The CFD trading market in Australia
CFDs (Contracts For Difference) have grown in popularity over the past decade with an early rise in CFD retailing in the UK. Online players have now expanded to Australia, providing a new, accessible way to invest globally with leverage.
The CFDs or “contracts for difference” markets have been around since the 1980s, gaining popularity in the UK in 1999, and finally established themselves in the Australian markets around 2002. CFD trading is different from traditional stocks in that respect. meaning that it allows investors to earn money. takes advantage of speculative price predictions on the underlying assets without actually owning them.
CFD trading is an inexpensive way to access trading markets, stocks, forex, ETFs, and crypto while enjoying maximum financial leverage that was once only available to professionals. Some online trading platforms even allow investors to start trading CFDs with as little as $ 10 (USD).
Fastest Growing Australian CFD Trading Platforms 2021
Due to the structure of australia financial market, CFD trading platforms must be properly licensed and regulated before users are invited to trade on the platforms. That said, here are some of our top picks.
Skilling is a new CFD trading platform that offers a range of financial instruments to global traders. It is owned by Scandinavians and is regulated in Seychelles. With over 800 different instruments available for trading, the company provides a robust platform for Forex and CFD trading.
A leading CFD trading platform with over 317,000 clients worldwide. They offer a simple trading platform with +2000 CFD markets to trade. They are duly regulated by ASIC, FCA, CySEC and MAS, covering four different countries including UK and Singapore.
A CFD trading platform owned by First Prudential Markets Pty, it is a properly regulated online Forex and CFD platform. AFSL number is 286354 and they are located at Level 5, Exchange House, 10 Bridge Street, Sydney NSW.
IC Markets was founded in 2007 under AFSL number 335692. They are available on the MetaTrader 4 platform as well as on the MetaTrader 5 and cTrader platforms. IC Markets has a high leverage ratio, low spreads, and a useful educational resource center for beginners.
FXCC has been around for over a decade and offers commission-free transactions. They have a large educational resource center, which helps newbies to start trading quickly. They allow users to choose from over 100 markets ranging from Forex to CFDs and Crypto trading.
CFD trading in Australia – A growing retail market
2007 was the world’s first peak in CFD trading. The rapid adoption of this new derivative of equity trading has seen many large CFD brokers establish new branches, especially in Australia. These huge brokers include IG Markets and CMC Markets, to name a few.
According to industry estimates, the number of active CFD traders in Australia currently stands at 710,000. In contrast, there were only 9,000 active CFD traders in 2005, which is more than 4 times the growth since its inception in the country.
Even today, CFD trading is still very popular in Australia. It is even believed that a third of the trades seen by ASX come from CFDs.
There are over a thousand different CFD assets on several brokerages. The choices of underlying assets range from a number of cryptocurrencies, indices, currencies and stocks.
ASX exchange traded CFDs do not seem to resonate well with Australian traders. The reason is that traders love the freedom they enjoy with direct market brokers. The trading model is also much more expensive, which clearly goes against the essence of CFDs.
Nonetheless, ASIC’s strict regulations mean these costly trade reductions at every level.
These regulations include:
1. CFD traders are protected against negative balances. CFD brokers are required to stop losses when the trader’s losses exceed his account balance.
2. CFD trading platforms are prohibited from offering promotional gifts to retail investors.
CFD Trading Market – Key Drivers and Trends for 2021
Know the Risks – CFD trading involves the use of leverage. When incorporating leverage into a trading strategy, the use of effective risk management systems is vital.
The economic fallout from the COVID-19 pandemic continues. As the recent increase in the number of Indian cases demonstrates, there can be more impacts at any time.
The crypto boom:
Most of the major cryptos hit all-time highs in 2021, only to see a massive sell-off materialize in late spring. This volatility offers traders many opportunities for profit.
Bonds remain expensive:
Despite record borrowing from major governments, central bank intervention kept bond yields at historically low levels. While not at all-time highs, interest rates are low by historical standards.
Choose a broker:
Choosing the right broker for a CFD trading strategy means fully understanding their product offerings. Many brokers offer similar products. Before deciding which broker to use, a trader should fully understand the products available and the terms offered by the broker.
Macro view for Australian CFD traders in H2 2021
Australian markets remain heavily dependent on global growth, and the relationship between Australia and China.
While the surge in commodity prices in 2021 is benefiting many Australian resource companies, the difficult relationship between China and Australia could prevent Australian equities from fully participating in the favorable commodity price environment.
Offshore markets have been vibrant in 2021, as major central banks continue to support asset prices with accommodative monetary policy, and global stocks hover around record highs. Either way, stocks are expensive. However, there are few other assets in which investors can deploy capital.
The cryptographic question
Once a digital novelty, cryptocurrency like Bitcoin has reached new highs in 2021. Easy monetary policies from central banks can help cryptos hit record prices. Despite widespread interest in cryptos by large investment entities, the crypto market remains volatile.
There are many ways to trade the crypto market. Many CFD brokers offer crypto products to their clients, but it is important to be aware of the costs associated with owning these instruments. Considering the level of price movements in the crypto markets, CFDs are a popular option for trading cryptos over shorter time frames.
Investors interested in buy and hold strategies in the crypto markets usually hold the tokens directly, or through the futures market, long term CFD trading can be more expensive than other options.
Low rates and large government borrowing
It is impossible to ignore the relationship between the response to COVID-19 and the central bank’s accommodative policy. The US government ran a record deficit of $ 3.1 trillion in 2020 and could exceed this borrowing level in 2021.
Despite these borrowing levels, interest rates remain at historically low levels and the US dollar is still the dominant reserve currency in the world. While debt markets ignore massive deficits, commodities markets have been under bids in the first half of 2021.
China recently released one of its highest PPI readings in modern history and introduced de facto price controls. Western countries are already heavily indebted and have no choice but to continue issuing new debt and spending to keep their economies afloat.
New imbalances and new opportunities
The past three decades have been characterized by low inflation and rising asset prices. This trend could be coming to an end and stagflation could be the next major trend in global markets. As stock prices are expected to continue on an upward trajectory, we may see a new FOREX market emerge as countries attempt to control inflation through new monetary policy.
CFDs offer Australian investors an inexpensive way to enter the FOREX market and profit from what could become a new era of currency volatility. China is already working on the launch of a central bank digital currency, which would allow the People’s Bank to China (PBoC) more direct control mechanisms over the country’s monetary policy.
Swift central bank interventions are likely to cause large swings in exchange rates, as global FOREX traders attempt to digest a new market where central banks can not only control interest rates, but also directly control the rate. value for money at the retail level.
Trading Authority is a privately held financial services industry research firm based in London, United Kingdom. We deliver independent and in-depth research into the behaviors, preferences and needs of retail investors and intermediaries for the financial services companies that serve them through Australia, Singapore, Hong Kong, France, Germany, Spain, and the United Kingdom.
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Research and markets
Marc Adams, senior
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