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What is ***** Trading Australia?
In a nutshell, ***** trading in Australia consists of using price shifts in the foreign exchange market - with the view to make gains.
So, how is this done? As we briefly mentioned above, the objective is to buy and sell currency pairs based on whether you think the value of the pair will rise or fall. We are going to delve into this with some practical examples shortly.
As we said, this liquid ***** marketplace rakes in around AU$9 trillion every day. It’s the largest financial market on the planet - much bigger than commodities, bonds and stocks. The main contributors to this figure are fund managers, financial institutions, commercial and central banks, and also hedge funds.
Then, of course, there are retail ***** traders buying and selling in their droves too. By retail clients, we mean your average Fred Nerk trading using their own money - using a personal account.
With internet access, you too can begin ***** trading in Australia from the comfort of your own home, or on the go. All you need to get started is a little knowledge, a good ASIC broker and a deposit method like an Australian debit card. But of course - you must predict the asset’s price movement correctly and create the appropriate order.
There are many ways you can go about this, and heaps of helpful tools and strategies to consider. All of which we are going to talk about in detail throughout this comprehensive guide on ***** Trading Australia.
Section 1: The Foundations of ***** Trading Australia
In section 1, we are going to start with the bare bones of ***** trading in Australia. This is to build both your knowledge of the market and how it works - but also confidence in your future trading endeavours.
Let’s start by elaborating on some common ***** terminology you are likely to see in guides like ours - not to mention at chosen your trading platform.
***** Pairs - Minors, Majors, and Exotics
[IMG]https://app.trading-education.com/photos/*****-pairs-symb.png[/IMG]
You will see the words ‘***** pairs’, ‘FX pairs’ and ‘currency pairs’ banded around a lot in the online ***** trading space. They all mean the same thing - 2 currencies competing against each other make a ***** pair.
Let’s say you wanted to trade the British pound against the Australian dollar. This pair would be illustrated as GBP/AUD. In this scenario, the British pound is the ‘base’ currency of the pair, and the Australian dollar is the ‘quote’ currency.
At the time of writing the exchange rate of GBP/AUD is 1.82, which means that for every £1 you would receive AU$1.82. The exchange rate of this, and any other pair, is motivated by supply and demand.
The price of FX pairs and other tradable assets fluctuate throughout the trading day, usually by the second. When it comes to currency pairs, the shifts in price are measured in ‘pips’ (percentage in points). This means that the difference in value can be measured in micro amounts.
It is for this reason that when you join a ***** trading site in Australia, you will notice that the price of a pair will be quoted to you in 4 decimal places. The exception to this rule is the Japanese yen (JPY) - which is usually quoted in 2 decimal places.
For instance, the aforementioned price of 1.82 for GBP/AUD would be something like; 1.8223. We are going to talk about pips and what they mean in more detail in a moment.
First, we are going to talk about the 3 main currency pair categories - ‘minors’, ‘majors’, and ‘‘exotics’. The vast majority of brokers identify ***** pairs in these groups, so it’s a good idea to have a good grasp of what each type contains.
Read More:
***** Trading Pairs - Top 10 ***** Pairs To Trade
***** Volatility - What Are The Most Volatile Currency Pairs?
Minor Pairs
A key characteristic of minor currency pairs is that they are made up of 2 strong currencies. Think along the lines of the Australian dollar, Canadian dollar and euro.
Because minor pairs include 2 strong currencies, you can expect a good level of liquidity - however not as much as when trading major pairs.
Another point to make is that minor pairs never include the US dollar - unlike major pairs which we are going to dive into next.
First, we have listed below the most popular minor ***** pairs to trade via an ASIC broker:
- EUR/NZD - Euro against the New Zealand dollar
- GBP/JPY - British pound against the Japanese yen
- AUD/CAD - Australian dollar against the Canadian dollar
- EUR/CAD - Euro against the Canadian dollar
- EUR/AUD - Euro against the Australian dollar
- EUR/JPY - Euro against the Japanese yen
- EUR/GBP - Euro against the British pound
Major Pairs
When it comes to major currency pairs, a key characteristic is that they always contain the most traded currency on the planet - the US dollar.
Consequently, you can expect lots of action in terms of trading volumes and higher liquidity when trading this FX pair category.
As we said, major ***** pairs will always contain the dollar. The other currency in the pair will invariably be another strong currency like the Australian dollar, British pound, or Euro.
If you are a newbie at ***** trading Australia, we recommend only trading minor and major pairs until you find your feet.
To give you an idea of what major currency pairs you might find on your chosen ASIC trading platform, please see below:
- AUD/USD - Australian dollar against the US dollar
- USD/CAD - US dollar against the Canadian dollar
- USD/CHF - US dollar against the Swiss franc
- AUD/USD - Australian dollar against the US dollar
- NZD/USD - New Zealand dollar against the US dollar
- GBP/USD - British pound against the US dollar
- USD/JPY - US dollar against the Japanese yen
- EUR/USD - Euro against the US dollar
You will no doubt find that the majority of the time, volatility levels will be on the low side. This is due to the high demand of majors in the market.
With highly reputable economies like Australia, the US, and Europe in the mix - this is hardly surprising. In fact, EUR/USD is the world most traded ***** pair in the world, alongside USD/JPY, GBP/USD, USD/CAD and AUD/USD.
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