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5 Key Benefits of CFD Trading
1. Leverage
With leverage, enjoy larger market exposure with less capital. In Australia, ASIC limits leverage at 30:1 for major forex pairs to help protect retail traders.
Example:
- Control a $30,000 position with just $1,000 of your capital.
Risk Reminder: Leverage amplifies both gains and losses. Risk management is essential to protect your capital.
2. Trading Flexibility: Going Long & Short
CFDs offer the ability to trade both rising and falling markets, giving traders more flexibility than traditional investing.
- Go Long: Buy if prices are expected to rise.
- Go Short: Sell if prices are expected to fall.
This flexibility can be useful in volatile or uncertain markets, but it does not remove the need for robust risk management strategies. If the market moves against the trader’s position, losses can accrue rapidly—especially with leverage.
Risk Reminder: Market volatility can increase the potential for losses when trading long or short. Always apply appropriate risk management tools.
3. Global Market Access From 1 Platform
With CFDs, traders can access a diverse range of global markets from a single platform. This opens up trading opportunities across various asset classes and regions.
Trade a wide variety of global assets available at Vantage:
- Forex: AUD/USD, EUR/USD, and more
- Stocks: Nvidia, BHP, and more
- Cryptocurrency: Bitcoin, Ethereum, and more
- ETFs: NASDAQ and others
- Bonds: US Treasury CFDs and others
- Hard Commodities: Gold, oil, and more
- Soft Commodities: Soybeans, coffee, and more
- Indices: S&P 500, ASX 200, and more
Risk Reminder: Each asset class has its own unique risk profile. Traders should understand the specific market conditions and risks before participating.
4. Trade Price Movements Without Ownership
CFD trading is based on price speculation, allowing traders to profit—or lose—from changes in asset value without owning the asset itself. While prices generally mirror the underlying market, minor differences can occur due to broker pricing, spreads, and liquidity, especially in volatile markets.
Risk Reminder: CFD traders don’t receive dividends and may face slippage or pricing discrepancies during low-liquidity or fast-moving periods.
5. Hedging Existing Positions
CFDs are often used to hedge against downside risk in broader portfolios, potentially helping limit losses.
Example:
- If you own physical gold bought at $3,000 per ounce, you could short a gold CFD at $3,300. If the price drops, gains from the CFD may offset losses in your gold holdings.
Risk Reminder: Hedging involves holding costs, swap fees, interest charges, and spreads that can reduce overall returns if not carefully managed.
Understanding Key CFD Trading Risks
While there are benefits of CFD trading, it’s equally important to understand the risks involved.
1. Leverage Risk
Leverage amplifies both gains and losses. Even small market movements can result in significant profit—or losses.
2. Market Risk
CFD prices reflect the underlying market, which can be volatile and unpredictable. Sudden price swings may lead to rapid losses, especially in highly leveraged positions.
3. Margin Close-Out Risk
If your account equity falls below the required margin, your open positions may be automatically closed and potentially lead to unintended losses. This can happen during periods of high market volatility.
4. Holding Costs
Keeping CFD positions open overnight may result in swap or financing charges, depending on the broker and trading platform. These ongoing costs can reduce your returns over time, especially with long-term trades.
Trade CFDs With a Broker You Can Trust
- ASIC-regulated broker ensuring trusted trading conditions
- Competitive spreads & transparent pricing
- Advanced trading platforms like MT4, MT5, TradingView & Vantage App
- Comprehensive educational resources & dedicated client support
Ready to Start Trading CFDs?
Explore the markets with a
trusted ASIC-regulated broker
Frequently Asked Questions
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1
Can I hold CFD positions overnight?
Yes, you can hold CFD positions overnight. While these positions can be held indefinitely, they are subject to overnight holding fees, commonly known as swap fees.
Keep in mind that holding costs also apply to maintaining CFD positions. To estimate the cost of your position, use our trading calculator here.
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2
Do CFDs have an expiry date?
Generally, no. Most CFDs do not have an expiry date, except those based on futures contracts, which require roll-over adjustments.
If a CFD tracks a futures contract, the underlying asset has an expiry, which leads to a contract roll gap. This refers to the price difference between the current and next month’s contract, when the contract rolls from one month to the next. This price gap is due to the time value of money element built into the futures product, where there is value in holding a product regardless of market sentiment and longer-dated contracts are typically priced higher.
At Vantage Australia, we automatically cash adjust the difference in futures contracts to help prevent clients from experiencing stop-outs caused by sudden price changes.
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3
What’s the minimum CFD contract size?
Minimum CFD trade sizes typically start from 0.01 lots, although this can vary depending on the market.
For example, in forex trading:
•1 lot = $100,000 notional value
•0.1 lot = $10,000.
•0.01 lot = $1,000.
Note: 0.01 is the smallest position size available for most currency pairs on the Vantage Australia platform. Contract sizes for other instruments and markets may differ.
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4
Can you trade both rising and falling markets?
Yes, you can trade both rising and falling markets via CFDs at Vantage Australia.
One of the key benefits of CFD trading is the ability to go long or short, allowing traders to speculate on both upward and downward price movements.
•Go Long: Buy the CFD contract if the price is expected to rise.
•Go Short: Sell the CFD contract if the price is expected to fall.
CFDs are derivatives. When you trade CFDs, you’re entering a contract with a broker to exchange the difference in the asset’s value from when the position is opened to when it’s closed, without owning the underlying asset.
This contract-based functionality offers flexibility for traders to take advantage of both rising and falling markets.
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5
What commission rates does Vantage charge?
Commission rates vary depending on the account type chosen. At Vantage Australia, we offer three account types:
1 Standard Account : No commissions, but with slightly wider spreads.
2 RAW Classic Account : Tighter spreads with a $2.50 per side commission per full lot.
3 RAW Premium Account : Razor-sharp spreads with lower commissions of $1 per side per full lot.
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6
What is DMA Trading?
DMA (Direct Market Access) trading gives you direct access to exchange order books for equities or interbank pricing in forex, without broker intervention
While DMA is common in equities, forex is traded over-the-counter (OTC), with the broker acting as an intermediary. DMA offers transparency and often tighter spreads, but may not be available for all instruments.