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Founded in 1851, BHP Group is an Australian mining company with a global presence, including projects across the US, Canada, Australia, and Chile. According to market capitalisation (AS$200.9 billion), BHP Group is renowned as the world’s largest company in the mining sector.
Boasting a global workforce of approximately 41,000 employees and contractors, the company’s primary operations centre on exploration, development, production and marketing of essential commodities. For example, iron ore is part of the company’s core business operations, an ingredient that goes into steel production. Additional commodities of focus include copper, which supports renewable energy and remains essential for a number of industries, such as construction; nickel, which is used in electric vehicles, petroleum, and metallurgical coal. To support sustainable farming, the company is moving into potash, a key ingredient for agricultural fertiliser.
Contracts for Differences (CFDs) are leveraged derivatives that provide a cost-effective way of trading in global financial markets. From Currencies and Bonds to Digital Currencies, Stock Indices, and Stocks, CFDs represent an agreement between two parties to exchange the difference in price between a position's opening and closing values.
Interestingly, physical delivery is eliminated in the CFD market as each active trading position is settled in cash. This is unlike futures and options contracts, where physical delivery is possible, though most futures and options contracts are cash-settled before the contract expires; this is known as the expiration date.
All CFD trades are derivatives, deriving their price on the underlying asset’s performance. As such, entering long (buying) or short (selling) a Share CFD with FP Markets means trading the underlying asset’s price movement. Your account equity will reflect the performance of the stock. Important to understand is that there are no voting rights with CFDs, but you can still be paid dividends, usually paid on the ex-dividend date.
A key attribute of CFDs is their leveraged nature. Leveraged transactions amplify account equity by using a margin account. As of writing, the share price of BHP Group is AS$40. So, to buy 100 shares of the company would involve an initial investment of AS$4,000. However, investing in BHP Group share CFDs with FP Markets would entail only putting up 20% of the initial investment to gain identical exposure as you would have if you purchased the shares outright. To demonstrate, with a margin requirement of 20%, the investor would need to put up AS$800 (4,000 * 0.20) to trade a position size equivalent to AS$4,000.
1. Open an FP Markets Forex and CFD Trading Account
The process to open a trading account with FP Markets is straightforward. You can also trade BHP Group through CFDs on MetaTrader 5 (MT5) and cTrader.
Click ‘OPEN LIVE’ on the main webpage, which will take you to the Account Application page, consisting of five steps: https://www.fpmarkets.com, as demonstrated below.
2. Download your Trading Platform
Upon approval of your FP Markets trading account, you will receive your login details through your registered email address, which can be used to access the FP Markets Client Portal. Within the Portal, clients can perform several tasks, from updating personal details and exploring Social Trading and Trading Tools to downloading your preferred trading platform, as exhibited below.
For this article, it assumes you trade with MT5.
3. Find the BHP Group Ticker
Within the Market Watch tab (Ctrl+M), locate the ‘click to add’ row and type ‘BHP Group’. Click on the BHP Group stock, creating an additional row for the security. With the stock now positioned in your Market Watch, drag and drop the stock to the primary chart interface on the right, and this will create a live, real-time chart for BHP Group. Now, traders can alter their chart preferences, from background colours to chart types, timeframes, technical indicators, and drawing tools.
4. Place the Buy or Sell Order
Once the Share CFD is live and research – technical or fundamental analysis or a combination of the two methods – indicates that the stock is overbought or oversold, placing a buy or sell order with MT5 can be achieved in a number of ways.
The most popular route is hitting F9 to open the MT5 order window. With the chart of BHP Group open in the background, this will automatically create the BHP Group symbol. If the symbol selected differs from what you want to trade, click the drop-down tab under ‘Symbol’ and locate BHP Group. You can then select the order type (market or pending), the volume you wish to trade, and Stop-Loss and Take-Profit values from here.
With MetaTrader 4 (MT4) and MT5, investors can also activate the One Click Trading feature. As shown in the chart below, this enables entry into a stock position with one click after inputting the trading volume. Longer-term investors will not need this feature; it is usually more beneficial for short-term traders, such as scalping or day trading. However, one of the issues with this solution is that you do not have the option of configuring Stop-Loss and Take-Profit orders. This must be configured in the trading terminal (Ctrl+T) once the trading position is active.
Below, you will find examples of long and short trades in stock CFDs:
With the stock recently clocking a fresh year-to-date low at AS$38.76 (down -21% this year), BHP Group is currently trading at levels not seen since November 2022. Weighed by soft demand for iron ore – price for iron ore is down -30% year to date – and Escondida copper strike concerns, is this stock worthy of a buyers’ watchlist, or does it open the door to selling opportunities?
Some analysts favour the attractive valuations and free cash flow generation, with Goldman Sachs forecasting an AS$50 price target for the stock over the next 12 months. Technical studies, however, highlight the potential for further losses in the stock toward AS$36.17, particularly if current support on the daily timeframe forms resistance.
The stock’s momentum to the upside has diminished considerably since mid-2021. From the monthly timeframe, this is evident through price movement; despite recording all-time highs of AS$50.84, buyers have been less eager to push things higher. This is also demonstrated by the Relative Strength Index (RSI) showing negative divergence and crossing below the 50.00 centreline (average losses exceed average gains).
Looking at the daily timeframe, price action ended Thursday’s session below an ascending line, taken from the low of AS$35.83. Should price hold below this line, further downside could be in store for the stock toward support at AS$36.17.
Share dealing refers to buying and selling shares of a publicly listed company that trades on an exchange. Like any investment, the shares' value can rise and fall according to the company's performance. When you purchase shares through an investment broker, this will generally make you the ‘beneficiary holder’, which means the investor holds these shares indirectly through the investment broker, the ‘nominee shareholder’.
The investor can receive dividend payments (if offered) and have voting rights. As a result, if an investor purchases shares of BHP Group, they will become a ‘part owner’ of the company in proportion to the number of shares purchased; they will also generally be the beneficiary shareholder of those shares.
Futures and options contracts are leveraged financial derivatives and are generally exchanged-traded instruments. Physical delivery is an option in the futures and options markets. However, most transactions are settled in cash (known as ‘offsetting the position’) before the contract’s expiration date – this is a specified date that an investor can trade the contract; these contracts essentially expire. Traders do, however, have the option to roll to back-month contracts. Finally, contracts in the futures and options market are standardised, helping to outline things like the quantity and quality of the underlying asset.
Purchasing a futures contract obligates both the buyer and seller to commit to buying and selling shares of BHP Group. Single stock futures are typically 100 shares for each futures contract.
Although ETFs will not perfectly mimic the price of BHP Group, they allow investors to invest in many companies without the need to invest in a single company, thereby spreading risk exposure. At the core of things, ETFs – traded on a stock exchange just like a regular common stock – are investment vehicles that pool investors’ funds and purchase various assets.
1. Does BHP Group pay a dividend?
Yes, BHP Group pays dividends; at the time of writing, the company offers a dividend yield of 5.4%.
2. What are the major differences between CFDs and physical shares?
Differences between CFDs and physical shares can be boiled down to ownership and leverage. CFD traders trade the underlying price movement of a stock; there are no ownership or voting rights, whereas purchasing physical shares bestows partial ownership of the company proportionate the number of shares bought, and delivers voting rights. In terms of leverage, CFD traders benefit from greater leverage options than when purchasing physical shares.
Can I trade BHP Groupon MT4 or MT5?
With FP Markets, you can trade BHP Group via CFD pricing on MT5 and cTrader. Most traders opt for MT5.
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