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Wednesday, 29 June 2022 06:33 GMT

Everything novice traders need to know about forex trading in Australia


(MENAFN- Stech Web Solution)

When it comes to forex trading, there are a few things to know about Australia. Firstly, Australia is a well-regulated market. There are plenty of opportunities for traders to get involved in, but there are risks too.

The first thing to understand about forex trading in Australia, like other countries, is that it is not a centralised market, which means that there is no one exchange where all trades occur. Instead, trades take place over the counter between banks, other financial institutions and retail traders.

This market can be suitable for Australian traders but does have some drawbacks. On the one hand, it gives traders more freedom to choose who they want to trade with. On the other hand, finding information about prices and volume is more complicated.

Another essential thing to understand about forex trading in Australia is that the country has a robust economy, which means that the currency is generally very liquid. There is a reduced risk of sudden economic changes that could impact the currency's value, as in certain developing markets. However, since the Australian dollar is not as volatile as other currencies, this also makes it difficult to make money from short-term trades.

Risks of forex trading in Australia

While the Australian market is well-regulated, some risks are still involved in forex trading. These include:

The value of the Australian dollar

As mentioned above, the Australian dollar is generally a very stable currency. However, this also means it is not as volatile as some other currencies, making it difficult to make money from short-term trades.

The liquidity of the market

Since the AUD is a major currency, this is not normally an issue. However in times of market stress it may be more difficult to exit positions.

The spread

A spread is the difference between the bid and ask price of a currency pair. When you trade in Australia, you will usually pay a slightly higher spread than in other countries.

The Australian market is slightly less liquid than some other markets, and so market makers charge an infinitesimally higher spread on the AUD.

Choosing a good broker in Australia

When you start forex trading in Australia, you must choose a broker. There are a few things that you should look for when you are choosing a broker, including:

Regulation

Ensure that the broker is regulated by the Australian Securities and Investments Commission (ASIC), a guarantee that the broker is legitimate and your money is safe.

Fees

Compare the fees charged by different brokers to find one suited to your trading style. Some brokers charge commissions, while others only charge the spread. Frequent traders should avoid brokers charging commission.

Platform

Ensure that the broker offers a trading platform that you are comfortable with. Some forex trading platforms are more user-friendly than others.

Customer service

Make sure that the Australian broker has good customer service, which is essential because you will need to be able to contact the broker if you have any problems with your account.

Benefits of trading Forex in Australia

While there are some risks involved in forex trading, there are also some benefits. These include:

The Australian dollar is a stable currency

As mentioned above, the Australian dollar is generally a very stable currency, which means that you can trade without worrying that the currency's value will fluctuate dramatically.

The market is well-regulated

Another benefit of forex trading in Australia is that the market is well-regulated, which means there is less risk of currency controls or massive volatility.

There is no stamp duty on Forex trades

There is no stamp duty on forex trades in Australia, which means that you will not have to pay any taxes on your profits.

Conclusion

Forex trading in Australia is a well-regulated market that offers plenty of opportunities for traders to get involved. If you are thinking of trying forex trading, make sure that you understand the risks involved and choose a broker suitable for your needs. Ensure you avoid the top four mistakes in the currency trading profession.


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