Author Name: Olivia Anderson
Foreign exchange (Forex) trading is lucrative and an excellent earning source for traders and speculators. By the end of 2022, the forex market’s worth in Australia reached AUD 9 trillion daily. Furthermore, the Australian dollar ranks among the top five traded currencies worldwide and boasts a sense of authority and power. And given the strength of the Australian dollar and the ever-increasing popularity of forex trading, you can get invested and interested in testing your fortune.
While the market runs on speculation and is extremely unpredictable and relentless, you need to be enlightened about the fundamentals. Before you step into this volatile forex market, the largest financial hub in the world, its basic understanding is indispensable. So through this guide, you will grasp the essential know-how of forex trading in Australia for beginners.
However, before you jump into the technicalities and prerequisites of forex trading, you must know its meaning. The forex exchange market operates on a 24-hour basis and is a global marketplace for currency exchange. This exchange happens in currency pairs, and as a trader, you can speculate on the rise and fall of the conversion rates.
Roadmap of Forex Trading in Australia
Commercial banks, central banks of different countries, and multinational corporations are key players in foreign exchange trading. And as an individual trader stepping into the forex market, you may be apprehensive and pessimistic. Retail investors do not form a huge chunk, but it should not deter you from exploring this highly profitable domain. So, here’s what you need to do:
- Create your demo account with a Forex broker or CFD (Contract for Differences Provider).
- Learn about the various aspects of forex trading, analyse, and frame a strategy.
- Place your trade and await the outcome.
Bonus tip: Ensure your forex broker is registered and recognised by the Australian Securities and Investment Commission (ASIC). Moreover, a well-regulated broker that requires low deposits and proffers informative content for amateurs is always welcome.
Must-Know Currency Pairs
- Major Pair: A major pair involves trading US dollars with other preferable currencies (for instance, Euro or Australian dollars).
- Minor Pair: Minor pair involves trade between two currencies that enjoy significant weightage in the market, excluding US dollars.
- Exotic Pair: It is the trade between the currency of a developing country (for instance, the Indian rupee, Thai Baht) with a major currency.
Taxation Rules Related to Forex Trading in Australia
The Australian Government recognises forex trading as a legitimate activity and imposes a tax on the profits accrued. Overall, the ASIC regulates the forex market in the country, and the relevant financial laws protect the interests of the investors. On the taxation front, the law distinguishes between traders and investors.
If you pay personal tax, deal in short-term speculation, and do not hold assets for more than a year, you become a trader as per the law. However, if you are a long-term participant in the forex market (longer than a year) and score a profit, you will be liable to pay tax and be called an investor. The law also imposes a tax on non-Australian citizens residing in the country if they earn gains from trading through a native broker.
The Foreign Exchange (Forex) market is risky but equally rewarding. And if you develop a deep understanding of the dynamics of the market, you can secure massive returns. As such, one proven way to become familiar with the exchange rates, industry trends, and different terminologies is to invest in educational content. Hence, sign up for workshops, seminars, and courses teaching forex trading in Australia for beginners, and the results will follow. Now, what are you waiting for?
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