CFD Trading In Australia 2024 (2024)

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CFD trading in Australia began in 2003. Now approximately one-third of trades on the Australian Securities Exchange (ASX) are born from CFD products. But before you start CFD trading in Australia, read our reviews of the best platforms and CFD brokerage firms 2024. We’ll also cover any tax and legal implications.

Best CFD Brokers in Australia

After reviewing hundreds of CFD brokers, our team found that these 3 offer best trading conditions for Australian traders:

#1

Vantage

CFD Trading In Australia 2024 (2)

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Bonus

50% Welcome Deposit Bonus, earn redeemable rewards in the Vantage Rewards scheme

#2

AvaTrade

CFD Trading In Australia 2024 (3)

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#3

IC Markets

CFD Trading In Australia 2024 (4)

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See all CFD Brokers in Australia

What Is CFD Trading?

Contract for difference (CFD) trading is about trying to profit from the movements in the price of an underlying asset. But crucially, traders never own the underlying asset. And where derivatives usually have a set expiry, CFDs do not. So Aussie traders have the flexibility to decide when to take a profit or loss.

Traditionally many derivatives were only available to institutions in Australia. Now individuals too can benefit from access to these markets with a straightforward instrument that reduces complexity and trading costs.

Assets

CFD trading in Australia gains you access to a range of asset types:

  • Stocks and shares
  • Government bonds
  • Commodities
  • Futures
  • Forex
  • ETFs

Most popular is the online share market, currency pairs, and commodities like gold. But the market in Australia is growing. Now also available are CFDs on cryptocurrency, such as Bitcoin, plus large events, including national elections.

How To Trade

To get started CFD trading in Australia:

  • Pick a market – Do you want exposure to the forex or stock market, or perhaps cryptocurrencies? Maybe you’ve spotted an opportunity in a major global market, such as the US or UK?
  • Buy or sell – Buy if you think price is on the up and sell if you think it’s going to fall. Bring up the trading ticket in your platform to view prices.
  • Choose a trade size – One CFD is the same as one physical share, while on other instruments it varies. Make sure you think about how much you can afford.
  • Use stop and limit orders– A fundamental part of your risk management strategy, a stop-loss order will protect your position if price goes against you by automatically exiting the trade. A limit order will lock in profits once they reach a certain level.
  • Close the trade – Keep an eye on your screen for changes to any profit or loss. Exit the trade when you’re ready to collect a profit or realise a loss. Any returns or losses should be reflected in your account balance.

Platforms

The best CFD trading platforms in Australia will change depending on who you ask. Many websites use the industry popular MetaTrader (MT4) or MetaTrader 5 (MT5) systems. But beginners may find these complex. Some companies in Australia also promote their own platform. IG, for example, has its proprietary software that allows for customisation. It’s also easy to pick up so suitable for beginners. Mobile traders should check the platform will be available through an iOS or Android app.

For those undecided about which online platform to go for, open a demo account. They’re great for fine-tuning strategies and exploring a platform – trialing signals, charts and any other analysis tools available.

Brokerages

Finding the best CFD brokerage in Australia will depend on individual needs. Still, Aussie traders should consider several factors. Firstly, look for low spreads and transparent fees. Generous leverage and margin requirements will also help you maximise your position size. Check you can open an account with AUD as your base currency too.

The range of markets available is important. And do they provide free access to ASX live data or is there an additional charge? Another consideration is the minimum account deposit required. A large initial investment may deter beginners. The best CFD trading brokerages in Australia should also process trades quickly and reliably each day. It’s worth checking user reviews for confirmation that deposits and withdrawals are processed quickly too. One final consideration is negative balance protection. This will ensure you can never lose more than your initial deposit.

Some of the biggest names in Australia are IG Markets, CMC Markets, AU Online Capital Markets, and Xtrade. They frequently rank towards the top in customer reviews, offering competitive prices and intuitive platforms.

For further guidance on choosing a brokerage firm, see here.

Is CFD Trading Legal In Australia?

CFD trading is legal in Australia. The other good news for traders is that firms are subject to one of the strictest regulators – The Australian Securities Investment Commission (ASIC). This means clients’ investments are better protected.

So before you open an account, check the platform is regulated in Australia. The provider should have an Australian Financial Services (AFS) license number displayed on their website. Regulated companies are also obliged to issue Aussie traders with a Product Disclosure Statement (PDS). This should list key information, including product features, fees, risks, and the complaints process.

Is CFD Trading Taxable In Australia?

The tax implications of CFD trading in Australia are centred around whether you’re operating as a business. The product traded is less important. For example, the tax implications of trading on CFDs are the same as if you were dealing in stocks, forex or futures.

The Australian Tax Office (ATO) states that if you’re operating as a sole trader or small business then you need to record income minus expenses. A loss can be offset against your total tax bill and carried forward while gains will be taxable. How much tax is owed will depend on the size of the gain. It’s also worth flagging that you do not need to detail every trade. Instead, it’s the total profit and loss that need to be declared to the ATO.

CFD trading and taxes can feel complex. This page aims to simplify the tax landscape by highlighting key areas to consider. With that said, it remains important to seek professional tax guidance.

For further information on day trading taxes in Australia, see here.

Education

Aussie traders can improve their CFD investing capabilities through a host of online tools. For example, top brokerages may offer virtual training courses. Demo accounts are also a great forum to refine a strategy. Economic calendars and insights from experts can help hone market insights too.

Final Word

CFD trading in Australia is hugely popular amongst both novice and advanced traders.The best brokerage firms are regulated by the ASIC and have good customer reviews. Once you’ve defined your risk parameters and formed a strategy, open an account with a provider you’re comfortable with.

FAQ

What is CFD trading?

A contract for difference (CFD) is a financial instrument that allows traders to speculate on the change in price of an underlying asset. CFD trading is available across multiple asset types, including stocks, forex and commodities.

Is CFD trading legal in Australia?

Yes – CFD trading is legal in Australia. Make sure you open an account with a regulated broker by checking for an Australian Financial Services (AFS) license number. Not only will your funds be better protected, but you’ll also received detailed information about products and associated risks.

Is CFD trading taxable in Australia?

If you generate profits from CFD trading in Australia, you may owe tax. You’ll need to declare total income minus expenses to the The Australian Tax Office (ATO). The good news is that taxes on CFD trading in Australia work in the same way as taxes on other instruments, such as stocks and forex.

Is CFD trading in Australia safe?

CFD trading in Australia, like anywhere in the world, comes with risks. There is the risk of losing your money and a risk of being scammed if you sign up to an unregulated broker. Use our top list of CFD Brokers to minimise such risks.

Can you make a living trading Contracts for Difference in Australia?

Some people do make a living trading CFDs in Australia. However, as with all instruments based on the financial markets, there is a risk of losing money.

If you trade with leverage, you can profit or lose more money than you initially invested.Be aware of the risks and don’t trade CFDs with money you can’t afford to lose.

Recommended Reading

CFD trading, or contract for difference trading, is a popular form of trading in Australia that allows traders to profit from the movements in the price of an underlying asset without actually owning the asset itself. CFD trading in Australia began in 2003 and has since grown significantly, with approximately one-third of trades on the Australian Securities Exchange (ASX) being born from CFD products [[1]].

When it comes to CFD trading in Australia, there are several key concepts to understand:

Assets

CFD trading in Australia provides access to a wide range of asset types, including stocks and shares, government bonds, commodities, futures, forex, ETFs, and even cryptocurrency such as Bitcoin [[1]]. The most popular assets for CFD trading in Australia are the online share market, currency pairs, and commodities like gold. However, the market in Australia is constantly evolving, and CFDs on other assets such as large events and national elections are also becoming available [[1]].

How to Trade

To get started with CFD trading in Australia, you need to follow a few steps:

  1. Pick a market: Decide which market you want to trade in, such as the forex market, stock market, or cryptocurrencies.
  2. Buy or sell: Choose whether you want to buy or sell based on your prediction of the price movement.
  3. Choose a trade size: Determine the size of your trade, keeping in mind your risk tolerance and available funds.
  4. Use stop and limit orders: Implement risk management strategies by setting stop-loss orders to protect your position and limit orders to lock in profits.
  5. Close the trade: Monitor your trade and exit when you're ready to collect a profit or cut your losses [[1]].

Platforms

The best CFD trading platforms in Australia vary depending on individual preferences. Many traders use popular platforms like MetaTrader (MT4) or MetaTrader 5 (MT5), while others prefer proprietary platforms offered by specific companies. For beginners, platforms that are easy to use and offer customization options may be more suitable. It's also important to consider whether the platform is available as a mobile app for iOS or Android users. To help decide which platform is right for you, consider opening a demo account to explore the features and tools offered [[1]].

Brokerages

Choosing the right CFD brokerage in Australia is crucial for a successful trading experience. Factors to consider include low spreads, transparent fees, generous leverage and margin requirements, access to a wide range of markets, availability of ASX live data, minimum account deposit requirements, quick and reliable trade processing, and negative balance protection. Some of the top CFD brokerage firms in Australia include IG Markets, CMC Markets, AU Online Capital Markets, and Xtrade [[1]].

Legal and Tax Implications

CFD trading is legal in Australia, and CFD brokerage firms are subject to regulation by the Australian Securities Investment Commission (ASIC), one of the strictest regulators. Before opening an account, it's important to ensure that the platform is regulated in Australia and holds an Australian Financial Services (AFS) license. Regulated companies are also required to provide a Product Disclosure Statement (PDS) to clients, which includes key information about the product, fees, risks, and the complaints process [[1]].

The tax implications of CFD trading in Australia are similar to those of trading in other financial instruments. If you operate as a sole trader or small business, you need to record income minus expenses, and gains will be taxable while losses can be offset against your total tax bill. It's important to seek professional tax guidance to ensure compliance with tax regulations [[1]].

Safety and Risks

As with any form of trading, CFD trading in Australia comes with risks. There is a risk of losing money, and there is also a risk of being scammed if you sign up with an unregulated broker. It's important to choose a reputable and regulated CFD brokerage to minimize these risks. It's also crucial to be aware of the risks associated with leverage, as trading with leverage can result in both higher profits and higher losses. It's recommended to only trade with money you can afford to lose and to have a solid risk management strategy in place [[1]].

In conclusion, CFD trading in Australia offers individuals the opportunity to profit from the price movements of various assets without owning the underlying asset. It is legal and regulated in Australia, and traders should carefully consider factors such as asset types, trading platforms, brokerages, legal and tax implications, and risk management strategies to ensure a successful trading experience.

CFD Trading In Australia 2024 (2024)

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