CFD Trading

Compare a variety of CFD trading platforms here with Savvy then start on your trading journey today.

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, updated on September 13th, 2023       

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Compare the top online CFD trading brokers

You may have heard of the term CFDs and have always wondered what they are, and how they work? Before you start your CFD trading journey it’s vital to understand exactly how CFDs work, and the implications of trading them. Once you understand exactly what CFDs are, you can then start looking for a broker to trade through. 

Savvy can assist you to find the best CFD broker by helping you compare many of Australia’s leading CFD providers. Find out the minimum amounts required to start investing, compare commissions charged, and explore the range of CFDs on offer through leading brokers right here with Savvy.

site-logos Vantage CFD

Minimum opening deposit

Available markets

Commission (ASX 200 Shares)



$200 Forex, CFD shares, Indices, Cryptocurrencies, Commodities $8 AUD or 0.08% MetaTrader 4, MetaTrader 5, TradingView 1:1 - 30:1

Vantage CFD is an award-winning global broker which describes itself as a true electronic communication network (ECN) – offering services to trade CFDs on a wide range of products.

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site-logos eToro CFD

Minimum opening deposit

Available markets

Commission (ASX 200 Shares)



$200 Forex, Shares, Indices, Cryptocurrencies, Commodities, ETFs $0 eToro Trading Platform 1:1 - 30:1

eToro is a comprehensive multi-asset broker which helped to pioneer copy trading, allowing novices to mirror the trades of more experienced and successful traders.

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site-logos IG CFD Trading

Minimum opening deposit

Available markets

Commission (ASX 200 Shares)



$0 Forex, Shares, Indices, Cryptocurrencies, Commodities $7 AUD or 0.08% IG Trading Platform, iOS and Android apps, MetaTrader 4, ProRealTime, L2 Dealer 1:1 – 30:1

IG is one of Australia’s largest CFD providers with over 320,000 active trading customers world-wide. It’s award-winning trading platform and low commission rates make it Australia’s #1 online CFD broker.

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Disclaimer: Savvy is not advising or recommending any particular product to you. We provide general information on products for the purposes of comparison, but your personal situation or goals are not considered here. Although we try to make our comparisons as thorough as possible, we do not have information on all products on the market on our site.

You should always consult a given offer’s PDS or further documentation in the process of deciding on which CFD platform to choose, as well as seeking independent, professional advice. If you decide to apply with one of the platforms listed above via our website, you will not be dealing with Savvy; any applications or enquiries will be conducted directly with the platform offering that product.

CFD Trading

What are CFDs?

A CFD, or contract for difference, is an agreement between a trader and a broker to buy and sell a contract for an asset, with the aim of making a profit on the trade. You enter an agreement with your broker to buy a contract based on the value of the asset, for a set agreed price.  This is called opening a position.

When the price of that asset changes on the international money markets, you end or ‘close’ your position, and you either make or lose money based on the price difference between your buy and sell price. For example, if you buy one share for $10, and then sell it for $10.10c, you will make a profit of 10c.

The CFD can be based on the price of stock market shares, commodities, market indices or cryptocurrencies. It’s also possible to trade CFDs on foreign exchange pairs, although this is usually referred to as forex (foreign exchange) trading.

Therefore, a CFD is not a stand-alone asset in itself; rather it’s a form of derivative trading. A derivative is a security (a financial ‘product’) whose value is dependent on the value of the underlying asset (ie. the share or commodity on which the CFD is based.) For example, you can trade in share CFDs, which are a contract for difference based on the movement of a particular share market price. You could also decide to trade FX CFDs, which are a contract based on the price movement between two currencies.

How does CFD trading work?

CFD trading is a way of making money through buying and selling a contract based on the price of a named asset. When you open a CFD position, you can choose whether to make a ‘long’ trade or a ‘short’ trade. A long trade means you think the price of the asset will go up, whereas a short trade is a bet the price of the asset will go down.

Either way, if the price of the asset moves in the direction you’ve predicted, you’ll make money. However, if it goes in the wrong direction, you’ll lose money.

For example, you may think the price of Telstra shares will go up. You take a long position and buy 500 Telstra CFD shares at $3.90 per share. The price of Telstra shares then goes up to $3.95, so you decide to sell. You make a 5c gain on every Telstra share you have a CFD contract on, so you make a profit of 500 x 5c = $25. However, if the price of Telstra shares drops below your contract price of $3.95, you’ll lose 500 x every cent it goes down.

It is not possible to short trade every type of asset, and not all CFD brokers offer the option of making short trades. For this reason, it’s important to compare brokers through Savvy to find one that fits in with your trading style and aspirations.

What’s the difference between trading CFDs and actual assets?

As well as the ability to trade long or short, there are two distinct differences between trading standard assets and CFDs which you should be aware of. These are:

  1. Trading CFDs, you don’t own the asset itself, just a contract based on the price of the underlying asset. For example, if you buy 100 BHP CFDs, you are not listed as a BHP shareholder, and will not be issued a share certificate. The shares remain the property of the broker you have the CFD agreement with. Your broker owns the shares – you just own the right to decide when to buy or sell them. However, if you are in a long trade, you will receive any dividends that particular share affords, or you’ll have to pay the dividend if you own the stock in a short trade.
  2. Most CFD contracts are based on the principle of using leverage, which means you only have to pay actual cash for a percentage of the price of the asset you are buying. The amount of leverage the broker will allow you is known as the ‘margin’ on offer, and can range from as little as 3% up to 60% or more.

What financial instruments can be traded using CFDs?

There are a wide variety of financial assets you can trade using CFDs. These include:

  • Australian shares – traded through the Australian Securities Exchange (ASX)
  • International shares – which can include shares listed on the New York Stock Exchange (NYSE), the NASDAQ or the Hong Kong Stock Exchange (HKEX), for example
  • Indices (also known as indexes) – which are a measure of the averaged price movement of a group of related shares, for example the gold index
  • Commodities – such as metals (eg. gold, silver), energy products (eg. crude oil, aviation fuel), agricultural products (eg. corn or coffee) which are traded on a range of international markets
  • Options – which are a financial product that affords the right to sell an underlying asset, for a set price, by a specified date
  • Futures – another financial product which obligates the buyer to purchase an asset at a specific price on a specific future date
  • Exchange-Traded Funds (ETFs) – which are a type of pooled investment fund, similar to a managed investment fund, that is traded on an exchange
  • Cryptocurrencies – virtual currencies that only exists electronically, that are traded or used as payment in exchange for goods
  • Bonds – which are debt securities, traded on an international bonds market
  • Treasuries – which are government-backed bonds, also traded on an international market
  • Forex or FX (foreign exchange currencies) – the difference in value between a pair of two foreign currencies, also traded on an international exchange currency market

By comparing CFD providers through Savvy, you’ll be able to clearly see the difference between online brokers, and the products they offer.  Find the one that suits the type of trading you wish to undertake, then get your trading started with Savvy today.

Who is suitable for CFD trading, and what are the risks?

CFD trading is often likened to share trading on steroids – both the risks and the rewards are far larger than standard trading. It can be highly profitable, but it’s also a highly risky method of trading which is not suitable for beginners. It is most suited to:

  • Experienced traders who have at least two to three years' experience of trading standard shares or commodities
  • Traders who have a sound knowledge and understanding of the financial markets and how they work
  • People who can read charts, and have a knowledge of chart analysis
  • People who have a high risk tolerance, and are in no way risk-adverse
  • Those who can afford to lose all their trading funds, and not face dire financial hardship as a result of their trading
  • Traders who are highly disciplined and understand risk management
  • Traders who are prepared to spend a lot of time learning, researching and monitoring their trades

CFD trading is not suitable for:

  • Beginners just starting on their trading journey
  • People who only have a small trading fund, which they can’t afford to lose
  • Anyone who is risk-averse and who prefers to play it safe
  • People who find it hard to make a plan, and stick to that plan no matter what happens

The risk with CFD trading is that because it is a leveraged product, you can lose far more than just your entire trading fund. If you gamble on pokie machines, you can only lose the money you put into the slot. However, with CFDs, you can end up owing your broker thousands of dollars more than your original trading fund. 

What is the difference between a market maker and direct market access?

There are two basic types of online CFD brokers – those who are market makers, and those offering direct market access (DMA) trading.

Market makers

These brokers offer an opportunity to trade CFDs based on bid and ask (buy and sell) prices they set themselves, and then offer to their clients. The prices on offer are based on the movement of prices in the international money markets, but they may not be identical. The broker sets their own values, and makes a profit from the difference in price between what they offer to clients, and what they can buy and sell on the real live international markets.   

DMA (Direct market access) brokers

This type of broker offers direct access to the international finance markets through their platform, so the bid and offer prices you see are the actual prices of the asset as they are traded in real time on one particular market. For this reason, direct market access usually only applies to live CFD trading of assets on a particular market, for example the ASX or NYSE. 

What does trading with leverage mean?

CFDs are usually a leveraged financial product, which means you don’t have to pay the full price of the assets you buy, but only a fraction of the full price.  For example, if you buy $100 worth of shares on 10% margin, you will only have to pay the broker $10, but you will ‘own’ the right to the profit on the full $100 of shares. This is why CFDs are so popular with experienced traders, as they are able to take advantage of this leverage to make money.

The percentage of leverage on offer on a particular share or asset will vary, depending on a range of different factors including:

  • The volatility of the shares you are purchasing (how much their price goes up or down on an average day)
  • The liquidity of the shares (how many shares are on offer, and the number of buy and sell orders for that particular share)
  • The financial regulations which apply to the market you are trading in (all financial markets have rules and regulations which all brokers must adhere to)

Shares that are heavily traded, for example, BHP or Telstra on the ASX, are offered with a smaller margin, which may range from 3% to 10% or more. Less popular shares which don’t have so many buy and sell orders (known as ‘illiquid’ shares) may come with a higher margin, for example, 40% to 60%.

It is essential to understand risk and reward ratios before trading any instrument on a margin, as leverage magnifies profits and losses dramatically.  

What is the difference between trading long and short?

Many traders get confused between trading long and short, and which way to trade in bull and bear markets.

Long trading – in a bull market

A market in which prices are rising is known as a bull market. It is helpful to remember this by picturing a bull tossing a matador UP into the air with its horns. In a bull market, there are more people wanting to buy shares than to sell them, so share prices rise. If this is the case, you will want to make a long trade, which means buying a CFD share at one price, waiting for it to go up, and then selling it for a profit.

Short trading – in a bear market

A bear market is the opposite to a bull market – prices are falling. You can remember this by picturing a large brown bear standing on its hind legs swiping DOWN to catch a fish. There are more people wanting to sell their shares than buy them, so prices fall. In a short trade, you sell the asset to your broker then buy it back at a lower price, and make a profit from that price difference. When you buy back the asset you end your CFD agreement, and you take your profit or loss. Even though you ‘buy’ the position back, you no longer have a position open, because it is offset by your original purchase.

How do I start trading CFDs?

The process to start trading CFDs is:

  • First, you’ll need to open a CFD trading account with an online broker. This may involve consenting to have a credit check carried out.
  • Once your trading account has been established, you’ll need to fund it with money from a linked bank account
  • When the funds have cleared your bank, and are in your trading account, you will be given access by your broker to their trading platform. This is the program you use to buy and sell assets.
  • Download the trading program, and set up a secure log in system including a password, and if possible, two-step verification
  • You may have to do an online training course or ‘test’ to ensure you understand the different type of orders that are possible before you’re able to start trading CFDs live
  • Many brokers will insist you practice using their trading platform (using a demo account) before making live trades

How do I choose the best CFD broker?

The pros and cons of CFD trading


Access to trading day and night

If you are live trading CFDs, it’s possible to trade almost 24/7 due to the world time zone differences between the various stock market opening hours.

Many financial products to choose from

CFDs are offered to trade on a wide range of financial products, so whether you wish to trade shares, forex or commodities, there’s a lot of choice of products to choose from.

Use margin to increase your profits

The biggest difference between standard trading and CFD trading is the use of leverage, which can magnify your profits (and losses) by a large factor.

Trade long or short

Share CFDs enable you to trade either a rising or a falling market, and take advantage of the price movement either up or down. The ability to trade both long and short is unique to CFDs and can be a valuable hedging strategy for market traders. 

No delay in receiving your trading profits

Unlike trading shares, when you trade CFDs there is usually no waiting time for your sales profits to be cleared through a bank – you receive your profits immediately in real time with no delays.


Very high risk trading

CFD trading comes with a very high risk of losing money. Some studies have shown that up to 8 in 10 CFD traders lose money.

Only for experienced traders

Trading CFDs should only be undertaken by experienced traders who understand how to manage risk, and have a thorough understanding of the financial markets and how they work.

Not suitable for long-term investing

CFD trading involves overnight holding fees if you wish to keep a position open overnight, so it is more suitable for day traders and is not suitable for those wishing to ‘set and forget’ their investment.

You don’t own the underlying asset

Unlike investing in shares (when you become a shareholder), you do not own the underlying asset you ‘buy’ when trading CFDs. 

Lose more than your trading money

Because most (but not all) CFDs are based on using leverage, you can end up losing far more than your initial trading funds, which is why CFD trading is not suitable for novice traders.

Top tips for CFD trading

Research before you start trading, and start small

Trading CFDs is not the type of trading to be undertaken by inexperienced traders, so do your research, read trading books, and possibly attend a CFD trading education course before deciding to start trading CFDs. When you do begin trading, start small by buying just a handful of shares until you gain experience of how to trade CFDs successfully.

Have a trading plan and stick to it

Having a trading plan is essential if you wish to start trading CFDs. The plan will outline what you have chosen to trade, your trading method and style, and how you will manage the risk of CFD trading.

Get out of losing trades quickly

The biggest mistake made by all traders worldwide is not getting out of losing trades quickly enough. Never trade without a stop loss order in place, and get out quickly if your trade goes against you.

Compare brokers with Savvy

The broker you choose should fit in with the type of trading you wish to do and your personal trading style. Compare online brokers with Savvy to find one that offers the products you wish to trade and fits in with your personal trading preferences.

More of your frequently asked questions about CFD trading

How do I open a CFD account?

Once you’ve chosen your preferred CFD broker, you’ll need to open a trading account. You’ll need to provide your broker with 100 points of ID, just as if you were opening a new bank account. The information required by your broker will include:

  • Your name and address
  • Your phone number and email address
  • At least two forms of ID, including your passport and drivers’ licence
  • Details of a bank account to link to your trading account

You may be asked to provide further details to enable the broker to carry out a credit check on you, as the leverage that comes with CFDs is considered to be a form of credit.

What fees will I be charged when I start trading CFDs?

In addition to brokerage or commission fees, there are also other charges to take into account when trading CFDs, including:

  • holding fees for overnight positions
  • daily interest charges
  • monthly data access fees (which may be charged by the stock exchange and passed onto customers by brokers)
  • midpoint order fees (which may be charged if you set a buy or sell order which is less than a standard unit, eg. half a cent)
What is a CFD stop-loss order?

A stop loss order is an automatic order which is placed to limit loss if a trade goes against you. It will result in your CFDs being automatically sold for a set pre-determined price to prevent catastrophic loss.

Will I have to pay tax on the money I make trading CFDs?

This will depend on whether you are considered by the ATO to be an investor, in which case your profits are considered a capital gain, or if you rely on trading as your main occupation, in which case profits are considered business profits. You will need advice from your tax agent as to how to most effectively set up your trading venture.

What hours is the Australian Stock Exchange open for trading CFD shares?

The ASX is open from 10am to 4pm AEDT, which is GMT + 11. It is open every business day of the year (Mon to Fri) with the exception of Christmas Day, Boxing Day and certain Australian public holidays.

Can I claim any CFD trading losses as a tax deduction against my normal income?

This will depend on your trading tax status with the ATO. If you are an investor, as most casual traders are classified as, then you can claim your trading losses as a capital investment loss, and offset them against any capital gains in the future.