| By far the most common question asked among | | | | highly liquid market and unlike other derivative |
| budding CFD traders is 'what are the best CFD day | | | | products like options, CFDs mirror the liquidity of the |
| trading strategies or the best winning CFD trading | | | | underlying stock market. When trading using a Direct |
| strategies that the profitable CFD traders use?' | | | | Market Access (DMA) provider you can get access |
| Here we'll look at the top 5 reasons why day traders | | | | to and can see the exact volume available on each |
| prefer to trade a contract for difference over other | | | | stock at muliple levels of depth. |
| derivative products and uncover the most common | | | | CFD day traders need high volume stocks and a |
| CFD day trading strategies. | | | | transparent market depth book that can be relied |
| 1. No overnight financing | | | | upon. That is why the DMA CFD providers using |
| CFDs have definitely evolved into the ideal choice for | | | | WebIress are so popular among short term day |
| short term day traders and there are a couple of | | | | traders. |
| key reasons for this. Firstly, CFDs incur a financing | | | | 4. Low commission rates for CFD traders |
| rate when you hold a position overnight. The | | | | By far the biggest highlight for CFD day traders is |
| financing for long positions is typically the RBA rate | | | | the very low commission rates. In fact some of the |
| (cash rate) +2%. So if the RBA rate is 7% then you | | | | most popular CFD products are the index CFDs which |
| pay 9% per year calculated back as a day rate. One | | | | are commission free. This gives you access to a fast |
| way to avoid this is to close your position before the | | | | moving product with ample liquidity for zero |
| trading day is over, thus avoiding the CFD financing | | | | brokerage. |
| rates. | | | | Even if you are day trading the top 100 CFDs, the |
| 2. CFD Leverage for day traders is incredible | | | | brokerage is still very low. Many CFD brokers in |
| Another key reason that CFD day trading strategies | | | | Australia charge a minimum of $10 or 0.1% and this |
| are so popular is due to the fantastic leverage you | | | | keeps the day traders very happy. |
| get access to. You see, if you had $5,000 in a stock | | | | 5. Day Traders love volatility which as been |
| trading account then you can only trade $5,000 and a | | | | extremely high recently. |
| 5% move on $5,000 is only $250. | | | | Volatility and CFD trading are the perfect couple. Day |
| If you took that same $5,000 on CFDs and traded a | | | | traders can't afford to sit there watching a stock go |
| $20,000 position, that same 5% move now equates | | | | nowhere, they want movement and fast movement. |
| to $1,000. So you can potentially make another $750 | | | | When the markets are volatile, short term day |
| with no more effort. Also keep in mind you can lose | | | | traders are in their element and usually profiting |
| an extra $750 with no more effort as well! | | | | handsomly from the short sharp intraday |
| 3. CFD liquidity on the top 100 ASX stocks is solid | | | | movements. |
| One of the keys for short term day traders is a | | | | |