In the 12 months to May 2012, the Australian contracts for difference (CFD) market has grown significantly, spurred on by an expanding range of available markets and the ability of traders to adapt to an underperforming local share market.
These are the findings of the latest Australian CFD report by Investment Trends, which found that 44,000 investors have traded CFDs over the year to May 2012 - up from 41,000 a year earlier.
According to the survey of 17,197 investors, international markets are becoming increasingly attractive to Australian traders, with the proportion of trades placed over international indices and shares growing from 14 per cent to 22 per cent. Commodities and currencies also experienced a relative increase in trading volumes.
"While most Australian CFD traders graduate from domestic equity trading, they are increasingly willing to trade overseas assets and commodities - a sign that the market is maturing," Investment Trends senior analyst Pawel Rokicki said.
Four out of ten traders who had not traded CFDs but were intending to do so in the next year pointed to market conditions as the main barrier to trading. Another 31 per cent said they were held back by a lack of knowledge about the product.
Rokicki said more seasoned traders generally thrive on volatile market conditions, but there is a large group of potential traders "who wait for the waters to calm before jumping in".
The two top CFD traders - IG Markets and CMC Markets - now control almost 60 per cent of primary relationships - up from 55 per cent in 2011, the report stated.
This dominance was mainly the result of MF Global's exit from the market, but competition is likely to grow with large institutional players including Saxo Bank and London Capital Group working to leave their footprint on the Australian market, Rokicki added.
In other findings, the report stated that Australia now has the highest adoption level of mobile trading platforms, with 58 per cent of current CFD traders using a smartphone or tablet to trade.