The Australian Forex Capital Market is flourishing and many traders and enthusiasts are looking to take part, with broker companies constantly extending the client base. With the business being as appealing and risky as it is, traders need to be looking for good broker management and nationally regulated companies.
Administering the Market
Australian Securities & Investments Commission (ASIC) is a government body and the national broker authority implementing the laws regulating the brokers and generally protecting the investors and consumers in financial services at hand. The broker companies regulated by ASIC have to comply and follow a number of requirements including regular external audits of Forex broker books and having a separate account for clients’ deposits.
For obvious reasons, ASIC thus provides protection and safety to traders while supervising and regulating the Australian brokers who continuously get to gain the trust of their existing and new clients.
Choosing a Successful Forex Broker
Australian traders can experience challenges because of the actual distance from the financial centers, and if there are any ISP issues this often causes obstruction and frustration with the customers. This practically means you would be looking for a broker with a fiber connection directly to a financial center – preferably New York – and combining it with a good and reliable ISP.
This also means that you’d want the broker company to have exceptional customer support! Most of the Australian Forex brokers have good customer support, as well-trained staff is one of the ASIC requirements, but you’d want to choose brokers offering committed customer support service including a live chat, e-mail, as well as telephone available 24/7. Of course, you’d be looking at polite and patient as well as knowledgeable service.
From a broker of your choosing, you’ll also want to provide popular trading platforms, dominant spreads, commissions and leverage as well as fast execution rates.
What to Look Out For
Exploring the potential broker companies, there’s a lot of useful information you can find by listing the customer reviews as well as ASIC website. You should always look out and take your time defining quality options and the traits they offer. Except for above mentioned regulation from the national authorities and the importance of good customer support, there are more important aspects to choosing your broker.
Trading Platforms and Accounts Types
The trading platforms are usually independent and high quality, but there are brokers offering their platforms too. The platform is one of the most important elements of your decision and a good platform will have all currency pairs available, trader history and history of trends, as well as a Stop Loss option included which could save you big money in case of a downfall. Most of the brokers will offer more than one platform for you to choose from, which is a preferable option especially for the beginners developing their style.
Most brokers in Australia offer different types of accounts including Demo accounts for practicing, standard accounts for real money investing and VIP accounts for professionals and experienced traders.
Demo accounts or sometimes called practice accounts are essential for beginners, as they provide you with a chance to test the market and your skills, often without a deposit. This is a great asset you should be looking for with your potential broker.
Spreads and Leverage
The spread is the difference between the bid and its ask price. You would aim to find a broker offering narrow spreads to reduce big potential losses as much as you can. You will be looking for wide-spread offers when you are more advanced trader to get a chance to earn more money. An important thing to note is that there are broker companies asking for a fee for every transaction you make. While some brokers taking deposit and withdrawal fees too, some brokers only charge the actual spread.
When it comes to leverage, most of the Forex brokers in Australia offer more than decent options, going as high as 1:500. While this is a great method for traders to make huge profits, it is also rather risky and we would recommend not using it while you are in the beginning stages of your trading career.
Cash and Payout
It’s important to explore the deposit and withdrawal methods and speed. You will always look for the brokers offering fast, usually same day or payouts within 24 hours.
Ideally you would also look for no deposit/withdrawal fees and of course deposit bonuses, so it’s important to check all the available options.
Understanding the Risks
Forex trading of course brings risks you have to be aware of if you’re willing to take advantage of the market. Best advice you can take is never to trade more than you can actually afford. You can always loose more than you have initially deposited, and it’s important to reduce the risks as much as possible and there are several ways you can do that.
Firstly, do not trade more currency pairs than you can follow. This would be a rookie mistake and can lead to a downfall, especially in the beginning phases of your trading. You should then always trade in high-liquidity currencies, and start with short spread. Although, there is never certainty, this minimizes the risks of a downfall in case of unfavorable market conditions. It’s important to have a short market watch list, understand the constant and on-going market changes and time your investments and withdrawals correctly.