CFD Trading
Contracts for Difference - CFDs - a leveraged way to trade Shares, Metals, Indices, Energy and Currency.
Advantages of Trading CFDs with Rockfort Markets
Liquidity
Liquid markets such as CFDs tend to move in smaller increments because their high liquidity results in lower volatility.
Hedging
Hedge your underlying stock or futures positions with CFDs.
Low margins
Leverage means you can trade large positions with small capital.
DIVERSIFICATION
CFDs cover the full range of Asset Classes giving diversification.
What is a CFD?
A contract for difference, or CFD, is an agreement between two parties to exchange the difference in price of an asset, from the point of contract opening to when it is closed.
- Full range of markets – 8,800 single stock CFDs plus indices, commodities and more
- Options to profit from both rising or falling markets
- Trade directly into the market with DMA (Direct Market Access)
- Advanced trading technology
- Access to live streaming price data, fundamental research and economic calendars
What Markets do CFDs Cover?
Contracts for differences can be traded on a vast range of different financial instruments, Rockfort Markets has access to many exchanges worldwide and has wide product base with the range of markets available to trade is constantly expanding. The main CFD market types include:
- Global share CFDs, examples. United Kingdom, USA, Asian and European
- Share index CFDs, examples. FTSE, Dow, NASDAQ, NIKKEI, etc
- Forex CFDs
- Industry sector CFDs, examples. oil and gas, banks, technology, etc.
- Commodity CFDs like soft commodities and grains.
- Metals and energy CFDs, e.g. gold, silver, oil, natural gas, uranium…etc.
Who trades CFDs?
Low Pricing of CFDs
- For share CFDs you only pay the commission charge, no spreads
- With all other CFDs, you only pay the spread, no commission
- Small funding charges for positions held overnight
| MARKET | BROKERAGE |
|---|---|
| Individual Shares | from 0.198% or AU$ 11, whichever is greater |
| Stock Indices | from 4.4 points, 0.5% margin |
| Commodities | from 0.5 points, tiered margins |
Share CFDs
Share CFDs allow you to trade individual Shares and ETFs just like an individual stock but with greater leverage. Share CFDs can be Market Made or Direct Market Access (DMA). Rockfort markets CFDs are DMA.
Share CFDs give traders exposure to the underlying stock on a leveraged basis with most share CFD orders executed on the exchange via the Broker. Share CFDs are popular for obtaining short term leveraged exposure to a stock and are second only to currency CFDs (Forex) in terms of popularity.
With Share CFDs you can leverage your money. For a small initial margin, which is usually around 10% of the face value of the stock, you can gain exposure to the stock with only a small initial outlay. CFDs can also be traded in small sizes meaning traders with limited capital can still gain exposure to a stock.
The benefit of being able to leverage your exposure to a particular stocks means gains are magnified for winning trades, however there is also risk with losses being magnified at the same rate as gains. This makes CFDs a very risky product as you could lose far more than your initial outlay, but does make them affordable in terms of cost, which is typically lower than for shares.
For Example: Say you wish to purchase Share CFDs in BHP Ltd, a mining stock listed on the ASX as well as other exchanges. Let’s say BHP is trading at $35 in this example and the trader would like to buy 100 shares. With a 10% initial margin the trader would outlay $350 (10% of $3,500 Face Value). The initial margin is simply a deposit held by the broker to cover any potential loss on the trade. Let’s say price moves up to $36.00 and the trader sell BHP. The profit would be $100 ($1.00*100 shares less interest). Conversely if the price moved down the $34.00 the trader would lose $100 less interest. There is an interest cost associated with the trade which would reduce the profit by the interest amount and increase the loss by the interest amount (depending upon the interest rate charged and the amount of time in the trade). Interest is charged on the full face value of the trade. If the Broker Interest rate was 4% on this trade and the trade was held for 5 days the interest cost would be $3,500*4%*5/365=$1.91. At the end of the trade the initial margin is refunded plus any profit or less any loss.
The leverage on a stock CFD is based upon the market capitalisation and liquidity of the stock. Large Blue Chip stocks typically carry a 10% initial margin whilst smaller stocks that are less liquid and more risky may incur initial margins of 20%, 50% or even 100%. You can view the initial margin when placing a CFD trade on your account in the order ticket before transmitting your order.
Metal CFDs
Trade Gold and Silver CFDs with Rockfort Markets. Low initial margins and deep liquidity.
Metal CFDs on Gold and Silver provide exposure to these commodities for as little as $1 per point with very low initial margins. The CFDs on Gold and Silver track the futures markets for these products as the underlying contract and as such rollover on the expiry dates of the futures meaning you may pay or receive a rollover charge depending on whether you are long or short.
One of the big advantages with trading CFDs instead of futures is that the point value is only $1 per point making these products accessible to traders with very small accounts.
Another advantage of trading Gold and Silver CFDs is broker liquidity and spreads are often more favorable than the futures market and the low outlay makes it easy to diversify your holdings into these products.
Index CFDs
Trading Indices offers access to a whole new range of markets, meaning you can diversify your trading strategies across uncorrelated instruments as well as take advantage of opportunities that global equities markets present.
Equity indices have gained in popularity as index prices have significantly appreciated over the past several years. As more private companies underwent initial public offerings to raise equity from the capital markets and became publicly-traded, the capitalization of the global equity markets dramatically expanded and now exceeds US$ 50 trillion.
Most major financial centers have at least one equity index and offer traders with exposure to companies domiciled in the U.S., Europe, Asia, and elsewhere.
- Real-time pricing, linked to actual stock market performance
- Sell short or long and trade whichever direction the market goes
- Flexible leverage to control your level of risk
- Extremely tight spreads offering potential to profit from small price movements
- Top indices available to trade, including ASX200, FTSE, Dow Jones and S&P500
Energy CFDs
Trading energy commodity CFDs with Rockfort Markets gives traders exposure to the Crude Oil market including West Texas Crude and Brent Crude.
Commodity CFDs, in particular, those targeting energy markets like Crude Oil and Brent Crude track the futures contracts as the underlying market. This means that these CFDs rollover at futures expiry and a large spread may be paid or received at this time. The big advantage of trading with CFDs as opposed to futures is that the point value on a CFD can be as low as $1 per point making them accessible for traders with smaller accounts. Also data fees and platform fees may also be eliminated or reduced.
Trading Crude Oil CFDs in the Metatrader 4 platform allows traders to create indicators, strategies, and systems to trade these markets in a manual, semi-automatic or automatic manner.
Our Account Managers are here to help so if you’d like to trade CFDs call us today on +64 9 281 2012.
