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Founded in early 1873 and with a market value of A$173 billion, Rio Tinto is a dual-listed mining and metals company: Rio Tinto plc and Rio Tinto Limited are listed on the London Stock Exchange and the Australian Stock Exchange (LSE/ASX; ticker: RIO), respectively.
Active in 35 countries and employing nearly 60,000 people, Rio Tinto’s core functions involve mining, exploration, and processing of various mineral resources, with its primary portfolio groups being aluminium, iron ore, copper, and minerals. Rio Tinto is a leading supplier of various industrial materials, including borax, titanium dioxide, and salt. The company also maintains an extensive network of operational facilities, such as ports, rail infrastructure, smelting, and refining plants.
CFDs (Contracts for Differences) are leveraged derivative agreements formed between two parties to buy and sell based on an underlying asset’s price movement. With CFDs, investors can trade and hedge on the global markets, including Currencies, Commodities, Bonds, Exchange-Traded Funds (ETFs), Digital Currencies, Stock Indices, and individual Stocks, such as Rio Tinto. Unlike futures and options contracts where investors can have the option for physical delivery, CFD trades are always cash-settled – trades are settled by taking the difference between a CFD's opening and closing price.
Trading on margin (leverage) is one of the defining features of the CFD market. Let’s assume you want to purchase 100 shares of company XYZ, trading at US$50 per share; to become a partial owner of that company would cost US$5,000 (ignoring any fees or commissions). This can be expensive for many new investors. As a result, you may decide to invest in the stock through Share CFDs with FP Markets; you could trade an equivalent position size of 100 shares with the XYZ Share CFD for 20% of the initial investment value: US$1,000. This would be your initial margin and mean you have effectively leveraged your capital by 5:1.
1. Open an FP Markets Forex and CFD Trading Account
To begin investing in Share CFDs, you must open a Forex and CFD trading account. With FP Markets, simply visit the main homepage, click the ‘OPEN LIVE’ button at the upper right corner and complete the five-step application process.
2. Download your Trading Platform
Once you have completed the registration, use your login credentials (sent to your registered email ID upon registration) and log in to the FP Markets Client Portal. Select ‘Platforms’ from the menu on the left side and choose your preferred trading platform. Most Share CFD investors opt for MetaTrader 5 (MT5) or cTrader.
3. Find the RIO Ticker
Investors often use MT5’s Market Watch tab (Ctrl+M) to locate stock tickers. To simplify the process, investors can type ‘RIO’ and select the stock to create a new row (see the first image below). From here, investors can drag/drop the stock to the chart’s main interface on the right (see the second image below). For investors who prefer to view all the available instruments to trade with FP Markets, right-click anywhere on the Market Watch and select ‘Show All’.
4. Place the Buy or Sell Order
Investors largely have two options when it comes to placing buy and sell orders. The first and most popular is the main order window (F9), which, as can be seen from the image on the left below, investors can input several key trading parameters, such as selecting order types, trading volume, and risk management options. The second option, which is used more widely by shorter-term traders, is the one-click trading feature (Alt+T – see image on the right below). This simplified approach permits traders to buy or sell with one click, provided that the trading volume is set. The downside to this approach is that it lacks the option of risk management and order types.
Share CFDs:
According to Refinitiv data (see stacked bar graph below), projections show that 70% of analysts are bullish on the RIO stock at current levels, while 30% recommend a hold. The stock's current mean (median) price target is A$133.09 (A$130.00).
As you can see from the daily chart of RIO, since late 2020 the stock has been consolidating between resistance around A$136.74 and support from A$90.02. While this may be the case, investors will also likely note an upside bias to price action, particularly since 2023, with the higher low at A$102.51 formed in August 2023 and another established at A$105.11 in September 2024. Therefore, given this, and observing the trend was to the upside prior to the formation of the noted range, an eventual breakout beyond A$136.74 could be seen.
Investing in physical shares allows investors to become a partial owner of RIO. Through an investment broker, an investor can purchase shares of a company that trades on a public stock exchange.
The value of your investment will rise and fall depending on the company’s performance and expected performance. Further to this, most investors will receive voting rights and be entitled to dividend payouts, essentially a share of the profits, usually distributed quarterly.
Futures and options contracts are another widely used method of investing in Stocks, agreements made between two parties to transact at a predefined price on a future date. Such contracts are generally used to hedge risk (for example, to lock in a price) and speculate.
A futures contract works by forming commitments between both the buyer and seller to transact at a predetermined price at a future date. In contrast, while an options contract bestows a similar obligation on the option seller, the buyer has the right but no obligation to transact. The option buyer pays the seller a premium for this ‘right'.
Commonly traded underlying assets for futures and options include physical products such as Commodities (for example, Gold, Silver, and Oil) and financial assets, including Bonds and Stocks.
ETFs operate similarly to mutual funds; both track a market index or a basket of securities and can be actively or passively managed. ETFs offer investors exposure to various asset classes, generally employed to help create a diversified investment portfolio.
Traded on a stock exchange like a regular stock, ETFs have unique ticker symbols that can be traded during exchange hours. Most ETFs are passively managed and track specific market indexes, like the S&P 500. It is important to note that while investing in an ETF with exposure to RIO will offer diversification benefits, the ETF will not precisely mimic the price movement of RIO.
1. Does RIO pay a dividend?
Rio Tinto does pay a dividend. As of writing, the company’s annual dividend yield is 5.22%.
2. What are the major differences between CFDs and physical shares?
While physical shares and CFDs allow investors to trade on companies' share prices, they differ in several key aspects. These differences include how they are traded, the leverage, and the ownership rights. This means that while both can provide investment opportunities, they operate in distinct ways.
Physical shares trade through a formal stock exchange and bestow clear ownership rights, while CFDs trade in the Over-The-Counter market (OTC) and are cash-settled. The leverage available with share dealing is small (Stock investors tend to trade with a cash account [i.e., no leverage]) compared to that offered in the CFD market.
3. Can I trade RIO on MT5?
With FP Markets, the RIO stock can be traded on both MT5 and cTrader.
4. What are the trading hours for RIO?
The trading hours for RIO are between 01:00 and 07:00 GMT+2 (Monday-Friday).
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