If you are a resident of Australia, then it is important that you choose a regulated forex broker operating in the country. It is not an easy task, but if you are aware of the various aspects you must take into consideration for selecting the right forex broker the task becomes easier. This is exactly what we aim to achieve through this post. Read on to know how Australian traders can choose the best forex broker in 2018.
How Australian Traders Can Choose the Best Forex Brokers
Exports from Australia have significantly increased over the years and this has contributed to a sharp rise in the value of the Australian dollar. As such, Australian traders seeking to gain from the Australian dollar’s price appreciation have been flocking the retail forex trading market. This has resulted in an increase in the number of online forex trading platform providers, making the process of choosing the right broker all the more difficult.
You have to keep a few things in mind while choosing a forex broker as an Australian trader. These include regulation, trading platform software, customer support services, commissions and spreads, and leverage.
- Forex Regulation in Australia
In Australia, the agency that has been vested with the responsibility of protecting the interest of traders in the country is the Australian Securities and Investment Commission or ASIC. The regulatory agency was established in 1998 as part of the Australian Securities and Investments Commission Act, 2001. The ASIC is vested with the following responsibilities to streamline the operations of companies in the financial sector:
Promotion of financial literacy
Regulation of financial services
Regulation of the insurance industry
Regulation of the securities and derivatives trading
As an Australian trader, you must work only with ASIC regulated forex brokers. Unregulated forex brokers may offer a lot of impossible benefits to attract customers. You should never for those offers. This is because working with them will not fetch you any monetary benefits at the end of the day. On the other hand, working with an ASIC regulated broker helps you enjoy peace of mind.
- Trading Platform Software
The broker’s trading platform provides you with entry into the currency market. If you want to trade effectively, the platform should be reliable and efficient. Generally, brokers offer many different platforms.
Downloadable platform software: This may either be created by the broker (proprietary platform) or it may be third-party or generic software such as the MetaTrader 4, cTrader, or Sirix Trader. In this case, you can access the platform only from the computer to which you have downloaded the software. Proprietary platforms are often highly customizable and, therefore, they can cater to traders of all skill levels.
Web-based platform: You can access a web-based platform through a web browser. This gives you the freedom to trade from anywhere in the world.
Mobile platforms: These are downloadable apps or web-based platforms. In addition, consider if the trading platform is proprietary or a generic platform widely used by the industry.
The platform offered by the broker should be:
Easy to use
Executing trades instantly
Providing you with an array of tools for market analysis
Providing quality charts and in-depth views of price movements
Making available additional tools such as economic calendar, pip and currency calculator, news stream, and chart trading for enhancing your trading capabilities
- Leverage, Commissions, and Spreads
Your profitability is dependent on the trading costs involved. Therefore, you should have a clear understanding of the commissions charged and spreads offered by the broker that you are planning to associate with. Depending on the business model adopted by the broker, you are either charged a commission or offered a spread for the trades executed on the platform. Most forex brokers make money through spreads which may be fixed or variable.
Typically, Electronic Communications Network (ECN) brokers charge a commission on each trade. It may be a fixed rate commission or a percentage of your total trading volume.
Considerably high level of leverage is available to Australian traders when compared with their European counterparts. While most European brokers provide a maximum leverage of 1:100, regulated brokers in Australia are allowed to offer a leverage ratio of up to 1:500.
- Types of Accounts
Forex brokers offer different types of accounts, depending on the market in which they are operating. Beginner-friendly brokers provide accounts that require only a minimum amount to be deposited to start trading. They also allow Australian traders to buy small lots. For premium traders, the account opening requirements specified are generally higher. The services offered to these traders will be personalized and exceptional.
When evaluating account offered by different brokers, you must also study the withdrawal policies. It should be ensured that the terms and conditions are agreeable and acceptable. While some brokers allow free withdrawals, some others charge a fee every time you withdraw funds from your account. Finally, check out the time taken to process withdrawal requests. Typically, regulated brokers process withdrawals in three business days.
- Customer Service
The forex market operates 24 hours in a day. As such, you should ensure that the broker you are planning to work with provides support throughout the day. Further, the broker should offer multiple channels of communication with the customer support team. Another aspect to be considered is whether the broker provides customer support services in multiple languages through local telephone numbers.
- Extra Services
It is also important to check if the broker provides value-added such as the following:
Free Trading Alerts
Interest on your trading account balance
Trading cost rebates and loyalty program
Market analysis and commentary
Personal consultation with the expert
Signal or robot trading services
Sign up bonus
In conclusion, it is important to work with the right broker to succeed in forex trading. So, you must avoid brokers that make tall claims like “Guaranteed Profits” or “Risk-Free Trading” as risk is part and parcel of trading. No Broker can guarantee profits. As a trader in Australia, the best online forex broker is one that is regulated by ASIC.
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