The majority of CFD providers in Australia offer CFDs over the stocks making up the ASX top 300, the rationale behind this is straightforward, shares with a bigger market capitalisation tend to be far more liquid. Several CFD companies forget that we live in Australia, a nation full of resources and naturally also rich in resource shares. The majority of shares listed on the ASX are resource based, this is actually the biggest sector of the Australian stock market.

CFD trading over speculative resource shares can be very worthwhile if you choose your stocks carefully. When buying and selling CFDs over speculative shares you should always perform some research on the company. Prior to choosing your shares you must make sure that the company has great management and a very good project. Of course if the copper price has risen and you are searching for exposure to shares in this sector logically you wouldn’t pick a CFD over a stock with gold assets, this is why picking stocks in the relevant sector is also essential. It’s always crucial that you remember buying and selling CFDs over speculative stocks has risks as these sorts of stocks can go up in price as quick as they can come down.

So why a trade CFD rather than buying the Share outright?

The answer to this question is simple and can be summed up in a couple of words, unrealised profits and losses. Unlike shares CFDs are marked to market on a daily basis meaning that the profits or losses are credited or deducted to and from your trading account each trading day. The profits and losses from buying and selling shares are handled very differently in that they're only realised once the equity is sold. Realising profits and losses every day means that you are able to make use of your unrealised to profits to buy new positions without having to deposit additional money into your trading account, naturally the same goes for losses in that you'll have to deposit money into your trading account if the position moves against you.

It’s important to note that most speculative stocks can have a higher margin prerequisite than shares in the ASX top 300, their margin requirement can be as high as 100% however the majority are offered on a margin of 75%. One vital factor to think about here is whether your CFD broker will charge you financing on the full notional value of the trade, this could of course be fairly large if the position was on a 100% margin, there are however a few CFD providers that will only charge financing on the borrowed quantity. It would be far more cost effective to pick a CFD company which will only charge you on the borrowed amount, if the CFD is on 100% margin this will likely result in a major cost saving.

You'll find hardly any CFD companies in Australia which will let you buy and sell CFDs on all ASX listed stocks, one of the most popular CFD providers is IC Markets. One of the 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 amount meaning that you won’t pay any financing charges for CFDs bought on 100% margin.