Australians have a huge number of options when it comes to the world of Forex trading, especially if they want to be able to do it online from their own home. Forex brokers online generally offer 24 hour service – which is essential when you interact with a 24 hour global market like foreign currency exchange.
The Forex market trades about AUD$7 trillion worth of different currencies every single day – which is about 20 times as much as Wall Street.
The Australian dollar is the fifth most traded currency, behind the USD, euro, yen and pound. It makes up about 7% of the market, with a daily turnover of around $490 billion.
More than 50,000 Australians are registered with Forex brokers, so plenty of people in this country are getting in on the action. But how do you pick the best Forex broker?
How do I begin trading?
Trading FX sounds daunting, but there are a few ways in which you can prepare yourself. Before you make your first trade, you will first need to decide how you would like to trade and learn the market.
Once you understand how it works, you are ready to open an account, build a trading plan and choose your FX trading platform.
Australian’s Best Online Forex Brokers
Here are the top brokers for Forex trading in Australia.
- HFTrading – top rated for quality & effectiveness
- AxiTrader – trustworthy and reliable
- ThinkMarkets – low fees for management
- Pepperstone – ease of use
- Blueberry Markets – best for professionals
- Vantage FX – ease of use
How you can find the top broker?
Here is a list of the top Forex brokers with their websites:
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Do you know other Forex brokers that should be on the list? Let us know here.
Top Forex Brokers Review:
HFTrading is an online financial service provider that delivers innovative trading solutions that make success in global markets accessible to all investors, from seasoned experts to those just starting their journey. As specialists in CFD (contract for difference), a form of derivative trading, HFTrading enables its users to engage with more than 350 assets, including Forex currency pairs, and leverage high-tech analytics tools to ensure consistent trading performance.
With competitive spread from 0.03 and 0% commission, users are also in safe hands with full support from the HFTrading team at every step of the way. They won the award for best CFD Broker in Australia for 2020 at the Forex Awards, making them an excellent choice for anyone wanting to engage with Forex via trading CFDs.
AxiTrader was founded in Sydney in 2007, and became an international broker when they launched their London brand in 2012. It now services clients in China, Germany, the Middle East and Latin America as well.
AxiTrader is a broker which offers 54 currency pairing options for Forex traders, as well as commodity trading options. They offer competitive spreads compared to other brokers, and a high level of customer service.
ThinkMarkets is another international broker that has expanded around the world from an Australian base. Like AxiTrader, it offers commodity trading support in addition to Forex, although it does not have quite as many currency pairings (40).
ThinkMarkets also operates a cryptocurrency exchange, offering nine cryptocurrency trading options. It does not charge a commission, so the brokering firm only makes money from the spread. They offer lower customer support for standard accounts than most brokers, but for more hardcore traders with a pro or VIP account they are excellent.
Pepperstone is a Melbourne based broker offering Forex trading as its main product, although it also offers commodity and cryptocurrency platforms. It offers 59 currency pairings for Forex exchanges, but fewer commodity options than AxiTrader and ThinkMarkets.
Pepperstone is very good for cryptocurrency as well as Forex, offering platforms for a number of different crypto-markets (including BitCoin). It offers two different accounts – the Standard Account is commission free, but it has much higher spreads than the Razor Account.
Blueberry Markets is an Australian Forex broker that offers a number of currency pairings, including metal to currency pairings (gold to USD, for example). They offer a practice account for prospective clients, so that people can get used to the Forex platform and strategies without risk.
Blueberry Markets put a premium on customer service, and charge a moderate spread on trades. They are a good broker for beginners in the world of Forex, because they are focused on customer service and provide opportunities to practice trading.
Vantage FX is a Forex firm based in Sydney that also operates in China. It is primarily a Forex firm, with much less of a focus on commodities and cryptocurrency than the other brokers mentioned, but does offer 120 investment options (mainly currency pairings).
Vantage FX have a very good reputation for customer service and security and offer very competitive spreads. They also allow leverage up to 500:1, meaning that you can potentially make a very large profit with them.
What is Forex?
Forex (which stands for foreign exchange) is essentially a global market where people can trade different currencies with other people and companies from all over the world. This is done by most people when they travel overseas, as you can’t use Australian dollars outside of Australia, or any other currency here! It is also done to make a profit – which is known as Forex trading.
Forex trading is essentially gambling on changing exchange rates. If you think that a particular currency (say, US dollars) is about to rise in value compared to Australian dollars then you might use your AUD to buy USD now.
If the USD does in fact increase in value compared to the AUD then you can sell them and make a profit in Australia. If the value of the USD actually falls, however, you have lost money and the person who used USD to buy your AUD can change back and make a profit. In every trade somebody will lose in the short term, although given how volatile the exchange rate markets can be it is possible for both people to win if they hold onto the currency and sell at the right time.
There are other complicating factors such as trading with leverage (which lets you borrow money to amplify your profits and losses) and beating the “spread”, which is the minor difference between the buying and selling price of various currencies that is kept by the broker. However, the simple explanation is that Forex trading is using one currency to buy another.
How do you get started?
To get involved in the world of Forex you will need to have a broker. Brokers are firms that provide traders with access to various markets, and Forex brokers are (logically) firms that provide access to currency exchange markets. Traders can go through a broker to access the 24-hour currency market – essentially, the broker buys and sells currency on your behalf.
Most large brokers will allow you to use a practice account so that you can get a good understanding of the risks, rewards and strategies around Forex trading. It is a good idea to spend some time practising with a few different brokers to work out the best one for you, as well as get some practice without risking your own money.
You will also need to put in a deposit to start trading, which lets you begin to make (or lose) money. Brokers will often lend you money as well (on top of your deposit) in order to magnify your profits – although this does also make it possible to lose more money than you have in your deposit.
Brokers make money through what is called the “spread”. This is the difference between what you pay for a currency and can sell it for at the exact same time – usually a fraction of a percent of each currency unit. They sometimes also charge a transaction fee for each trade you make.
What makes a good broker?
There are a few key characteristics you should look for in your Forex broker. Once you have come up with a list of ones that are suitable, you can start to narrow it down.
First, they need to offer 24-hour service. Currency markets never close, and major events can offer you the chance to make a lot of money outside of Australian business hours (Brexit is one example). Therefore you need to be able to execute trades at all hours of the day or night, depending on circumstances.
Second, they should offer you the chance to practice. We have already discussed the practice accounts that many brokers offer – if someone doesn’t give you this service then they are probably not the firm for you. Apart from this indicating a lack of service and care about you, you are also likely to lose a lot of money as you figure everything out!
Finally, a you need to check the reputation of the broker. You obviously want your broker to be reliable and helpful, and so finding out what other people’s experiences have been is essential!
Once you have compiled a list of Forex brokers who meet these requirements, you need to figure out which one is best for you. There are a number of factors to be looked at balanced here, some of which may be red flags for some people but none of which should, alone, rule a broker in or out.
You will need to check how much of a transaction fee a broker takes, and if this fee seems low ensure that they don’t take a larger than normal “spread”. The larger the fee the broker takes, the lower your potential profit is without reducing your losses.
You also need to find out how much support the broker offers to you, particularly at first. Of course you should be able to practice first, but you never know when you might have a question or need some advice, and a broker that provides this is often better than one that doesn’t.
Finally, you will need to see how much leverage the broker will allow. More leverage means that you can use the broker’s money to buy currencies, which increases your potential profits. However, you also run the risk that you lose more than your deposit can cover, which will mean you owe the broker more money. You will need to decide how much risk you want to trust yourself with.
What regulations do you need to know about?
Because foreign exchange trading takes place on an international market there are different regulations in different countries. In Australia there are very few regulations on Forex trading or brokerage, other than tax requirements on profits. The only other regulation is limit on how much of your initial deposit can be charged to a credit card – $1000.
Brokers operating in Australia are governed by ASIC, meaning that if there is a problem you will have local support from a regulatory body. ASIC will not be able to help you for simple losses in trading, but if you have a dispute with your broker, they are available to mediate.
Risks of currency trading
As with all trading and investment strategies (especially ones that are as close to outright gambling as Forex) there is a significant risk of losing money. As already mentioned, when you trade currency with someone else each party believes that the money they are getting will rise in value compared to the one they are getting rid of. In the short term, at least, only one can be right.
The risk is expanded by the frequent use of leverage allowing you to make bigger trades. This can pay off, especially when you are trying to take advantage of very small changes in currency values, but it can go very, very wrong. As you can imagine, if you lose a large amount of your broker’s money they will not be happy with you!
That said, unless something drastic happens then you can usually sell a currency before too much damage is done. If you have made a trade and start to see the value of your new currency go down then you should be able to sell it before you lose more than you can afford to – and if you can absorb the short term loss you can also hold on to the new currency in the hope that it rises in value.
You should also not expect to make money at first, because it will take you a while to get used to the platform and develop your strategies. This is another reason why having a practice go first is so important! Limiting the amount you trade at first and accepting that you are unlikely to make millions in your first trade will minimise your initial losses.
Who decides the value of a currency?
No currency has a set value compared to another – even in China, where the government artificially keeps the exchange rate low, other currencies go up and down. The value of different currencies compared to each other is decided based on the demand for those currencies, as well as the actual value of money in their home countries.
Other frequently asked questions:
What is Forex?
Many people haven’t heard of the word Forex, but they will actually know a lot more about it than they initially thought. Forex is known by most people as foreign exchange, currency trading or FX.
What is the market like?
Foreign exchange is a decentralised global market where all of the world’s currencies trade. Interestingly, the Forex market it is the largest, most liquid market worldwide and is larger than all of the world’s stock markets combined. The average daily FX trading volume exceeds $5 trillion.
What is Forex trading?
Foreign exchange trading involves buying and selling currencies on the Forex market. FX trading is quite similar to trading on the stock market, but instead of buying and selling stocks, you are buying and selling currency. The aim is to make as much of a profit through this as possible.
How does foreign exchange work?
Whenever you travel overseas you will need to convert your money into the currency of the country you are visiting. The exchange rate at the time will determine how much you get in the currency you are converting to. This is based on supply and demand and is continuously fluctuating.
When is the market available for trading?
One of the best things about the foreign exchange market is that it can be traded at almost any time. The Forex market is open for trading 24 hours a day, 5 days a week.
What currencies can be traded?
It is possible to trade in a wide range of global currencies; however it is important to remember that these come in pairs. Forex allows traders to work with over 80 currency pairs.
What are some of the currency pairs?
The foreign exchange market works in pairs, meaning you will buy one currency and convert it into another. Some of the most popular pairs are:
What are the benefits of trading foreign currency?
There are several benefits of trading in foreign currency, these include:
- 24 hour trading
- High liquidity
- Regular opportunities
- Variety of foreign exchange pairs to choose from
What are some FX trading tips?
As with anything, learning the foreign exchange market takes time and practice, but there are also a few other tips to make learning how to trade easier. Some of these include:
- Stick to your trading plan
- Research trading tools and choose the ones that best suit your style of trading
- Consider different Forex providers and opt for the one that is closest to your trading needs.
Forex trading involves a high level of risk, and may not be suitable for all investors. You should carefully consider your objectives, financial situation, needs and level of experience before entering into any any transactions with all the brokers listed on this page, and seek independent advice if necessary.