According to the Australian Foreign Exchange committee, there was a US$139.4 billion daily turnover in the Australian foreign exchange market as of April 2021. Forex trading is clearly a popular legal means of trading in Australia. 

Despite the size of the forex market, it moves in favour of experienced and informed forex traders. If you wish to trade forex in Australia and make a good profit, you should learn the ropes and choose the best forex trading platform in Australia.

What is forex trading in Australia? 

Forex trading involves trading one currency for another to make a profit from the change in the exchange rate. 

Forex is a global market where buying and selling of currencies takes place. Banks, companies, government and retail forex traders can exchange currencies for several reasons.

The forex market is the most active financial market globally. The forex market is open 24hrs  on weekdays in different parts of the world. The market is open by Sunday 5pm EST and closes by 5pm EST on Friday. The difference in the international time zones is one of the reasons forex can be traded 24 hours globally.

Unlike the stock market, all forex trades happen over the counter( OTC). There is no physical marketplace dedicated to forex trading as it is done via the internet through forex brokers.

There are four trading sessions in the forex market; Sidney, New York,  London and Tokyo. Based on AEST, the trading hours that open during the day in Australia are the Sydney and Tokyo sessions that open by 7am and 9am AEST respectively.   

The London session opens by 5pm AEST, while the New York session opens by 10pm AEST and closes by 7am.  If you wake up to trade by 3am, you will be unable to do so through Australian forex dealers. However, you can make any amount of trade through European or North American dealers.

How can I profit from forex trading in Australia?

You can profit from forex trading when the market moves in your preferred direction. 

If you lodge a buy order based on your prediction of change in the value of the base currency relative to the quote currency, you can make a profit if you close your position when the value of the base currency eventually rises as you have predicted. By closing your position( selling the base currency to get more quote currency), you can make more profit from the exchange rate because you are getting more quote currency than the amount you used to purchase the base currency in the first place.

For instance, if you lodge a buy order on USD / AUD  based on your prediction that USD will appreciate relative to AUD. If the market moves based on your prediction, you can close your position to get more AUD that has now depreciated. 

However, sometimes you may need to buy the base currencies in larger quantities to make more profit. If your margin is not enough to pull a large transaction, you can leverage it by borrowing more funds from your broker

What are the forex rules and regulations Australian traders should follow?

Although forex trading is legal in Australia, some rules and regulations are applicable to the Australian forex market. 

To trade forex in Australia, you must go through a forex broker. 

Forex brokers in Australia must be licensed by the Australian Securities and Investments Commission (ASIC), the regulator of foreign exchange activities in Australia. The majority of regulations made by ASIC apply to forex brokers and not traders.

To successfully trade forex in Australia, there are some golden rules you must follow:

Start with a demo account

As a beginner forex trader, it is safe to start with a demo account. Forex brokers offer demo accounts where you can practice trading by using virtual money instead of real money. So you can learn how forex platforms and trading strategies work without losing your capital by signing up for a forex demo account. You can start trading with your own money when you are confident that you have become well-grounded in the game.

Start small

It is advisable to start trading with small capital before going bigger. As a beginner, you shouldn’t expect everything to start working smoothly from the start, although that doesn’t mean you can’t make a good profit as a beginner. Most forex broking platforms require a minimum deposit of 100-200 AUD to start live trading.

Register with a forex broker licenced by ASIC

As an Australian citizen, you are not mandated to trade with a licenced Australian forex broker. However, it is advisable to trade through licensed brokers because ASIC stipulates heavy regulations on these brokers which serves as protection for novice traders. ASIC monitors forex trading activities in Australia to prevent fraud and misconduct.

Set a stop-loss order

Stop loss order is a market order that is set to automatically close your trading position once a preset price level is reached. This order is set to minimise your loss when the market is not moving in your preferred direction.

Make careful analysis before you trade 

Forex trade is based on prediction. However, you should predict the market movement after analysing the fundamental and technical factors affecting the currency pair prices.

How to choose a forex broker in Australia 

Forex brokers are financial service firms that offer access to forex trading platforms for buying and selling currencies.  To choose the best forex broker in Australia, consider the following qualities that an ideal forex broker should have:

• An ASIC license
• A free demo account for practising
• Tight spreads and optimum leverage
• 24/7 customer service
• Data and privacy protect
• Quick deposits and withdrawals
• Tools and programs to help you learn forex as a beginner