Contract for Difference (CFD)

What is a CFD?

A Contract for Difference (CFD) is a derivative product that mirrors the price of the underlying instrument such as shares, indices, sectors, commodities or currencies. CFD trading is very similar to share trading with the added benefit of trading on margin.

Advantages of CFDs

  1. Leverage/ Trading on margin

    CFDs can be traded on a 3 – 5 per cent margin deposit, which means you only need a small fraction of your trading capital to enter a trade; a more efficient use of your trading money.

  2. Ability to go short (and make money from a falling market)

    You can go short (sell CFDs) to take advantage of falling prices, just as easily as you can go long (buy CFDs).

  3. Low brokerage fees

    Trade CFD share transactions of up to $10,000, for as little as a $10 fee.

  4. Global Market Access

    CMC Markets offers CFDs on over 3000 products including all major stocks and stockmarket indices in the US, UK and Asia Pacific. This allows you to trade on international markets without having to open an overseas account (usually denominated in US dollars).

  5. Ability to hedge with CFDs

    Protect or hedge your physical share portfolio against volatile or uncertain market movements with CFDs. For example, you can hedge a physical share portfolio of $100,000 for only $3000.

CFD Trading with CMC Markets Stockbroking

CFDs are an alternative investment tool that gives you more trading power, flexibility and trading opportunities. CMC Markets Stockbroking is part of the CMC Markets group, Australia’s number 1 CFD provider.

CFDs and other financial products can be risky and are not suitable for all investors and you should consider whether they are suitable for you. This information does not take into account your objectives, financial situation or needs. CMC Markets and CMC Markets Stockbroking recommend you to consider these matters and seek independent financial advice before making an investment decision. It is important for you to consider the relevant Product Disclosure Statement (PDS) in deciding whether to acquire, or to continue to hold financial products and they are available from CMC Markets on 1300 303 888 and www.cmcmarkets.com.au or from CMC Markets Stockbroking at www.cmcmarketsstockbroking.com.au. Information about our services, including our fees and charges is also contained in our Financial Services Guide, which is available at those sources. CMC Markets is the trading name of CMC Markets Asia Pacific Pty Ltd (ACN 100 058 213, AFS Licence No. 238054) CMC Markets Stockbroking is the trading name for CMC Markets Stockbroking 2008 Participant of ASX Group (ABN 69 081 002 851 Australian Financial Services No 246381) * Based on independent research conducted by Investment Trends in May 2007, 53% of Australian CFD traders, trade with CMC Markets. CMC Markets and CMC Markets Stockbroking are related corporate entities.