An exclusive feature unlike in other exchange-driven markets is available with the Forex market which is enticed by many market makers and traders.
No regulatory fees or exchange fees, no data fees and, best of all, no commissions are promised by them. This sounds too good to be true to the new trader who just want to break into the trading business.
In Australia three forms of commission are used by Forex brokers. On a percentage of the spread some firms offer a variable spread, others offer fixed spread and still others charge a commission based. You need to consider a few things before you jump in and choose one.
Some brokers will pass the order flow received from you on to a large market maker with whom he or she has a relationship and may also charge a very small commission, perhaps two-tenths. These kinds of facilities are offered by Forex brokers in Australia.
Different Service Levels, Different Brokers
So do you know the effect of each type of commission's bottom line on your trading? This is a difficult question to answer as all brokers are not created equal. The reason is that for your trading account when weighing what is most beneficial there are other factors to take into consideration.
As all brokers are unable to do it is not easy to make a market equal. As the Forex market is an over-the-counter market based on the creditworthiness of capitalization and each organization with price other banks and aggregators the primary market makers, the banks, have relationships.
How to choose a Forex Broker
In addition to the type of spreads the broker offers, you as a trader should always consider the total package when deciding on a FX broker in Australia. In Australia when choosing a brokerage firm you should check out the following:
• How much time has it been in business? • How the firm is well capitalized? • Know about the banks with which the firm has its relationship. • Span of experience the person have? • In case you want to hold your positions overnight what is its rollover policy? • Know about its margin policy? • Know about the kind of platform it offers • To the rollover interest rates does the firm add a spread? • If your internet connection is lost what steps will you take? • Whether it contains a dealing desk or not?
Check whether all the back-end office functions, such as P&L are provided by the firm in real time?
You may be sacrificing other benefits even though you might think you are getting a deal when paying a variable spread. As a trader one thing is certain that is and your broker always earns it and you always pay the spread. Forex brokers in Australia are the best on which you can rely fully.
Finally choose a reputable broker in Australia like Forex brokers who are well capitalized and has strong relationships with the large foreign-exchange banks so that you can get the best deal possible. On the most popular currencies examine the spreads.
A very reputable market maker who can provide the liquidity you need to trade well is the cheapest way to trade.