The popularity of CFD trading has taken everyone by storm. There would have been few people in the investment community that could have predicted the success of this leveraged product and even during the economic downturn some of the major CFD brokers are increasing trading volumes.

The popularity of CFDs in Australia has largely come down to the simplicity of the product itself. Contracts for Difference or CFDs are exactly like trading the sharemarket except you need a small amount of money upfront. While CFDs are a leveraged product, the amount of leverage a trader users is entirely up to them. This means any trader could make the product as safe or as risky as they choose.

1,000 new accounts a month during the Bull Market

At the peak of the bull market it was quite common for some of the large CFD brokers in Australia to be opening around 1000 new accounts every single month. Whilst this may sound impressive it does not take into account the number of people who are closing their account each month as well.

During 2008 stock markets around the world experienced the highest level of volatility that any seasoned investor had ever seen. Despite this extreme volatility many CFD brokers in Australia experienced the highest level of trading volumes and the highest number of account openings at any time in their history.

Trading activity has recently doubled

In fact a recent article in the Australian newspaper indicated that one CFD broker managed to double the level of trading activity in the last six months of 2008 and new account openings were up 65%.

Using CFDs to Hedge and reduce portfolio volatility

One of the reasons for the heightened interest in CFD trading in Australia is due to the fact that CFDs can actually be used as a hedging tool and enable investors to reduce their risk on their existing share portfolio. Further to this any trader knows that with increased volatility comes an increased amount of opportunity.

So as you can see the popularity of trading CFDs in Australia is huge. It has overtaken the other derivative products like options, warrants and futures and will remain one of the best products to trade moving forward.

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