How to choose the best forex brokers Australia:
Since there are too many forex brokers who offer brokerage service for the Australian clients, it can be a daunting task to select the best broker out of them. So a clear guide is needed to help you choose the best broker based on some criteria:
The regulation of the best forex brokers Australia:
Regulation of the forex broker is the most important factor to be considered when choosing a broker. Since regulation offers several advantages for the forex traders including:
- Assure the legitimacy of the forex broker as company authorized by the regulator organization to conduct online trading activities. This regulation indicates that the broker has fulfilled the legal requirements of the regulation and ready to offer its service in the market.
- Regulation authorities keep monitoring the forex brokers and control their practices in the online trading market.
- Forex traders who face issues with forex broker can complain to the regulatory authorities which should follow up the complaints until a fair solution is found.
Some Forex Regulatory organizations include:
- National Futures Association (NFA) in the USA.
- Commodity Futures Trading Commission (CFTC) in the USA.
- Financial Conduct Authority (FCA) in the UK.
- Federal Financial Supervisory Authority (BaFin) in Germany.
- Swiss Financial Market Supervisory Authority (FINMA) in Switzerland.
- Financial Services Agency in Japan.
- For Australian forex traders, there is the Australian Securities and Investments Commission (ASIC) which is the sole regulatory authority in Australia for forex brokers. So once you thought about any broker, you have to check whether is it registered in ASIC or not.
How to check if a forex broker registered with the Australian Securities and Investments Commission (ASIC):
- Go to the website ASIC connect.
- In the top left, there is a search bar.
- Select the search type ” Organisation and Business Names.”
- Type below the company name as mentioned on their website, then click Go.
The spread and the commissions of the best forex brokers Australia:
You have to know that forex brokers are actually like money exchange shops. When they sell you currency, they take commission so the price will be a little bit higher than the market price, and when you sell them your currency they will buy it cheaper than the market price. The difference between the buying and the selling price of a given currency pair is called the spread.
Since the spread is one of the main competition segments between the forex broker, many brokers offer very low spreads approaching the zero. While some brokers have zero spread account, they still charge a commission per trading lot. ( Lot in forex is the standard unit of trading volume, one standard lot =100,000 pips, mini lot=10,000 pips, one micro lot =1000 pips, one nano lot= 100 pips, pip is the smallest decimal change in the currency price). So when considering the forex brokers comparison, the spread and commission should also be considered as a ranking factor. Less spread and commission is always better. Usually, the broker website should clarify the spreads on every trading instrument and any commission which might be incurred, so it is your responsibility to check them carefully.
The leverage and margin requirements in the best forex brokers Australia:
Leverage is the amount of money which the forex brokers can lend you once you opened an account with them. It works as a multiplication factor of your initial capital investment. For example, if the broker’s leverage is 100 and your initial investment is $100 then you can trade with 100x$100 = $10,000. Leverage is very useful to amplify your investment; however, as leverage can increase your profits, it can also increase your loss. So you should use leverage wisely. Beginners in forex trading are always advised to trade with low leverage, something like 1:10.
The margin requirement is the minimum percentage of money required to open a position. It can be calculated as 1/Levrage. For example, if your leverage is 1:100 then your margin requirement is 0.01%.
Higher leverages and low margin requirements can be considered positive signals for a forex broker rating. However, you should be careful when trading using leverage and use only the proper leverage.
The trading platform in the best forex brokers Australia:
Forex trading platform is the software which is used to connect you with the forex market through your forex broker. So they are the base of the forex trading.
There are some good features of the best forex trading platforms:
- The speed of execution of the orders: lagging in the order execution is one of the worst things which might happen for forex traders, so the execution speed is a mandatory requirement for any forex trading platform.
- The graphical and analysis tools: charts and technical indicators are the major part of the forex trading analysis. Every trader at a stage would need to analyze the forex market, and that is doable only with the charts and the technical indicators which can be used to determine the trends, lower and upper limits, entry and exit points, and many more useful things.
- The popularity and the reputation of the platform: popular trading platforms such as the MetaTrader MT4 are made to be used by most of the traders, and you can easily find help and support for them online.
- The support of Expert Advisors (EA) and Automatic trading: Some trading platforms such as MetaTrader and cTrader support the automatic trading using special algorithmic scripts. These scripts are programmed to take some parameters from the platform and then do an action based on the processing of these parameters.
The technical support of the best forex brokers Australia:
Technical support is one of the major points which should be well tested before selecting a forex broker since it is common that issues, such as platform issues, withdrawal, and deposit issues, to evolve during forex trading and these problems can be resolved by cooperative technical support. Also, the technical support should be highly skilled in helping customers with any trading-related issue and should be available 24 hours daily and at least five days in the week.
The variety of trading instruments provided by the best forex brokers Australia:
Forex brokers not only offer forex trading but also they offer Contract for Difference (CFDs) which include gold, silver, platinum, oil, natural gas, stocks, crypto currency and more. It is a good idea when trading forex to vary the instruments, so if one instrument failed the others wouldn’t fail. Although opening many positions at the same is risky especially if you have small capital.
The minimum deposit and the bonus in the best forex brokers Australia:
Different brokers have different minimum deposits requirements. It can be a positive indicator if the forex broker has a low minimum deposit, but it doesn’t also mean the broker who requires large deposits are bad. Furthermore, some brokers offer bonuses when you open a trading account while others offer the bonus on deposits.
The orders execution model in the best forex brokers Australia:
There are two main types of forex trading orders execution models:
The Dealing Desk (DD) or market makers:
- When you open a trading position, it goes through the broker dealing desk who will do a reverse order to your order. For example, if you bought USD/JPY, they will Sell USD/JPY.
- They set the prices on their platform as they want.
- They usually provide fixed spread.
The No Dealing Desk (NDD) or Electronic Communication Network (ECN) / Straight Through Processing STP brokers:
- When trading through STP brokers, your orders will go directly to the liquidity providers such as the banks and the global financial firms.
- When trading through STP+ECN brokers, your order will go directly to the liquidity providers and other brokers and traders.
- The prices in their platforms are directly quoted from the liquidity providers.
- ECN brokers offer market depth view which shows the quantity of the pending sell and buy orders of an instrument which wait for execution.
- They usually have tight spreads or commissions per trade volume.
Miscellaneous features in the best forex brokers Australia:
Some extra but crucial features of the best brokers in Australia include:
- Allowing Scalping.
- Allowing Hedging.
- Allowing Auto trading via Expert Advisor (EA).
Forex learning tools in the best forex brokers Australia:
Although most of the forex trading platforms are similar, most of the forex brokers offer online courses for the beginners in the forex market. These courses range from the basic levels to the high levels. Besides, some forex brokers provide free market analysis, economic calendar and forex news.