All Australian-based brokers must be authorised by the Australian Securities & Investment Commission (ASIC) before forex and CFD traders can invest with them. ASIC has offices in many cities in Australia, like Sydney, Queensland, Tasmania, etc.
This guide will only mention legit and safe Australian brokers that the ASIC has authorised for use in Australia. We will go through some factors, like spread, fees, leverage, security, and trading instruments. You should look at these factors when comparing forex brokers in Australia to know how to choose an Australian forex broker that meets your needs.
We will also go through the pros and cons of trading with the top forex brokers in Australia, the different kinds of accounts available on Australia ASIC-approved forex brokers and how to open an account with them. Finally, we will look at views from people on Reddit and Quora, and answer some frequently asked questions about regulations and the legality of forex trading in Australia.
Forex Trading in Australia
Forex (Foreign Exchange) trading happens when people exchange foreign currencies in the global market. The forex market is the world’s largest market, with trillions of dollars being exchanged daily by banks (including central banks), corporations, multinationals, and individual traders. These parties use forex to facilitate international trading and hedge against inflation and international currencies.
In Australia, the forex market is significant and has been rapidly increasing over the years. Australia is one of the world’s largest countries in terms of population and has a fast-growing economy. As a result, the Australian currency, the Australian Dollar (AUD), is one of the top 8 most tradable currencies in the world, behind only the Canadian Dollar (CAD), US Dollar (USD), Great Britain Pound (GBP), European Euro (EUR) and Swiss Franc (CHF).
The Australian Dollar is also one of the most favoured forex trading currencies by traders, as it provides some of the best yields of the major currencies on most trading platforms. Also, because of its strong affinity with gold, it is one of the most stable and trustworthy currencies for trading in the forex market.
Apart from the strength of its currency, Australia also has a vast amount of desirable natural resources, like oil, uranium, nickel, gold, iron ore, coal, and agricultural products. These resources put them in a good position to trade with the fast-developing Asian economies and contribute to more desirable interest rates for forex traders.
All these factors have contributed immensely to the fast growth of the forex market in recent times. Currently, Australia has the largest forex and CFD market per capita in 2021. According to data by Investment Trends, over 100,000 Australians entered one form of forex or CFD transaction in the year 2021, with an average Australian trader depositing more than $8,400 into their CFD account. Even more importantly, the number of retail traders had increased by almost 40,000 since 2017, when just 60,000 people were making one transaction or more on the FX market.
Factors to Consider When Choosing an Australian Forex Broker
Before you choose an Australian forex broker, there are some factors you should consider. There is no one-size-fits-all broker for everyone, but these factors will help you fine-tune your considerations to a broker that meets your needs. The best Australian forex brokers meet most or all of these criteria.
Here are some of the critical factors to consider when choosing an Australian Forex Broker
Regulation is one of the most critical factors you should look out for before you start trading with an Australian broker. Why? Because without regulation, you could become a victim of a forex scam. Even if the broker has good intentions, you can never fully predict what could happen in the forex market. In the event of an unfortunate loss, you would be affected if the broker is not adequately insured. Proper regulations ensure that all measures are taken to ensure your funds and data are safe and secure from unexpected situations.
If you live in Australia and want an Australian broker, you should check that the broker is authorised and regulated by ASIC (Australian Securities and Investment Commission) first. ASIC is one of the most respected financial regulators in the world, so being regulated by them is a good sign that the forex broker is worth working with.
Trading instruments are sometimes called securities, which refer to the types of markets you can trade. For example, you might want to trade stocks, CFDs, cryptocurrencies, etc., and forex trading. First, check that your broker is robust and allows multiple trading instruments. This factor will depend mainly on your preferences. Next, find the trading instruments you are most interested in and check if the broker allows trading in that market.
You must check to ensure that the trading platform is user-friendly. Although you have to be knowledgeable in forex before you can trade it, nobody wants to trade on platforms that are too technical and difficult to understand. The ease of use of the trading platform will determine if a broker will reach more people than others.
Apart from the ease of use, the platform should be quick and timely in executing transactions, with little downtimes. In addition, there should be other essential trading tools on the platform, like charts, indicators, and news feeds.
The best way to check if an Australian broker is secure is to check if they have been regulated by ASIC. An ASIC-regulated forex broker should have negative balance protection, which is a feature that prevents traders from losing more than their deposit when they trade with leverage.
Furthermore, Australian ASIC-approved forex brokers must adhere to data protection laws as stated by ASIC. These laws state that users are granted full anonymity when dealing with the broker, for example, when making a complaint. The broker is only allowed to disclose the name and information to Australian authorities when the law requires that they do so.
Brokers should also have two-factor verification, a technology that helps them verify your identity with two distinct security measures. For instance, you could have a password to your account and a one-time verification code from an authenticator installed on your mobile phone and connected to your email address. This way, even if someone guesses your password, they won’t be able to access your account because they can’t connect to your authenticator.
Finally, secure forex brokers ensure that transactions are communicated with SSL (Secure Socket Layer) technology, ensuring your privacy is safe at all times. Check if your forex broker has these features.
Fees and Commission
Traders love to use brokers with low fees and commissions. There are different types of fees and commissions you may come in contact with when trading. Some brokers charge a fixed fee for handling your trades and allowing you to use their service to manage your investments. Most brokers try to be as competitive as possible, only taking a minute fraction of your transactions.
There are different fees, but the primary classification of fees are Trading and non-trading fees. Trading fees are fees you pay only when you make a trade. Examples of trading fees are spreads, commission, and swap rates. Non-trading fees, on the other hand, include conversion fees, deposit & withdrawal fees, and many more.
Spread is the difference between the ask and bid price on trades. Different brokers offer different spreads – fixed or variable. There are even some that take a percentage of the spread. You can compare the spreads of the brokers before choosing the one to trade with. The best forex brokers in Australia try to offer tight spreads, so you don’t lose much on ask and bid trades.
Leverage means borrowing capital to invest in a currency so that you can trade larger positions using that currency. Different leverage ratios are available for trading forex depending on the size of the trade, the margin requirement, and the broker.
Australia Brokers offer different leverages depending on the trading instrument. ASIC restricts the maximum leverage on Forex Majors to 1:30 and Crypto CFDs to 1:2.
Forex brokers with multiple payment methods help to remove ambiguity when it comes to funding your account. You might want to find out if they accept the local currency, the Australian Dollar (AUD), as that will make payments easy. The most commonly used payment methods include Credit card, Debit card, Bank transfer, and e-wallets (Skrill, Neteller, Paypal, etc.).
The customer service of your chosen forex broker must always be available to respond to your queries and complaints. Most especially, if you are a newbie, the customer service of the broker must be easy to contact either through live chat, phone call, or email. The faster they respond, the better for you as a trader.
Check that your broker has good customer service that helps with all issues users may face while using the platform.
Pros and Cons of Trading with Australian Forex Brokers
Here are the pros and cons of trading with some of the best Australian forex brokers
- Zero Commission
- Multiple Trading Instruments
- Great customer service
- Excellent demo account for newbies
- Intuitive Trading Platforms
- Multiple payment options
- Regulated by ASIC
- Social trading available for most brokers
- No referral program (some Australian brokers)
- High overnight fees (for some Australian brokers)
Benefits of Trading with Australian Forex Brokers
Trading with some of the above-listed forex brokers in Australia can make the experience worthwhile. For example, Capital.com offers zero fees for trading, except for their very tight spreads. You can trade the EUR/USD currency pair from 0.7 pips spread on the broker. Also, it has a good demo account, so you can practice trading without risking your money.
eToro is another great broker in Australia, and it is easy to see why they are considered to be the best by many traders in their eToro broker review. For one, it has multiple payment options and supports trading with the local currency. Also, like Capital, it offers a demo account for newbies.
Pepperstone may not be as prestigious as the other two, but it is always in the conversation when traders mention the best forex brokers in Australia. Apart from its excellent customer service, it also offers social trading, where you can model your trades after another experienced trader and get similar results.
How to Start Trading with an Australian Forex Broker?
Now, let’s go through the steps required before you can start trading on an Australian forex broker.
Step 1: Open an Account and Verify Your Identity
Before you can start trading with a broker, you have to create an account with the broker and do a KYC (Know Your Customer) verification. KYC involves showing proof that you are an actual human who is 18 and above.
To open an account on a platform like eToro or Capital.com, follow these steps:
- Go to the website and sign up with your email and any username you choose. Then, go to your email address and verify your email.
- After verifying and confirming your email address, log in to your account to complete your personal information. You’ll be required to fill in personal information like your name, date of birth, address, country of residence, etc. Please ensure this information matches the documents you’ll present later.
- Verify your phone number via SMS.
- Submit proof of identity. You need a passport or both sides of a government-issued ID card to do this. This ID should contain your full name, date of birth, and photograph.
- Submit proof of address. The document you’ll present here is different from the one before. This one should contain your current address and be dated within the last three months. You can get one issued by a bank or utility company, for example, a bank statement or an electricity bill.
The broker might take some time to verify the documents presented before giving you the full rights to trade on the platform.
Step 2: Deposit FundsASIC Regulated Brokers List
Before you can trade, you need to deposit funds. To do this, find the part of the platform where it says “Deposit Funds” and click on it. Next, choose your preferred currency (AUD) and select a payment method.
Step 3: Browse Supported Trading Markets and place a trade
Check the platform to see the supported trading markets so you can place a trade. For example, on eToro and Capital.com, you can trade currencies, stocks, ETFs, crypto, indices, etc.
You can choose to BUY or SELL any of these instruments.
Trading Instruments Available on the Best Australian Forex Brokers
Trading instruments are the different kinds of markets you can trade. Let us go through the ones accepted by the best Australian forex brokers.
Forex (Foreign exchange) trading is exchanging one currency for another. For example, you could exchange the European Euro (EUR) for the US Dollar (USD). People swap currencies to hedge against inflation by betting on a more stable currency. Others swap because they need foreign currencies to carry out large foreign transactions.
Forex traders trade currencies in pairs. A trading pair comprises a base currency and a quote currency, with the base currency coming first. For example, an AUD/USD trading pair means that AUD is the base currency and USD is the quoted currency. This trading pair means you wish to sell your AUD for some USD. Other common trading pairs you can find are the EUR/USD, GBP/USD, JPY/USD, and many more.
Using Australian brokers, you can trade these and many other currency pairs. The maximum leverage allowed depends on the currency pair. Major currency pairs like the EUR/USD can be traded with a leverage up to 1:30, while minor currency pairs can be traded with up to 1:20 leverage.
Shares are used to prove ownership of equity in corporations. In simple terms, if you own a share of a company, you own a piece of that company. So people buy shares with the hope that the company will be bigger in the future. This way, their piece gets more significant. However, there is also the risk that the company shrinks in value, making their share smaller.
On Australian broker platforms, you can invest in real shares and trade share CFDs on multiple stock markets worldwide, including the New York Stock Exchange, Nasdaq, London Stock Exchange, and Australian Securities Exchange. You can buy stocks like Tesla (TSLA), Apple (AAPL), Nike (NKE), or Amazon (AMZN).
With Australian forex brokers, the maximum leverage allowed to trade share CFDs is up to 1:5 due to new ASIC restrictions.
In financial markets, commodities are goods and items bought, as opposed to securities which are just financial contracts. You can buy commodities like gold, oil, livestock, grain, etc. You can buy and sell commodities on Australian brokerage platforms like eToro and Capital.com. These platforms offer leverages up to 1:10 to trade commodities and 1:20 to trade gold.
Indices (plural for index) are standardised methods for tracking the performance of a group of assets. Standard indices include the S&P 500, ASX 200, and the Dow Jones Industrial Average. You can trade indices on Australian brokerage platforms with leverage up to 1:10 for minor indices and 1:20 for major indices.
Cryptocurrencies have taken over the financial space for the better part of the last decade. A cryptocurrency is a decentralised digital form of money, i.e., it has no government or institution controlling it. Different cryptocurrencies have different properties that make them valuable, like demand, the speed of transactions in their blockchain, and the low cost of transactions. Traders can also trade cryptocurrencies as CFDs on Australian forex brokers with leverage up to 1:2.
The Different Account Types Australian Forex Brokers Offer
You can get different account types on an Australian Forex trading platform, depending on your preference. Let us go through the most common ones.
Just as the name implies, a demo account is not a live account, i.e., you won’t be using any real money to trade. Instead of real money, a demo account uses virtual funds to trade and imitates real-life trading conditions. When you trade with a demo account, you can learn how trading works in real-time and make some profits and losses, although you wouldn’t be able to withdraw any funds because it’s virtual.
Some Australian forex brokers like Capital.com offer up to $10,000 in virtual funds for you to trade with on your demo account. To open a demo account, all you have to do is sign up for the broker, complete an online form with your personal details and choose the demo account option. Then you can trade with virtual money.
A standard trading account is a regular trading account you can use to trade forex, shares, commodities, etc. With a standard account, you need to deposit funds to start trading, and some brokers allow deposits as low as $20. Trading on standard accounts is done at the trader’s risk because the money used is not virtual. Depending on the trading instrument, you can trade with a leverage of up to 1:30 with Australian brokers.
When you trade with a standard account, you pay some fees. The most common one is spread, the difference between the price the broker sells an instrument (the ask price) and the price the broker buys it from you (the bid price). Spread is the primary way a broker makes a profit and stays in business. Therefore, most brokers stay competitive by making their spread as tight as possible.
To open a standard trading account, follow the steps in the “How to Start Trading with an Australian Forex Broker?” section above.
Raw/Zero Spread Account
A raw spread account offers the actual market value of securities and commodities to traders without any price markup, so sometimes, the spreads are extra tight or even zero. A zero-spread account is very similar to a raw-spread account. The only difference is that while the spread for a zero account is often zero, the spread for a raw account may not be zero.
Brokers offering raw and zero-spread accounts do not profit from spreads, so they make up for it by charging higher commissions than standard accounts.
Trading the traditional way is considered to be haram (forbidden) in Islam, therefore, brokers have come up with Islamic trading accounts, which follow the principle of trading that is halal (permissible) according to the Quran. An Islamic account (also known as a swap-free account) does not allow for the accumulation of interest, as the Quran forbids it. Also, transactions are carried out quickly and without delay on these accounts, with transaction costs settled within 24 hours.
Many brokers don’t offer this type of account very often because it’s not profitable, and few people often require it.
Trading Platforms Available on Australian Forex Brokers
Let us go through some of the trading platforms available on Australian forex brokers. Generally, there are two kinds:
Desktop Trading Platform
A desktop trading platform is software for trading forex and other CFDs on a personal computer, Mac, or laptop. Good examples of desktop trading platforms are the widely-used MT4 and MT5 (MetaTrader 4 & 5, respectively) software. MT4 and MT5 differ because while MT4 is primarily a forex trading platform, MT5 offers to trade with CFDs, stocks, and futures.
The Capital.com trading platform is among the Brokers that use MT4 as their trading platform. eToro doesn’t use MT4 or any of the others, but it has its own proprietary trading platform with over 15 million users. eToro’s proprietary trading platform has some features that make it desirable to traders. For one, it supports social trading, so you can copy the trade decisions of other traders/investors. It also has ProCharts, which traders use to analyse the market and make decisions accordingly. On the other hand, it lacks features like algorithmic and API trading.
Another good desktop trading platform is cTrader, a more advanced forex trading platform often preferred by expert traders. These desktop trading platforms offer proprietary trading, which has recently increased in popularity.
Thanks to technological advancements, it has become easy to trade forex on smartphones. Trading platforms like MT4, MT5, and cTrader can connect to your broker and allow you to trade forex on your mobile devices in real time. Apart from real-time forex trading, mobile trading apps provide real-time market news notifications so you can stay abreast of current market conditions and real-time order performance notifications.
Payment Methods Accepted By Australian Forex Brokers
Depending on the Forex broker, you can use different payment methods to deposit funds in your forex account. Here are some of the commonly used payment methods:
- Neteller & Skrill: Neteller and Skrill are online transaction platforms. You can transfer up to $10,000 (AUD 14,662.25 as at the time of writing this article) in USD, GBP, or EUR on a platform like eToro.
- Bank transfer: Bank transfer is available for all countries and is allowed by ASIC regulation in Australia
- Credit Cards and Debit Cards: They are acceptable for depositing funds in Australia but not in some other countries. Credit cards and debit cards you can use are: Visa card, Maestro, or Mastercard.
- ApplePay: It is accepted in Australia but not in many other countries.
- PayPal: You can use your PayPal account to deposit funds to brokers in Australia.
- POLi: POLi is an Australian online debit payment platform. You can pay through POLi using the local currency.
Forex Trading Regulation in Australia
Financial markets are the largest in every country, with trillions of dollars worth of transactions happening daily. It is also one of the most regulated, because many shady people and corporations are looking to make a quick buck by scamming or manipulating the markets. For a market as significant as the foreign exchange market, it is important that regulatory bodies take charge of monitoring transactions to reduce risk as much as possible.
The primary body for monitoring financial markets in Australia is the Australian Securities and Investments Commission (ASIC). ASIC exists to improve investors’ confidence so that investors can feel safe trading with Australian Forex brokers.
ASIC requires that:
- All forex brokers in Australia register with them before they can be allowed to offer forex trading services.
- All brokers must have at least $1 million in trading capital. This money must be held in a tier-1 Australian bank and not be used for other business purposes.
- Brokers must submit details of their Non-Tangible Assets (NTA) to ASIC other tangible assets.
- Brokers must submit quarterly projections of their expected cash flow for the year.
- All brokers must have a physical office in Australia
A broker must have many other requirements before rendering their services to Australian forex traders, and all brokers must meet them. These laws safeguard traders’ monies and boost confidence in the forex market.
Is Forex Trading Legal in Australia?
Yes! Forex trading is legal in Australia, and as mentioned above, there is a body responsible for regulating the market. However, the regulations are market-friendly, so the Australian forex market is often envied by other countries with stricter regulations.
Are Australian Forex Brokers Safe?
To keep investors safer while trading on a brokerage firm, ASIC requires that forex brokers employ some safety measures, which include a Compensation plan and Negative balance protection.
Forex brokers must set aside $1 million or more to protect traders from losses that arise when the broker goes bankrupt. Negative balance protection also ensures you don’t lose more than the amount in your account and owe the broker money. Let’s say you have an initial capital of $2,000 and trade with a 1:5 leverage, meaning you have a position worth $10,000. If your position drops 30%, you will suffer a loss of $3,000 due to the leverage.
If you were trading with a broker without negative balance protection, you’d have to pay the extra $1,000. A broker with negative balance protection would ensure your balance never goes below your deposit, so you never owe them money.
What Reddit & Quora Say About Australian Forex Brokers
Reddit, the front page of the internet, often has many discussions about the best Forex brokers in Australia. We noticed people talked about the best forex brokers and how the 1:30 leverage cap has affected Australian traders.
Generally, names like Pepperstone come up a lot, but many people don’t like the leverage cap placed by ASIC, so they choose to use offshore brokers to get higher leverage to trade.
On Quora, some people love forex brokers like eToro because they are regulated by some of the world’s renowned regulatory bodies.
Other people prefer brokers with good trading conditions and low commissions.
Forex trading has become more popular worldwide because of the ease with which brokers allow traders to carry out transactions. With a good internet connection and a mobile device, you can trade from anywhere in the world. Forex trading in Australia is just as easy as finding a registered forex broker and setting up a trading account. You can set up a demo account to practice without real money, a standard account to trade with real money, or a zero-spread account with zero spreads but high commissions. You can also deposit money into your account through different methods like bank transfers, credit/debit cards, or online fintech apps like PayPal and POLi.
You can trade different trading instruments with Australian brokers, including stocks, forex, commodities, and cryptocurrencies. These Australian brokers are regulated by ASIC, Australia’s primary financial regulatory body. ASIC has some guidelines and safety measures that keep brokers in check and ensure that investors’ monies are safe. This way, losses are reduced, fraudsters are minimised, and investors have confidence in the forex market.
Across different internet communities and platforms like Quora and Reddit, there are different arguments for and against why ASIC-regulated brokers are better than non-regulated ones. Among the regulated ones, names like eToro, Pepperstone, etc., are often considered the best forex brokers in Australia.
Q & A
The Australian Securities & Investment Commission (ASIC) regulates all forex brokers in Australia.
ASIC stands for Australian Securities & Investment Commission, the primary regulatory body in Australia. ASIC’s forex regulations are rules all forex brokers must abide by before they can offer brokerage services in Australia. If a forex broker is registered with ASIC and abides by these rules, they are ASIC-regulated.
ASIC regulations require brokers to provide a compensation plan for traders in the event of bankruptcy. The regulations also limit the leverage a broker can offer on different commodities and state that all forex brokers must offer negative balance protection in case of a drop in position during leverage trading.
Yes, forex trading is legal in Australia.
To start trading forex, look for an ASIC-regulated forex broker and set up an account. Complete all verifications and deposit some money as capital to start. You can also trade with a demo account and receive $10,000 or more in virtual funds to learn how to trade.
All forex brokers registered under ASIC are the best-regulated brokers in Australia. You can also find some brokers that are not regulated by ASIC, which offer higher leverages, but with more risk.
The minimum deposit on a forex broker varies from broker to broker. Brokers like AvaTrade require at least $100, while IG requires $450. However, you can always start demo trading with $0 and virtual funds on most Australian forex brokers.
The maximum leverage available to trade forex in Australia is 1:30, as set by ASIC in 2020.
According to many forex broker reviews, some of the best ASIC-regulated forex brokers are eToro, capital.com, Pepperstone, AvaTrade, IC Markets, and IG.
Forex brokers make their money through fees and commissions. The most common fee is the spread, which is the difference between the amount they buy from you and the amount they sell to you. Brokers that offer actual market prices with zero markups and zero spread charge relatively high commissions for trading. Some brokers charge overnight fees for holding a position overnight, withdrawal fees, and other related fees.
Yes, you can learn forex trading through the use of demo accounts on Australian forex brokers. A demo account uses virtual money, not real money, so you can practice trading without losing anything.
Some brokers, like eToro, have online learning platforms that teach you the basics of forex trading and mistakes to avoid as a beginner trader. Capital.com also has an online dictionary containing the A to Z of trading and investing, plus tips on trading on the platform.
You can trade forex in Australia through ASIC-regulated brokers. You must open an account with a broker of your choice, and present documents to verify your identity. After that, you can deposit some money and choose currency pairs you wish to trade with.