CFD & FX Trading

Investors seeking to maximise their returns are increasingly turning to more advanced and innovative trading tools. Among the most popular of these are contracts for difference (CFDs) and foreign exchange (FX).

Sophisticated online trading platforms provide the convenience of secure 24/7 access from anywhere that an internet connection is available. These platforms incorporate charting tools at no extra cost along with a wide range of order types, including contingent orders and stop-loss orders to limit downside risks. Phone trading is also

widely available.

CFDs provide investors with easy access to global markets. From a single trading account it is possible to access live prices on many thousands of securities around the world. In addition to CFDs on equities from Australia, Asia, Europe and North America, investors can trade CFDs over indices, commodities and interest rate products. With a few mouse clicks it is possible to go from trading CFDs on National Australia Bank, to CFDs on Adidas AG; to CFDs on the S&P 500, to CFDs on Japanese 10 year bonds, gold, oil or even pork bellies! The ability to take both long and short positions in many of these markets allows traders to take advantage of both rising and falling markets. Given the smaller trade sizes and lower costs, CFDs make an attractive alternative to futures trading for many investors.

Both CFDs and FX are leveraged products, meaning they are traded on margin. As a result, investors are required to provide only a fraction of the face value of the trades they undertake. Equity CFDs are typically traded on margins ranging from 50% down to as little as 3%. Global equity indices can be traded on margin of just 1% while FX margin requirements can be as low as 0.25% of the face value of the trade. This leverage frees up capital, allowing investors to take advantage of more market opportunities.

The vast majority of trading in CFDs and FX by private investors is conducted through specialist CFD providers. In Australia, the Australian Securities and Investments Commission (ASIC) is the regulator of these companies. Additional laws exist to protect investors, including specific rules for the handling of client money.

Many of the CFD providers operating in Australia are branches of major global institutions with substantial financial backing. According to an extensive survey of the CFD market in Australia during 2009 by Investment Trends, the fastest growing CFD provider in Australia is the global company ‘City Index’. The same survey reveals that they are also more likely to be referred to a friend or colleague than any other provider, indicating their service quality.

Associate Director, Alex Douglas, says, “Our CFD service provides a cost effective and transparent process for private traders who increasingly demand the same sophisticated access as professional investors in these challenging times.”

To learn more about trading CFDs and FX, sign up for a free demonstration account. This provides an opportunity for investors to learn how these markets and sophisticated trading platforms work without placing any funds at risk. It is also advisable to attend one of the numerous free seminars offered in various cities around the country. Here, you will have the opportunity to hear experienced market veterans explain the opportunities that await for those wishing to trade CFDs and FX.

Information Supplied by:

City Index

Phone: 1800 354 182

Website: www.cityindex.com.au