An Overview Of Currency Trading In Australia
Currency trading requires strong knowledge and expertise of the key forces and fundamentals of foreign currency markets. It also requires the understanding of definitions and trading styles and strategies such as the bollinger bands and fibonacci strategies. This is the reason why most Australians are slightly hesitant to experiment with currency trading. However, with careful research and a basic understanding of how currency markets work, traders can navigate the markets with confidence.
Foreign exchange is not too foreign a concept. Whenever you travel overseas or purchase something online from another country your domestic currency is converted into foreign currency in order to transact efficiently. So to in currency speculation, one currency is traded or exchanged for other currencies of differing value for profit. Forex trading Australia has grown into a $380 billion a day market as traders get sucked into thinking they can make a quick buck trading currencies. However, successful foreign exchange trading takes skill and expertise. We have tried to detail some of the benefits and risks of currency trading below.
Risks associated with currency trading
Trading with currencies brings greater risk which doesn’t make it suitable for all traders. The high degree of leverage like that offered by Easy Forex can bring you a significant gain or loss and traders need to closely monitor all their trades closely due to fast account balance changes evident when trading forex online. The responsibility to monitor open orders are exclusively on the client. Before trading consider the investment objectives, level of your financial experience and risk appetite. If you are not convinced of the suitability of the products offered by some of the forex brokers found on this site, try their customer service and educational seminars where you can get more info into currency trading Australia. The possibility of achieving high profits have always been associated with high risk. As an investor, one should trade reasonably in the range of financial options that are available to the trader.
90% of traders that lose their money on the forex market is due largely to a lack of planning and education, and bad money management. Focus on one major currency pair! We advise the trader to select one of the main currency pairs which have a low spread and is volatile and trade with the right forex broker.
Things to keep in mind to avoid risks in currency trading are choosing reputable Australian currency trading brokers, making sure that the currency broker you select has proper regulation, be aware of the rate risks and the leverage risks, to apply some risk-management techniques in order to avoid price risks and to use stop-loss order like the ones offered by Easy Forex and Plus 500.
Benefits of currency trading (profit)
Even though there are lots of risks, traders choose this type of trading because of all the benefits that this trading brings:
- Trading without commissions – Not all currency trading Australia brokers offers commission free trading, but most of them do. These brokers earn on client positions through so-called “spreads”.
- High liquidity – Since the currency market is too large, it is extremely liquid. What does liquidity means? It means that you can always sell what you buy. Under normal market circumstances, there is always another side that is going to buy / sell the currency you need.
- Free demo accounts – Most brokers offer you to open a free demo account to practice without risk. In fact, this is recommended before opening a real account.
- Leverage effect – In Forex trading, a small payment (called the margin) can control large positions. This so-called leverage gives the ability to trader to make a profit way bigger than not using the leverage. Again, if your market analysis is wrong, you will lose all your money, and become one of the beginners who have emptied one, two or more orders. Therefore, open positions with smaller parts of money you have in your account.
- Minimum ability to manipulate prices – Currency market is so deep and there are so many participants and no institution can control the price of any currency in the long term.
- Full-hour market – It’s open from the late hours of Sunday to Friday evening. Great for currency trading Australia traders who have steady jobs and want to trade in their spare time.
Types of brokers you can trade currency with and what Compare Forex Brokers thinks of them
- From 0.1 Pips
- Free Brokerage Up To $600
- Visit Website
- From 0.4 Pips
- Offer Bonuses For New Deposits of $2,000 Or More. Bonuses Are Not Paid In Cash But In Premium Software Programs.
- Visit Website
- From 0.8 Pips
- Visit Website
Pepperstone is Australia’s fastest growing forex broker by market share offering two forex trading platforms MetaTrader 4 (MT4) and cTrader with fast execution speeds. Pepperstone offers the higher leverage level of 500:1 and frequent flyer points on trades. They are recommended for intermediate to expert forex traders with strong support offered by the Pepperstone customer support team.
Easy Markets (Formally Easy Forex)
Easy Markets (formally called Easy Forex) is a currency trading Australia broker that is geared towards beginner forex traders or those looking to minimise their risk. Easy Markets offers 400:1 leverage and risk management tools including Deal Cancellation and Guaranteed stops. Easy Markets is one of the few Australian forex brokers to offer fixed spreads and don’t charge commission fees on trading.
Offers the lowest leverage which is good for beginners, but do not offer fixed spreads and guaranteed stop losses. You can trade with this Australia forex broker either on your computer, laptop or your smartphone and minimum deposit is only $1.
An Australian forex trading regulated CFDs provider that offers highest spread fees (2 pips). The Australia forex broker don’t charge trading commission fees and minimum deposit is $100. They offer 300:1 leverage levels which can also work perfectly for traders who have just begun with trading.
A forex trading Australia forex broker that offers the lowest leverage level 200:1, similar to Plus 500. They do not offer fixed spreads and guaranteed stop losses. It’s ASIC regulated with an AFSL and trading is available on multiple trading platforms.
Finishing with GO Markets, this trading broker offers low to medium leverage level 300:1 (higher than FXCM and Plus 500 and lower than Easy Forex). They also don’t offer fixed spreads nor guarantee stop losses. It is supported with forex trading platforms MetaTrader 4 and GO EZYTRADER trading platforms.
Importance of forex trading Australia regulation
You should only trade with a broker that is regulated with an Australian Financial Services Licence (AFSL). All five trading brokers from our list above are regulated ASIC brokers and there is no need to worry about frauds or something similar.
Choosing the right currency trading Australia broker is important and although only Easy Forex and Plus 500 offer guaranteed stop losses (you can lose only the amount you invest), OANDA, FXCM and GO Markets have positive characteristics. Before you commence trading know the benefits and risks. Hedge your positions and open an account with a broker that is a) Australian regulated and b) boasts guaranteed stop loss functionality. Don’t bite of more than you can chew. You always hear people’s success stories and never about their failings. If you’re vigilant, hard working and not greedy, forex trading success will come your way.