CFD Tracker

CFD tracker refers to a special type of account with a CFD provider. A CFD tracker account enables the trader to minimise transaction cost by choosing the right level of leverage or financing.

Before we move to defining a CFD tracker account, it would be better to understand CFDs in detail. We all know that a CFD is a derivative product that may be based on a company’s stock, currency pair, commodity or index. It is a leveraged system of trading where a trader can place high-value trades with a very small capital outlay, sometimes with only 5% of the value of the contract. The balance is financed or loaned by the CFD provider.

Actually, this is one of the major reasons that CFDs have become extremely popular in Australia despite being a relatively new derivate product. However, what is not talked about much is the fact of interest charged on the balance amount if the trader carries a trade overnight. Howsoever small the interest rate may be, it does add to the cost. A CFD tracker is actually meant to restrict interest costs so that a winning does not turn into a losing trade.

CFD tracker allows investors to choose the level of borrowing and choose exactly how much financing they want in each trade, anything from 0 to 99%. This can be of great value to investors who normally have a long term time horizon while trading. Another advantage is that it allows traders to invest in a fraction (up to 1/1000th of a unit) of a share or a specific monetary value.