On the whole CFD brokers in Australia offer CFDs over the shares making up the ASX top 300, the rationale behind this is simple, stocks with a larger market capitalisation are often much more liquid. Some CFD providers forget that we live in Australia, a country full of resources and naturally also rich in resource shares. A good number of shares listed on the ASX are resource based, this is in fact the biggest sector of the Australian share market.
Buying and selling CFDs over speculative mining shares can be extremely rewarding if you select your stocks prudently. When trading CFDs over speculative stocks you must always do a little analysis on the company. Prior to selecting your shares you should make sure that the company has great management and a good project. Of course if the copper price has risen and you happen to be looking for exposure to stocks in this sector logically you would not select a CFD over a stock with gold assets, this is the reason picking stocks in the relevant sector is also critical. It is always important to keep in mind trading CFDs over speculative stocks has risks as these kinds of shares can go up in price as quick as they can come down.
So why a trade CFD as opposed to buying the Stock outright?
The answer to this question is straightforward and can be summed up in a couple of words, unrealised profits and losses. Unlike shares CFDs are marked to market each day meaning that the profits or losses are credited or deducted to and from your trading account each trading day. The profits and losses from trading stocks are handled very differently in that they are only realised once the stock is sold. Realising profits and losses each day means that you are able to draw on your unrealised to profits to buy new positions without needing to deposit added funds into your account, naturally the same goes for losses in that you will have to deposit money into your account if the position moves against you.
It is vital that you note that most speculative shares could have a larger margin requirement than shares in the ASX top 300, their margin requirement can be as high as 100% allthough the bulk are obtainable on a margin of 75%. One significant factor to think about here is whether or not your CFD provider will charge you financing on the full notional value of the position, this could of course be quite large if the position was on a 100% margin, there are on the other hand a number of CFD brokers that will only charge financing on the borrowed quantity. It would be far more cost effective to select a CFD company that will only charge you on the borrowed amount, if the CFD is on 100% margin it will deliver a large cost saving.
There are hardly any CFD providers in Australia that will permit you to buy and sell CFDs on all ASX listed stocks, certainly one of the most popular CFD companies is IC Markets. One of several major benefits of buying and selling with IC Markets is that they don’t have any CFDs on 100% leverage and only charge financing on the borrowed total meaning that you will not pay any financing charges for CFDs bought on 100% margin.
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To discover out more about buying and selling CFDs on speculative resource stocks you ought to visit IC Markets website, here you will discover allot of CFD education to help you formulate your trading plan and get started.
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