Are you disciplined, interested in foreign currencies, and enjoying taking risks working in a fast-paced environment? If yes, a career as a forex trader could be perfect for you.
Forex traders buy, sell and exchange foreign currencies at current or specified prices on foreign exchanges.
You don't need specific education or training to work as a Forex Trader in Australia. However, taking Forex trading courses or professional coaching can help develop thorough market knowledge and trading skills to work in this field.
This blog discusses everything you should know to pursue a lucrative and exciting career in forex trading.
1. What Is Forex Trading?
Forex trading, or Foreign Exchange trading, involves making money by purchasing and selling international currencies on the foreign exchange market.
You make profits and losses through differences in exchange rates. In this fast-paced market, currencies are traded 24*7 and prices change constantly.
As the market is decentralised, Forex Trading allows buyers and sellers to make direct deals with one another.
2. What Is A Forex Trader?
Forex traders, also called foreign currency traders, are skilled and experienced in forecasting currency movements.
They trade currency pairs from all over the world through the foreign exchange market. They buy one currency and sell the other simultaneously. The first currency purchased is the base currency, and the second one sold is the quote currency.
Forex traders usually work for a financial firm, individual clients, or a group of clients who profit directly from their trades.
3. Types of Forex Traders
They work for a forex brokerage, studying price movements and patterns and writing content that may impact trading decisions.
They work for large companies or manage individual clients to make trade decisions based on their goals.
They hold several positions within the forex industry to protect investors from scams.
4. Who Can Trade Forex?
Anyone with a reliable high-speed internet connection and a device to access the web can do Forex trading.
The profession doesn't require tech equipment but the right attitude to start.
5. How Much Do I Need To Invest To Do Forex Trading?
First-time traders can start trading with as little as $50. As gaining a formal education isn't necessary to do Forex trading, anyone with good analysis and investing skills can enter this profession full-time or part-time.
You can start with the social trading platform eToro, which allows one to follow other traders and copy their strategies. You can create a free account HERE and start watching other successful traders. It also provides virtual money if you need more confidence to use real cash.
It is perfect for beginners and advanced traders, providing a user-friendly interface.
6. Is Forex Trading Legal in Australia?
Forex trading is a popular investment instrument in Australia.
The Australian Securities and Investments Commission regulates it, safeguarding the interest of Forex traders in Australia. It is legal to trade with local and overseas Forex brokers.
7. What Are The Benefits And Drawbacks Of Forex Trading?
Trading in foreign exchange in Australia offers an opportunity for financial freedom, supplementing your income and earning high returns.
Let's check out a few more benefits of forex trading:
24*5 market (suitable for part-time traders)
High cash flow potential
Accessibility (laptop, desktop, and mobile)
Low Initial Cost (Most brokers require an equivalent of a 100 AUD deposit for opening an account. Some brokers do not have any minimum deposit requirement)
No formal qualification is needed.
Unpredictable volatility in exchange rates (Small market movements can lead to a significant impact)
Extremely difficult to predict markets
Limited risk protection, only a "stop-loss order" to cap your losses. Also, you may require paying a premium price for guaranteed issuance of the stop-loss order.
Alluring schemes and advertisements can lead to Forex scams and fraud.
Some brokers are unregulated or poorly regulated.
High costs of trading and withdrawal fees
Time-consuming activity as profitable trading requires education, skill, discipline, and caution.
Risk of insolvency of your Forex broker
A lack of liquidity can lead to trading delays that can severely impact your trade outcome.
8. Steps To Become A Forex Trader In Australia
Step 1: Get A Degree
To become a forex trader, you can study a degree in finance, commerce, economics, and a related field. The valuable financial knowledge and skills you develop will help you within the currency exchange field.
Though a degree is optional to become a Forex trader in Australia, it can help develop thorough market knowledge and trading skills to work in this field.
Step 2: Complete A Forex Trading Course
Before you start practising trading, you should gain an understanding of foreign exchange markets and how they work. Find a trainer or a professional trader who can help you develop your trading mindset.
Several Forex brokers provide educational resources, trading, and technical support in articles, video tutorials, and guides to help enhance your strategy to minimise mistakes.
For example, the social trading platform eToro lets you follow other traders and copy their strategies. You can create a free account HERE and start observing other successful traders. It also provides virtual money if you need more confidence to use real cash.
Forex trading courses will also teach you about world currencies and their valuation and popularly used trading tools, indicators, strategies, and best trading practices.
Step 3: Find A Reliable Broker
To become a professional trader, you need open a demo account with an ASIC-regulated Forex broker. Trading with a demo account involves placing real-time trades using fake money in a live trading environment.
It is a great way to learn and practice Forex trading till you gain the skills and confidence to trade with real money.
Step 4: Determine Currency Pairs For Trading
Assess currency pairs on liquidity or ease of selling to decide which one you want to trade on the forex market.
As a beginner, start with a single currency pair and get knowledge of what causes fluctuations in that currency pair's price and when the price changes happen.
Here are the popular and highly volatile currency pairs that you can consider for trading:
Step 5: Decide The Amount You Want To Trade
As a beginner trader, start trading with a small amount. You can gradually increase your trading capital as you gain experience and proficiency. Only trade with the money that you don't mind losing.
Another thing to remember is to trade with a small portion of your total trading amount at a time. So, if even your trading strategy goes wrong, you don't lose all your money and can still make other trades.
Step 6: Use Quality Trading Platforms With Trade Automation
Quality trading platforms offer reliable market coverage, customisations, real-time market news, advanced-level charting abilities, and beneficial trading tools.
Most forex brokers also provide automated trading programs with intuitive interfaces to simplify forex trading for beginner traders.
Step 7: Use Better Risk Management Strategies
Emotional control and discipline are essential in forex trading. A little carelessness and delay in executing trades can result in huge losses. You must implement specific measures to reduce risks to ensure such incidents don't happen.
Strict stop-loss is an excellent way to discard your trade if it doesn't go in your favour. When your stop-loss price reaches, you will exit the trade automatically and limit your losses.
Step 8: Keep Practicing
Currency markets are constantly changing. Global news, federal announcements, national crises, and political events drive price movements. It makes it very important to stay up to date with market news.
Aspiring forex traders should focus on continued practice, testing new strategies, and constant learning in the live trading environment.
9. How Much Do Forex Traders Earn?
The salary of a forex trader depends on their position. Independent traders profit by purchasing and selling currencies based on market trends.
Professional traders work for corporations and private clients. They earn a salary rather than making profits directly from executing trades. The average forex trader's salary in Australia is $91,749 per year.
10. How Does The Forex Exchange In Australia Works?
The Australian Securities and Investments Commission controls forex trading, which is known to be the toughest regulator in the world.
The main objective of ASIC is to protect Australian traders from financial fraud and promote a healthy and competitive financial marketplace.
ASIC-regulated Forex brokers are subjected to the following regulations:
30:1 leverage on Forex
Negative balance protection
Ban on financial inducements, such as bonuses and promotions
Ban on binary options
Forex traders make money from market volatility. They purchase a currency at the market price and sell it at a target price. As the currency prices keep changing, the trader books a profit or loss from the difference between their buy and the sell prices.
The Australian Forex market operates 24 hours daily and is closed on weekends. The market volatility and trading volume are generally high during the market opening hours.
11. Key Forex Trading Terms
Do you want to start as a forex trader? Here are a few things you must know before trading in foreign exchanges:
Regulated forex brokers that offer forex trading service
Type of trading platforms that provide "forex-trading"
How to open a forex trading account?
The fee and charges to open and run a forex trading account
The trading strategy you wish to apply
Key Forex Trading Terms
12. What Are The Major Currency Pairs Traded In Forex Market?
AUD/USD – (Australian dollar/United States dollar)
GBP/AUD – (British Pound / Australian Dollar)
AUD/NZD – Australian Dollar / New Zealand Dollar
EUR/USD – (Euro/United States dollar)
USD/JPY – (The United States dollar/Japanese yen)
GBP/USD – (Great British Pound/United States dollar)
EUR/JPY – (Euro / Japanese Yen)
USD/CAD – (the United States dollar/Canadian dollar)
NZD/USD – (New Zealand dollar/United States dollar
USD/CHF – (the United States dollar/Swiss franc)
AUD/MYR – Australian Dollar / Malaysian Ringgit
13. Which is the Best Forex Trading Platform in Australia?
MetaTrader 4, MetaTrader 5, and cTrader are popular forex trading platforms in Australia, offering detailed trade analysis and customisation options.
Some brokers, such as eToro and XTB, have trading platforms that do not support MT4, MT5, and cTrader platforms. However, they have fewer functions, less customizability, and simpler interfaces, making them ideal for beginner traders.
It is a 3rd party, a high-speed, customisable trading platform that different Forex brokers support.
The platform offers a comprehensive charting suite with numerous indicators to help traders make informed trade decisions and automate their trading. The platform works on tablets, mobile, in a web browser, and as an application.
Unlimited chart windows, 12 more time-frames than MT4, a built-in chat function, and 80 built-in indicators, including the Depth of Market indicator, are some great features of MT5.
It is another 3rd party platform that offers high-speed execution and ease of use compared to MT4 and MT5. It enables traders to work with multiple Forex brokers using this platform.
Automated trading, elaborate trade analysis, advanced-level platform customisation, and comprehensive educational videos make it a preferred choice among Forex traders.
14. What Are The Common Strategies For Forex Trading?
Do you want to know how to trade Forex for beginners? There are four common strategies used in Forex trading.
All these strategies require performing thorough fundamental and technical market analysis.
15. What Are The Largest Forex Brokers In Australia?
Forex broker works as an intermediate between traders and the international market. They provide market access and trading software to their clients so that they can do market research and trade currencies.
Here are the best ASIC-authorized brokers for forex trading in Australia for beginners:
Consider the following factors to choose the Best Forex Broker from the above list:
Trading Conditions And Fees
Accessibility and Affordability
Trading Platform Features
Deposits and Withdrawals Methods
Company History and Background
Education Tools and Resources
Ease of Account Opening
16. What Are The High Leverage Forex Brokers In Australia?
Leverage is the borrowed capital brokers lend to traders to execute their trades. It is common in foreign exchange trading.
High leverage gives trading power to trade with more money to achieve a higher return. It can either lead to hefty profits or losses in the forex market.
Here are the top 5 ASIC-regulated forex brokers that offer high leverages to traders:
IC Markets: offer leverage up to 1: 500
FX Open: up to 1: 500 with min deposit of $1
Anzo Capital: up to 1: 500 with min deposit of $100
GoMarkets: up to 1: 500 with min deposit of AUD200
XM: up to 1: 888 with min deposit of $5
FPMarkets: up to 1: 500 with min deposit of AUD100
17. What Skills Do I Need To Become A Forex Trader?
Forex traders should develop technical skills and soft skills to increase their chances of success:
A realistic mindset
Able to work well under pressure
Computer skills to use spreadsheets, trading software, and navigate trading platforms
Self-control and discipline (to exit the trade when achieving the target)
Money Management skills
18. How To Become A Profitable Forex Trader?
Profitable Forex trading needs patience, expertise, and an in-depth understanding of trading strategies. Part-time forex trading is a successful way to complement your income.
To make profitable trades and succeed in the forex market, you need to specialise in the currency pairs available and use trading strategies that do not need round-the-clock monitoring.
An automated trading platform benefits new traders or those with limited experience.
Here are a few tips to help you enhance your profits and reduce your losses while trading:
Manage your expectations
Set realistic goals
Define your trading risk profile
Develop a personal trading strategy and stick to it
Find the correct currency pairs to trade
Set up an automated trading system
Apply disciplined decision-making
Control your emotions
Use Stop Losses
Do not overtrade
19. Are Forex Trading Earnings Taxable in Australia?
Yes. The profits you generate in Forex trades are taxable as per Australian law.
It also applies to any trading profits with an overseas Forex broker.
20. What Are The Job Prospects Of Forex Trading In Australia?
Australia has a vast Forex trading market. The growing global significance of the Aussie dollar, the availability of advanced trading platforms, computer systems, and ultra-fast streaming technology make Forex trading accessible and exciting.
It is a perfect solution for earning a second income and making solid returns on investment.
21. Is Forex Trading A Scam?
No. Forex trading is not a scam. However, some traders take advantage of newbie Forex traders.
Here are some ways that can help you avoid being scammed:
Trade yourself. Don't give your hard-earned capital to anyone to trade on your behalf
Refrain from relying on individuals or brokers that guarantee returns. Do your due diligence.
Ensure your Forex broker is ASIC-regulated.
22. Is Forex Trading Safe?
The Foreign Exchange market is highly volatile. As many brokers provide high leverage for trading, any profits or losses realised in the trade get magnified. This high-risk and high-reward market offers opportunities for the patient and discerning investor.
Also, there is a guaranteed formula/strategy for successful trades in volatile currency markets. Even the most successful or richest forex traders only get it right sometimes. There are cases when the market behaves unpredictably and presents price gaps.
Performing proper fundamental and technical analysis, using the right trading strategies, limiting the amount of capital, and applying risk mitigation strategies like strict stop loss and limit orders, will help make profitable trades.
Forex trading offers traders great opportunities to learn and grow, along with a sizable amount of risk, like other forms of trading.
If you have the right skills and knowledge, practice positive trading habits such as discipline and self-control. In that case, you can easily make consistent profits from your trades.
If you are ready to take your interest in Forex trading to the next level, completing Forex trading courses is the perfect solution.
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