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How to Use Plus500 in 2024 (The Ultimate Guide)
If you are looking to get into trading stocks using CFDs, then you picked a very good time to do it.
Why? Because the world economy is not in the best place right now. But why is that a good time to get into stock trading using CFDs?
There are two things you should know before you get into trading stocks using CFDs, whether you are using Plus500 or any other stock trading app.
CFD Service. Your capital is at risk.
The first thing to understand is that the economy of Australia—or any country, or the world—is not the same thing as its stock market (though some people act like it is).
The second thing you should know is that when the stock market recedes in value, that is not the world-ending calamity that it might seem to be. Many people see the stock market’s value shrink and get worried that people are losing money. But traders see that it is actually an opportunity to invest.
Even as the economy of Australia has seen better days (though it is by no means in dire straits) the Australian Securities Exchange (abbreviated as the ASX) is actually near a high for the last year.
Because the ASX is near its high, that means it will soon stumble down a bit. That is just how these things work. Why not strike while the iron is hot? To help you get your foot in the door when it matters most, we have assembled this guide on how to use Plus500, one of the best trading apps available.
CFDs are a leveraged product and can result in the loss of your entire balance. Trading CFDs may not be suitable for you. Please consider whether you fall within Plus500’s Target Market Determination available in their Terms and Agreements. Please ensure you fully understand the risks involved.
Table of Contents:
- Step One: Funding Your Account
- Step Two: Trading Stock using CFDs
- Step Three: Using Tools
Step One: Funding Your Account 💰️
You have three main options for how to fund your account, and they all have their advantages and drawbacks.
Option #1: Credit or Debit Card 💳️
This method sees you transferring money to your account. This is appealing because it is fast and convenient. Using a credit or debit card will make it hard to transfer your funds out of your account. And perhaps more importantly, it will also incur service charges on adding funds to your account.
Option #2: Using PayPal
PayPal is a third-party online banking software that allows you to transfer funds much more easily, both to and from Plus500. It is easy to use, but it has two problems of its own: To begin with, it takes a fee of its own when you transfer your funds out of your PayPal account.
But the other problem is that in order to transfer funds out of your PayPal account, you have to link it to your bank account anyways. This is why we recommend the last option for funding your account.
Option #3: Using Your Bank Account 💵️
Linking your bank account to your Plus500 sounds more complicated than it is. The first step in doing it is giving Plus500 your bank state branch number and account number. This will allow them to find your account. But then, you must verify your account. Here is where some people get confused.
Plus500 will send you two deposits worth less than a dollar each, and then subtract everything they sent you. You must verify your account on the app or website by filling in the value of the two deposits.
So, if they sent you a deposit of $.56 and another of $.22, then subtracted the $.78, you will fill in that the first deposit was $.56 and the second was $.22. Exclude the amount they subtracted.
This is the best method for funding your account since it comes with no service fees and allows you to transfer money out of your account easily. You just have to get through that initial verification process.
Step Two: Trading Stock using CFDs 🛒️
There are actually many different kinds of securities available through Plus500 using CFDs, but we are going to begin with talking about the most popular one: Shares in companies, also known as “stock”.
The first thing you will need to do is find a stock to trade. You can do this in a few ways. The easiest is by consulting an “ETF” or “exchange-traded fund”.
ETFs are indexes of different stocks, usually within a single industry. These make sorting through a particular industry easy. Plus500 also gives you the ability to sort by the price of each stock, as well as how much that stock’s price has moved in a given day.
Once you find a stock that looks appealing to you, the interface will show you its price history and a few interesting tools. The tools you will find the most useful are the analysis tools and the notifications.
Step Three: Using Tools
Using Analysis Tools 🔎️
We will not plunge into the depths of how to analyse a stock price, but we will give you an idea of how to use Plus500’s tools to make a good investment. First, starting with the draw tool. This is a simple tool for drawing on the chart that shows the history of the stock’s price over time.
Next, expand the price history to include the last one to three months of prices. Three months is preferable, but one month is all you need if you want to avoid overloading yourself with information.
The next step is the simplest: Find all the points where the stock price reached its lowest before going back up. Draw a straight line from left to right that intersects with as many of these points as possible.
This is called the “demand line”, and it represents the base level of demand for a business.
Then, draw another line that intersects with where the stock reached its highest before going back down. Again, try to intersect with as many of these peaks as possible while keeping the line straight.
This is the “supply line”, which represents the company’s ability to meet that base demand.
Using Trading Tools 📊️
The trading tools you will be presented with are exactly what you would expect: open buy and sell positions on *instrument* CFDs. But there are a few more that you should know about, as they are important for trading precisely.
A stop loss is an order that says you will close your position once the price of each individual share goes down to a certain threshold. So, you might open a position at $5 each per share, then set the position to close if it drops down to $4.90 each. This means you will take a $.10 loss per share, but it saves you from losing anymore.
On the opposite side of the coin is the “limit order”. This is an order that sees you closing your position once the shares reach a certain price above what you paid. If you open a position at $5 each per share, you set the position to close at $5.50 each. That way, the moment someone is willing to pay that price, you close the position.
These tools are important for closing the position the moment the price you want becomes available.
Plus500 is a very user-friendly platform available to Australians. It connects you to tons of companies, different markets, and a variety of securities. This means you have a lot of tools you can use to optimize your trades.
You can find Plus500 knowledge base on their website under the “trading” tab. Select “trader’s guide” to find out how to trade more effectively, as well as how to trade riskier securities. Use their “news and market insights” to inform your decisions.
CFD Service. Your capital is at risk.
The most important thing to trading well is the fundamentals. Do not risk too much of your money at once. Avoid trading in securities you do not fully understand. Do this, and you will get far.
CFDs are “complex financial products”, thus the platform is not suitable for beginners-inexperienced traders.
Plus500AU Pty Ltd (ACN 153301681), licensed by: ASIC in Australia, AFSL #417727, FMA in New Zealand, FSP #486026; Authorised Financial Services Provider in South Africa, FSP #47546. You do not own or have any rights to the underlying assets. Consider if you fall within our Target Market Distribution. Please refer to the Disclosure documents available on the website.
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