TRADING CONTRACTS FOR DIFFERENCE (CFDs)
CFDs provide a trader with full exposure to an underlying stock, index or currency for a fraction of the cost. The holder of the CFD does not own the underlying asset, but enters into a contract to exchange the difference in the value of the underlying asset when the contract is closed.
Why Trade CFDs?
The ability to go 'short': CFDs allow you to sell shares you don't own, just as easily as buying shares. This enables you to benefit from falling share prices.
Leverage: CFDs enable you to obtain full exposure to a share for a fraction of the cost
Simplicity: CFDs mirror the price of the underlying instrument
Price: Trade $100,000 worth of stock for $66
Hedging: CFDs allow you to employ more advanced strategies such as hedging your existing share portfolio
Dividends: When you hold a long CFD position over an ex-dividend date, you receive the dividend into your trading account that day
To find out more about trading CFDs with Trader Dealer, download our free CFDs E-Book!
Trading CFDs with Trader Dealer
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Trader Dealer has introduced Block Rate Trading to the Australian CFD market, reaffirming our status as the best value online broker around. And, consistent with Trader Dealer's existing pricing structure, you can trade CFDs as many times as you like, in the one stock, on the one side of the market on the same day and we'll book it as just one trade, with one lot of brokerage.
Check the Fees in Detail page to see how Block Rate Trading offers great value to CFD traders.
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Split your orders across the day for even better value on your brokerage.
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Trader Dealer offers a Direct Market Access service - this means that we guarantee you trade on real market prices and liquidity, ensuring you get the best deal possible.
CFDs can be traded online via Market Analyser, our proprietary software.
Don't pay twice as much for phone orders - place trades over the phone at online rates.
Rest assured you're receiving the best execution available. Trader Dealer partners with MF Global, the world's largest derivatives broker to offer CFDs in Australian and international shares.
Short sell more than 150 stocks on the ASX plus hundreds of overseas securities.
Available Products & Margin
Trade local and international shares at market leading rates from the one advanced platform, Market Analyser.
Financing
Overnight financing is applied at MBR +/- 2.25%.
We pay interest on available funds - MBR -1%.
The Mechanics of Trading CFDs
Trading Direct Market Access CFDs is a lot like using margin lending. You use a percentage of your own funds plus a percentage of other people's funds to gain a larger exposure in the market. There are, however, a number of subtle differences that are worth consideration.
The spectrum of stocks that can be margined is greatly enhanced while the Loan to Valuation Ratio (LVR) is generally more than traditional margin lending.
Although you don't actually own the underlying asset, you still gain the majority of benefits as if you did. These include dividends and the right to participate in corporate actions such as rights issues.
Opening your CFD Position:
| CFDs - Leveraged Trade | Traditional Trade With No Leverage | ||
|---|---|---|---|
| Buy Price | $5 | Buy Price | $5 |
| Initial Outlay (3% margin) | $3000 | Initial Outlay | $100,000 |
| Commission charge (to buy) | $66 | Commission charge (to buy) | $310 |
| Total Outlay | $3066 | Total Outlay | $100,310 |
Closing your CFD Position:
| CFDs - Leveraged Trade | Traditional Trade With No Leverage | ||
|---|---|---|---|
| Sell Price | $5.20 | Sell Price | $5.20 |
| Gross profit/loss | $4000 | Gross profit/loss | $4000 |
| Total Commission charges (to buy & sell) | $132 | Total Commission charges (to buy & sell) | $620 |
| Overnight financing: 1 day | $20.08 | Overnight financing: 1 day | Zero |
| GST | Zero | GST | $50 |
| Net profit/loss | $3847.92 | Net profit/loss | $3450 |
| Return On Investment (ROI) | 128% | Return On Investment (ROI) | 3.38% |
