The number of CFD traders in most of the countries studied by Investment Trends fell in the previous 12 months but the Australian CFD market bucked this trend. Against a backdrop of lukewarm investor sentiment and low volatility levels trader numbers increased slightly to 42,000 people who traded CFDs at least once in the 12 months to June 2014. The inflows of dormant traders who resumed trading in the last 12 months continued to track upwards reaching a high of 10,000 (up from 9,000), whilst 8,000 new traders joined in the 12 months to June 2014 (down from 9,000). 17,000 CFD traders stopped trading in the 12 months to June 2014 (down from
21,000).

The Investment Trends 2014 Australia CFD Report is an in-depth study of Australian CFD traders’ attitudes and investing habits, based on a survey of 12,398 investors conducted between 28 April and 22 June 2014.

The number of CFD traders increased by 2% to 42,000 (from 41,000) current CFD traders. Compared to the other countries examined by Investment Trends, the Australian CFD market performed well with the UK spread betting, UK CFDs, France CFDs and Singapore CFDs all reporting losses in trader numbers.

The five largest CFD providers by number of primary client relationships were:

* Number of customers who use each organisation as their main provider.

Usage of mobile trading surged among frequent traders

Adoption of mobile trading increased slightly in Australia with 72% (up 2% pts) of current CFD traders using a mobile platform in relation to trading. This is a moderate level among the countries examined by Investment Trends, behind Singapore CFDs (82%), UK CFDs (73%) and UK spread betting (72%).

Usage of mobile trading surged among frequent traders (30+ trades per month) with 33% of frequent traders using a smartphone/tablet as their main means of CFD trading, more than doubling from 15% last year. Frequent traders were also more likely to use a mobile platform with 78% (up 5% pts) of frequent traders using a mobile platform in relation to trading. A more modest gain was observed among mainstream traders, with 17% now predominantly trading via a mobile app, up from 15%.

IG currently has the highest rated mobile app, while FXCM had the largest improvement in mobile trading (now ranking 2nd, up from 4th).

Overall satisfaction eased at an industry level but remains high

After eight years of increasing trader satisfaction at an industry level, satisfaction eased in the last 12 months but remains high. At an industry level, the composite satisfaction score^ of overall satisfaction decreased 2% pts to 70%.

CFD traders assessed their main provider overall and across 16 areas including functionality, price and service. FP Markets leads on overall satisfaction followed by FXCM and CMC Markets.

^ Defined as the composite score where very good = 100%, good = 67%, average = 50%, poor = 17% and very poor = 0%

IG’s improved mobile trading platform, CMC Markets’ platform upgrades and City Index’ new
platform were positively received by clients

Individual providers are constantly improving their offering to their clients. We asked current CFD traders what they perceived as the most useful innovations introduced in the last 12 months from their main provider. IG’s improvements to both their Apple and Android trading platforms have been well received by many of their clients. CMC Markets’ platform upgrades were also well received with clients liking the new pattern recognition tools, portfolio mixer and mobile platform. City Index recently launched their new Advantage Trader platform which was also well received.

CMC Markets unveil its new stockbroking packages.

CMC Markets yesterday unveiled its new stockbroking packages, which the business says reaffirms its commitment to the Australian market and its serious intent to win substantial market share of the frequent trader segment.

The move by CMC Markets Stockbroking is the first in a number of initiatives that will see the business leverage its global expertise to become a dominant player in the Australian stockbroking market.

Andy Rogers, Head of CMC Markets Stockbroking, says rewarding frequent traders is at the heart of the new offer. “We are serious about delivering incredible value to frequent traders and believe our new brokerage packages and rates set us apart from the rest of the industry – particularly for the trader who executes larger trades.  There simply is no better offer on the market for frequent traders,” says Rogers.

The launch of the new packages reflects CMC Markets’ confidence in growing the stockbroking business with a particular focus on delivering cutting edge technology at a great price, with outstanding service that provides traders with immediate access to expert assistance.

From 2 October CMC Markets will offer packages for three types of stockbroking trader – ‘Classic’, ‘Active Investor’ and ‘Premium Trader’ tailoring the technical features and pricing for each group.  All categories will benefit from the best value pricing currently available.

 Table 1: CMC Markets Stockbroking new trading tiers

Frequent traders, a group encompassing Active Investors and Premium Traders, will pay from $9.90 or 0.08% for each trade and benefit from access to the most sophisticated technology available to traders in Australia.  For example, Premium Traders receive free access to dynamic data, technical analysis, research and trading ideas, and comprehensive tax and portfolio management tools.

“Our pricing is the best available on the market but what we are most proud of is the value we are able to offer traders, in particular frequent traders,” said Rogers.  “We’ve invested heavily in technology and as a result can provide even the most demanding traders with all the tools they need to trade successfully.  Add to this outstanding customer service whereby traders can get immediate assistance from our experienced and highly-skilled Sydney-based team and this is a package that really can’t be beaten by any other providers.”

Currently frequent traders account for around half of CMC Markets’ clients.  These frequent traders hold an average of 17 different securities at any one time and make around 25 trades every month.  Over the last 12 months the most popular securities traded were Linc Energy, Fortescue Metals Group, CBA, Telstra and Atlas Iron.

Mr Rogers added, “By understanding the needs of our frequent traders we are able to offer the best possible value, technology and service to this group.  We have forged strong, trusted relationships with our clients as a result of this understanding and our ability to deliver for them every time.”

As part of CMC Markets’ commitment to providing the best service for clients it recently moved its IT infrastructure within the ASX Australian Liquidity Centre (ALC).

“The purpose-built data centre is designed to meet the demands of the financial market community and provides CMC Markets Stockbroking with reliable access to trading data and venues. As we expand our online trading platform offering we are in the best position to take advantage of these state-of-the-art technologies and pass on the benefits to our clients,” concluded Rogers.

Table 2: Summary of new packages offered by CMC Markets Stockbroking

Table 3: Summary of technical features available to Premium Traders

The new capability, exclusive to CMC Markets, is a purpose-built addition to its next generation CMC Tracker Platform that enables clients to see the percentage of CMC Markets’ clients from around the globe that are long or short on a particular product.

The new tool can sort sentiment of all CFD clients on a particular product, or just CMC Markets’ most profitable clients.
According to Chris Fulton, Head of CMC Markets Australia & New Zealand, the new sentiment tool provides its traders free of charge with the kind of market intelligence that is fundamental in supporting trading scenarios.

“The sentiment tool delivers information that gives our clients the advantage of having ‘eyes-and-ears’ into how other traders, both locally and globally, feel about the markets.

“Successful trading is all about superior information; this new capability is another way that we are delivering useful and timely data to our clients to help them make the best use of information in their trades.

“While some traders like to go with the market and others are contrarians, everyone likes to know how others are trading.  This new feature was custom-built for our traders after we received much client feedback about how we might improve our platform,” said Mr Fulton.

The new client sentiment tool is just one of several new tools CMC Markets has added to its CFD platform recently:
Pattern Recognition Scanner – this feature was built in response to the growing technical expertise of traders, who want access to extensive and detailed charting software. 100% integrated into the trading platform, the scanner gives investors more trading ideas by automatically scanning over 120 major instruments every five minutes, to find potential technical trade set-ups across all major asset types.

Trading Community – CMC Markets has successfully merged online social communities directly with trading the market through tools such as online Chart Message Boards and innovative use of social media via the CMC Markets Blog. The Message Boards allow traders to participate in online dialogue and discussions, post and exchange charts and interact with CMC’s Market analysts.

Mobile upgrades – CMC Markets continues to invest in mobile technology and many of the upgrades to the web-based platform are also reflected in CMC Markets’ purpose-built mobile platforms. More than 62% of CMC Markets’ clients have accessed CMC Tracker via a mobile app for iPhone, iPad or Android.

Mr Fulton concluded: “Our platform is constantly evolving to provide leading technology to our traders.  This is part of CMC Markets’ ongoing commitment to helping our clients’ trade with an edge.”

Michael McCarthy, CMC Market’s Chief Market Strategist commented “At the end of 2011 it appeared that the end of the world was nigh.  Very few people predicted growth in the world’s major indices and even fewer would have suggested that it would be the German share market that outperformed its counterparts in the US and China.  Indeed the US and China also finished the year ahead of their starting position.”

The economic recovery and (partial) clearing of a political logjam in the US, the downgrading of European fears to negative growth from financial catastrophe, and the stabilisation of growth in China, point to a positive, modest growth scenario for the global economy over 2013 according to CMC Markets.

2013 will see investors remain cautious and focussed on investment basics.  McCarthy expands, “Dividend yields will be top of investors’ minds and with interest rates close to zero we expect to see a continued shift in investor thinking away from capital protection and safe havens towards real returns.  This is essentially a re-balancing of the risk to reward equation.”

McCarthy also notes that dividend yields on stocks are, in many cases, substantially above bond rates, a situation that often indicates share price increases. “While each market is different, this usually means utilities, telcos, infrastructure, property trusts and in some cases, financial stocks. Most importantly, investors need reasonable comfort that the revenue streams supporting dividend yields are sustainable.”

CMC Markets also notes that another important aspect of the brighter growth prospects for the world is that investors may move towards “growth” stocks over the next two quarters – primarily materials and industrial sectors.  McCarthy expands, “The implications for indices are clear – those offering superior dividend yields, compared to local interest rates, are likely to receive support over the first two quarters. As the global economy grows, the possible shift in investor focus could see outperformance by indices dominated by materials stocks – notably Canada and Australia.”

According to CMC Markets declining global risks could see significant Price to Earnings ratios (P/E) expansion.  McCarthy expects that canny traders looking to benefit from investor activity may examine markets with lower P/E’s as possible targets for global investors. “Hong Kong and Singapore both enjoy lower P/E’s and higher dividend yields, making them potentially more attractive to global investors. While Australia has a higher dividend yield, the higher P/E may deter. Importantly, indices such as the Germany 30 and US SPX 500, while trading at or near GFC highs, are not stretched on P/E’s measures, suggesting further upside is very possible.”

CMC Markets believes that the greatest driver of share market rises in 2012 was the activities of central banks – notably the US Federal Reserve, The European Central Bank, the Bank of Japan, the Bank of England and the Swiss National Bank. The enormous liquidity injections from these banks, combined with government fiscal stimulus and low interest rate regimes, saw individuals and fund managers searching for a suitable home for their investments according to CMC Markets.

McCarthy commented, “The risks of this unprecedented globally co-ordinated stimulus is that the inflation genie will escape its bottle, wreaking havoc  on national economies as cost and asset prices spiral out of control. For this reason, the relevant central banks are keenly watching for the right time to stop stimulating, and then start withdrawing stimulus funds.  The withdrawal of stimulus funds is possibly the greatest threat to the health of global share markets.”

As growth improves, and unemployment falls, markets face a conundrum – an improving economy should mean stimulus withdrawal.  “Central banks will do their utmost to ensure their actions don’t de-rail recovery but markets may well run ahead of Central Bank action. Markets price the future, not the present, and will anticipate withdrawal well before the fact,” said McCarthy.

CMC Markets expects the outlook to have two major implications for traders. Firstly, the possible shape of market moves, regardless of country,  could resemble a sine curve – higher as growth improves, lower as markets anticipate withdrawal, and higher again as an orderly withdrawal soothes market fears. 

Secondly, as in 2012, traders may choose to deal with these non-trending conditions by employing “relative value” trading, buying one index and selling another at the same time. The trader sees profits or losses due to the change in the relationship between the two (or more) indices, while enjoying some protection against sudden shifts in global market sentiment by staying both “long” and “short” in different indices.

An analysis of CMC Market’s most profitable clients measured by dollar value, found that one of the most popular CFD instrument traded over the last week was the CHINA50, a share index tracking the performance of some of the largest “A” share companies traded in China.  These are companies registered in mainland China whose stocks are traded on the Shanghai and Shenzhen stock exchanges.

CMC Market’s top CFD traders also looked to Finnish company, Nokia.  Shares in Nokia have more than doubled in price from very depressed levels in mid-July as investors embraced its smartphone link up with Microsoft and many of the savvy investors have seen real upside for the company in emerging markets given its lower cost smartphone offering.

The second most profitable company CFD was Shun Tak Holdings, a Hong Kong based property investor and developer with interests in both Hong Kong and Macau. It also has interests in cleaning services, transport and travel agencies. Shun Tak’s shares rose strongly last week as part of a broad based rally in China’s market and following broker upgrades based on an improved outlook for Macau.

Ric Spooner, Chief Market Analyst, CMC Markets, commented: “Our most successful CFD traders are confident and experienced enough to look beyond the mainstream trading instruments to those offering more international exposure.”

CFD Instruments traders by CMC’s most profitable clients over the last week include:

Top 10 traded CFDs (by profitability)

1.       AUD: USD

2.       China A50

3.       Nokia

4.       US SPX 500 ( S&P 500)

5.       Gold

6.       US 30 (Dow Jones Index)

7.       UK 100 (FTSE 100)

8.       EUR: USD

9.       German 30 (DAX)

10.   Shun Tak Holdings

CMC Market’s top traders also looked to the AUD:USD currency pair to produce the best returns from the available CFD currency instruments. The currency pairs that yielded the least profit for the top traders was the USD:JPY.

Ric continued: “Major currencies and leading share indices are traditionally among the most popular trading instruments among our clients. CFDs like the AUD:USD, EUR:USD, US 30 and Gold are highly liquid markets with tight spreads and trade either around the clock or with only a small break which makes them favoured instruments for short term traders.

“The German CFD (based on the DAX index) has grown steadily in popularity amongst our Australian client base. European economies have been an increasing source of focus for international economies since concerns over a possible break-up of the Eurozone began to mount in 2010. Opening at 6pm Australian time and being active during the Australian evening, makes the German and index particularly suitable for part time traders working during the day.”

The plans announced by US Federal Reserve Chairman, Ben Beranke, were welcomed by investors and traders as financial markets across the globe witnessed a buying spree that sent global equities surging higher. 

CMC Markets, Senior Trader, Tim Waterer said:

“The FOMC’s plan to spend US$40b per week on mortgage-backed securities, which came with no conclusion date, showed traders that the FOMC is digging its heels in. This aggressive move served to comfort US investors, so much so that the Dow and S&P500 have hit December 2007 levels.

“The exuberant buying witnessed in the US last night is similarly being played out across Asian markets today.  With investors clearly pleased with the heavy-handed approach by the Federal Reserve in tackling the struggling US economy.

“Locally the Australian market looks set to end the week in sprightly fashion.  Mining stocks, not surprisingly, are among the best performers given the rosier outlook on the US economy post the Fed announcement. The ASX200 looks like it has a fair chance to conclude the week close to the 4400 level if buying enthusiasm can be maintained in the afternoon trading session.

“Whether the QE3-inspired rally can show some longevity remains to be seen. Whilst the markets have been served a dose of good news this week, the shot of adrenaline may only last as long as the point where economic indicators abroad remind us that global growth remains precarious at best.”

The result of A$156m of investment over two years, this new platform has been built in response to customer, industry and regulatory feedback that retail investors must be empowered and confident to trade the markets.

“The CMC Tracker platform will be a substantial leap forward for an industry that relies on the latest technology, and will allow more innovative applications of CFD trading,” said Louis Cooper, Head of CMC Markets Australia and New Zealand.

The platform will allow faster execution through a range of features including increased order types, advanced charting techniques and the ability to execute trades from these charts, and integrated news feeds all at a lower cost of trading.

In a review of the Tracker platform, Canstar Cannex (Australia’s leading financial research institute) believes “through their development of the Tracker platform CMC Markets can potentially revolutionise the role CFDs play in the investor’s/trader’s portfolio.”

Adjustable leverage and automatic, transaction based stop losses manage downside
A major new innovation is the platform allows an investor to dial down the level of leverage in the CFD, to as far as zero. This means the platform will allow investors leverage-free access to products like FX, international stocks and commodities. The platform also allows the more self-directed investor to employ a ‘buy and hold’ strategy’ if they wish.

Canstar Cannex describes the adjustable leverage as a feature that “will open the door for CFDs to be used in a more conservative space at a gearing level chosen by the trader”.

“We believe this will be incredibly beneficial for investors who are sufficiently comfortable with using CFDs but want less risk. It creates one of the easiest ways to access foreign exchange and commodities in a market where there are limited choices for investors wanting access to these asset classes,” said Mr Cooper.

Another new risk management feature is the automatic transaction based stop losses, which automatically set a stop loss equal to an investors’ margin. This feature remains enabled from account set up unless the investor deliberately changes their account settings, providing a higher level of protection for newer or more risk adverse investors.

The platform increases CMC Markets’ focus on education with live news streams from Dow Jones and integrated education modules and embedded social media. CMC Markets was named “Best education materials” in the Investment Trends May 2011 Australia CFD Report for the third year running.

New portfolio mixer allows control and equity hedging
Another notable feature is the portfolio mixer, which allows an investor to drop and drag different assets, companies, currencies and commodities into one on-screen basket.

“For educated, savvy investors, CFDs can be a great tool for hedging company exposure in their equity portfolio. We wanted to give them a means to be able to do this accurately and confidently, so with the appropriate education they can start to minimise the downside of investing purely in an equity portfolio, especially in volatile markets,” said Mr Cooper.

For the most sophisticated investor, it is possible to use the mixer for more targeted techniques including building your own index across multiple assets, for example a gold index which includes direct access to the commodity as well as gold miners.

Automated system will reduce trading costs
The new platform offers CMC Markets’ lowest spreads ever, meaning investors can trade currency pairs at interbank rates, (including EUR/USD) and all major indices (including Australia 200) from 0.7 pip spreads.

In regards to financing, an investor only pays interest on the leveraged portion of their trade, not the entire trade amount. The financing charged is only 2% above the base rate.

“The basic premise is an investor’s bottom line means everything. With tight spreads, commission free company trading and no financing charged on the margin amount, investors should have more money in their pocket to trade with,” said Mr Cooper.

The platform also has versions built specifically for mobile devices which allows investors to trade with superior functionality on iPads and iPhones plus market leading security features.

“This platform should set the pace for our competitors, many of whom have lagged behind in technological investment. We expect this platform to propel us to the position of number one CFD provider in Australia,” Mr Cooper concluded.

Recently the Australian bourse has been weighed down by international issues such as a potential China slowdown, European and US debt issues along with local concerns like the high Australian dollar and consumer reluctance to spend.

“Depressed share prices have attracted many investors to companies which are looking like good value now on their price to earnings ratios and dividend yields, but whether their earnings are sustainable will determine their value as an investment. Around 160 of the top 200 companies reporting over the five weeks will provide some valuable insight into this earnings sustainability,” said Mr McCarthy.

For investors, it is also important to be on the alert for companies and industries displaying earnings growth, as this will be a major factor in share price growth.

The last 12 months has seen analysts downgrade earnings forecasts across the board as optimism about a global recovery has faded to concern over mixed economic signals.

“The good news is for the most part any surprises have already been captured in these downgrades so the surprises are likely to be better than expected earnings, albeit with a few exceptions,” Mr McCarthy said.

Indications are also that improved cash flows and reduced debt will mean the potential for capital returns.

“Given a generally cautious investment environment and weak market sentiment, investors will pay particular attention to company views on the outlook for business over the coming year,” Mr McCarthy said.

Sector focus

Consumer Discretionary – focus on outlook statements and strategies to cope with lower sales

Consumer discretionary stocks, particularly retailers, are under pressure from recent downgrades, driven by fears about the activity of consumers in the eastern states and falls in reported retail sales. Recent guidance from David Jones and Myer is pointing to falls in profit of between 0.5 and 5%. JB Hi-fi’s result will attract attention in light of the buyback of 9.9% of its capital earlier in the year. Media stocks are also expected to show modest earnings per share falls.

Investors and analysts are likely to focus on outlook statements and any strategy changes to deal with the current lower level of sales. Of particular interest will be any initiatives to deal with competition from online retailers, especially in light of the recent strength of the Australian dollar.

Sector leader reporting dates: 23/8 Flight Centre, 31/8 Harvey Norman, 16/9 Myer

Consumer Staples – will shed light on consumer activity

Consumer Staples is an important sector as it will shed light on consumer activity. Analysts will carefully examine comparable sales in grocery giants Woolworths and Wesfarmers (Coles). Woolworth’s recent Q4 sales results point to comparable growth around 4%, headline around 6% and profit growth around 6.5%.

Sector leader reporting dates: Coca-Cola 9/8, Wesfarmers 18/8, Woolworths 25/8

Financials – divergence across sector

There are several key aspects to the reports from the financial services sector. Credit growth is in doubt, given conservative consumers and a well-capitalised and cash rich corporate sector. CBA is the only big four bank to report, expected to show a profit increase of 8 to 8.5%. Bank of Queensland is likely to report a 10% drop in earnings due to problems with its commercial property exposures.

Diversified Suncorp could be a strong performer on the back of an improved insurance pricing environment, although its banking business is the likely swing factor. Property groups could diverge, with Westfield’s improved US earnings offset by a strong Australian dollar, and Goodman Group likely to report a large lift from improved development profits.

Sector leader reporting dates: CBA 10/8, Westfield 18/8, Suncorp 24/8, Bank of Queensland 13/10

Materials – heavy bearing on the overall share market

Resource stocks will remain a focus, whether mining or energy related. This group represents around one third of the value of the overall share market and will have a heavy bearing on its performance over the next six months.

Metal and oil prices are at elevated levels, ensuring good revenue flows in US dollar terms. Exchanging this income to Australian dollars is likely to offset this benefit, and will be a focus for investors and analysts. Another area of concern will be cost containment. Project delays due to weather disruption are largely factored in to current share prices, but the effects of wages pressure is less clear.

Sector leader reporting dates: Rio Tinto 4/8, Alumina 11/8, Newcrest 15/8, BHP Billiton 25/8.

Traders are showing greater signs of confidence and are tackling more adventurous investments according to the latest Share Trader Insights Survey launched today by CMC Markets Stockbroking.

CMC’s bi-annual Share Trader Insights Survey measures the trading behaviour of over 500 active share traders and compares the results with previous surveys conducted in 2010.

Overall, confidence is on the rise with 40% of traders planning to invest more money into the share market and only 18% are planning to do nothing – a marked drop from the 33% planning to sit on their hands in the H2 2010 survey. Trader confidence is also reflected by a spike in the number of investors wanting capital growth, rising to 30% from 25% since the last survey, while wealth preservation as an investment goal has fallen to 13% from 15%.

Banks and major resources companies such as BHP Billiton and Commonwealth Bank continued to dominate traders’ top 25 stock picks, but there were some signs of further diversification with companies such as Bluescope Steel, Qantas, Commonwealth Property Office Fund and JB Hi-Fi all increasing in popularity.

“The fact fewer investors are opting to sit on their cash is a strong sign of confidence. It’s a big departure from previous findings which showed investors were either cautious about trading or largely sticking to the large names in domestic equities,” said David Land, chief market analyst with CMC Markets. “Investors are again looking at share trading as a means to grow, rather than protect, their wealth.”

Getting savvy with social media

CMC Markets also surveyed traders’ use of social media and online tools for gathering information and increasing knowledge.

Online articles (22%) and online guides (15%) are the most important sources of information for increasing trading knowledge, followed by more traditional media forms including personal finance magazines (13%), newspapers (13%) and trading magazines (10%). According to the survey, trading tips are most in demand (19%), followed by analyst reporting (14%) and commentary (12%).

Looking at social media, trading websites are the most popular forms of social media for increasing their level of investment knowledge (used by 57% of traders) with forums, blogs and webinars also high on the list.  Facebook gained favour with only 9% of traders and was marginally more popular than Twitter with 8%. By age, 25 -34 year olds comprised almost half of traders who used Facebook and 59% of those who used Twitter were under 35. Meanwhile investors aged 45 and over were more likely to use an iPhone.

“The research confirms the social media phenomenon is extending to our trading habits with trading websites and i-Phone apps considered a useful source of information. This is consistent with our experience; CMC has seen a steady increase in traffic to our online trader tips and blogs,” said Mr Land.

SGX gets thumbs down while Chi-X more warmly received

Traders were also quizzed on their reaction to current events including the proposed takeover of the Australian Securities Exchange (ASX) by the Singapore Stock Exchange (SGX) and the entry of alternate exchange Chi-X to the Australian market.

Only half of investors knew the ASX is a publicly listed company and 24% think it is government owned. Therefore it’s not surprising 32% said they were opposed to the takeover, 35% were supportive and 32% were neutral.

By contrast, 43% were neither opposed or supportive of Chi-X, 35% were supportive and only 22% were actually opposed.

“The fact people don’t mind another entrant into the market, yet are opposed to a takeover of the ASX tells us there is much emotion and nationalistic sentiment tied to the ASX with many people believing it’s a state-owned asset of national significance,” said Mr Land.

Herd Index shows timing the market is still tricky for traders

The survey also encompasses the CMC Markets Herd Index, which measures trading patterns against market movements. The Herd Index has continued the pattern of previous surveys with 44% of traders moving money into the market during January 2011 as the All Ordinaries Index rose.

“The Herd Index shows investors are continuing to move money in to the market when it is on its way up, then out when its going down, meaning they are entering and exiting at the wrong times,” Mr Land said.

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Traders are showing greater signs of confidence and are tackling more adventurous investments according to the latest Share Trader Insights Survey launched today by CMC Markets Stockbroking.

CMC’s bi-annual Share Trader Insights Survey measures the trading behaviour of over 500 active share traders and compares the results with previous surveys conducted in 2010.

Overall, confidence is on the rise with 40% of traders planning to invest more money into the share market and only 18% are planning to do nothing – a marked drop from the 33% planning to sit on their hands in the H2 2010 survey. Trader confidence is also reflected by a spike in the number of investors wanting capital growth, rising to 30% from 25% since the last survey, while wealth preservation as an investment goal has fallen to 13% from 15%.

Banks and major resources companies such as BHP Billiton and Commonwealth Bank continued to dominate traders’ top 25 stock picks, but there were some signs of further diversification with companies such as Bluescope Steel, Qantas, Commonwealth Property Office Fund and JB Hi-Fi all increasing in popularity.

“The fact fewer investors are opting to sit on their cash is a strong sign of confidence. It’s a big departure from previous findings which showed investors were either cautious about trading or largely sticking to the large names in domestic equities,” said David Land, chief market analyst with CMC Markets. “Investors are again looking at share trading as a means to grow, rather than protect, their wealth.”

Getting savvy with social media

CMC Markets also surveyed traders’ use of social media and online tools for gathering information and increasing knowledge.

Online articles (22%) and online guides (15%) are the most important sources of information for increasing trading knowledge, followed by more traditional media forms including personal finance magazines (13%), newspapers (13%) and trading magazines (10%). According to the survey, trading tips are most in demand (19%), followed by analyst reporting (14%) and commentary (12%).

Looking at social media, trading websites are the most popular forms of social media for increasing their level of investment knowledge (used by 57% of traders) with forums, blogs and webinars also high on the list.  Facebook gained favour with only 9% of traders and was marginally more popular than Twitter with 8%. By age, 25 -34 year olds comprised almost half of traders who used Facebook and 59% of those who used Twitter were under 35. Meanwhile investors aged 45 and over were more likely to use an iPhone.

“The research confirms the social media phenomenon is extending to our trading habits with trading websites and i-Phone apps considered a useful source of information. This is consistent with our experience; CMC has seen a steady increase in traffic to our online trader tips and blogs,” said Mr Land.

SGX gets thumbs down while Chi-X more warmly received

Traders were also quizzed on their reaction to current events including the proposed takeover of the Australian Securities Exchange (ASX) by the Singapore Stock Exchange (SGX) and the entry of alternate exchange Chi-X to the Australian market.

Only half of investors knew the ASX is a publicly listed company and 24% think it is government owned. Therefore it’s not surprising 32% said they were opposed to the takeover, 35% were supportive and 32% were neutral.

By contrast, 43% were neither opposed or supportive of Chi-X, 35% were supportive and only 22% were actually opposed.

“The fact people don’t mind another entrant into the market, yet are opposed to a takeover of the ASX tells us there is much emotion and nationalistic sentiment tied to the ASX with many people believing it’s a state-owned asset of national significance,” said Mr Land.

Herd Index shows timing the market is still tricky for traders

The survey also encompasses the CMC Markets Herd Index, which measures trading patterns against market movements. The Herd Index has continued the pattern of previous surveys with 44% of traders moving money into the market during January 2011 as the All Ordinaries Index rose.

“The Herd Index shows investors are continuing to move money in to the market when it is on its way up, then out when its going down, meaning they are entering and exiting at the wrong times,” Mr Land said.

The post Confidence returns as traders get active and more adventurous, CMC Markets survey says appeared first on AdviserVoice.

The multiple awards won demonstrate the quality and depth of CMC Markets’ stockbroking business after CMC Markets launched Australia’s lowest online brokerage rate of $9.90 or 0.10% in 2010.

“People often view us as the online brokers who are the low cost option.  What we want traders to be aware of, especially active traders, is not only do we have the lowest brokerage but we have the best charting (which is free to all clients), best website functionality, best customer service and most importantly the highest overall client satisfaction levels,” said Louis Cooper, Head of CMC Markets Australia and New Zealand.

“On top of this, we have an unrivalled education offering for new share traders who want to familiarise themselves with the share market, including a unique ‘Trading Insights’ blog that both clients and non-clients can access for trading strategies and information on both local and global markets,” said Mr Cooper.

“What we saw happen in the second half of 2010 was a surge in the competition in online brokers as the low cost brokers have started to challengethe more established providers.  Our research found that newer entrants like CMC Markets have strengthened their market position considerably,” said Pawel Rokicki, Senior Analyst at Investment Trends.

The Investment Trends analysis found that CMC Markets attracted 7% of new clients, significantly higher than their overall 3% market share.

CMC Markets’ clients can access a platform that offers low cost brokerage with free unlimited conditional orders, access to all ASX equity instruments, live pricing, market news and analysis, and free charting which will ensure clients are more equipped than ever to make smart, strategic trading decisions. This is why our clients are the happiest online broking clients in the country,” said Mr Cooper.