Stock CFDs are financial instruments that give you access to trading with international stocks without actually needing to own the stock. They work similarly to traded shares, except they tend to be more flexible and feature lower commissions than regular share trades. Stock CFDs could be an attractive option for investors who want considerable exposure with small cash investments or who believe they can beat the market by actively trading.
The availability of stock CFDs in Australia varies depending on which broker you use. Not all brokers offer them – especially not local brokers like CommSec or Westpac Online Investing. However, many international brokers make it easy for Australians to buy and sell stock CFDs, including AvaTrade, CMC Markets, IG, and Interactive Brokers.
Best Australian Stock CFD Brokers
They are an online brokerage that consistently holds top tier status in Canstar’s annual customer satisfaction ratings. They offer stock CFDs on over 2,000 international shares with competitive commissions starting at just 1c per share traded. You can also use their innovative ‘click to trade’ function, which lets you put a stop-loss order right next to your buy order – allowing you to be informed of the price without actually needing to make the transaction or click any buttons.
All investment instruments, including forex trading, contract for difference (CFD) trading, stocks, mutual funds, bonds and more, are offered. With AvaTrade Australia, you can start to make money with stock CFDs the moment you open an account. They give new users $50 worth of free trades to test out their platform and feel comfortable before making any investments on the market.
IG has been a UK-based broker offering trade CFDs since 1974, giving them unrivalled experience and expertise in this area. They offer over 2,000 stock CFDs with prices updated every minute and low commissions starting at just 40c per trade. You can also use their innovative ‘click to trade’ function, which lets you put a stop-loss order right next to your buy order – allowing you to be informed of the price without actually needing to make the transaction or click any buttons.
This US-based online brokerage also offers stock CFDs and many other investment products. They have been named one of Barron’s Top Online Brokers five years in a row and have over 1 million client accounts. You can use their ‘quick trade’ function, which lets you buy or sell shares without needing to complete an entire transaction, meaning you don’t need to click any buttons to pass the order onto your broker.
What are the benefits of trading with stock CFDs?
Low barrier to entry
The most significant benefit of stock CFDs is the low barrier to entry. Anyone can use them for as little as $200, and you can use them on a phone or tablet if you download the app. It is ideal for investors who want considerable exposure with small cash investments or who believe they can beat the market by actively trading.
One of the main benefits of stock CFDs is that they usually have low commissions compared to traditional share trades. After each trade, you will pay less for every transaction and keep more of your profits in your pocket. On top of this, some brokers offer no-commissions stock CFD trading! Here are examples from three top brokers showing the commissions you can expect to pay for stock CFD trading if you were to invest $10,000:
Another great benefit of investing in stock CFDs is that it offers high leverage compared with traditional share trading. If you lose your money, the broker won’t take any of your cash – they close your position and take their commission instead. Here are some examples of how much leverage brokers offer when you trade with $10,000 using 5x and 20x margins.
Stock CFDs allow you to trade 24 hours a day Monday through Friday, which gives investors who work during traditional market hours access to shares during the week. You are limited to CFDs on commodities and currencies only on the weekend. This benefit is beneficial for advanced traders who want to take advantage of volatile markets when everyone else has gone home.
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