What is forex?
Foreign exchange (forex) is the trading of one currency for another, usually a currency from another country. A currency’s value is ever-changing and will depend on a variety of factors specific to each country. The most common form of foreign exchange is completed when you visit another country and have to complete transactions using their local currency.
Once you arrive in a foreign country, you will usually have to exchange or purchase their local currency using your own and the two are related to what is known as an exchange rate. This rate assigns the value of your currency relative to the foreign currency.
There are two rates that are applicable for any currency, a fixed rate or a floating rate. For a floating rate, a large global open market determines a currency’s value by the supply and demand that is applicable to the specific currency. A fixed-rate is determined by the central bank of the specific country that it is in.
The rate is then set against a major world currency within the market. There are numerous political and economic factors that can drastically influence the value set for a specific currency. The most common indicators for price change are usually unemployment statistics, interest and inflation rates, GDP stats, economic performance and commodities available.
Forex has since expanded to become a global market with traders from just about every country in the world looking to trade their currency for a foreign currency option. This is done by using brokers and their specific trading platforms.
To head to the list of available brokers out there, check out some of our forex trading reviews that are available on this web site. To better understand how this is done, we will be taking a closer look at exactly what a broker is in the next section of this article.
If you think you have a firm grasp of forex trading, head to our forex broker in Australia guide.
What is a forex broker?
Now that we have forex trading explained, it is time to take a look at exactly what a forex broker is. A broker is a firm/individual that serves as an intermediary between another individual in order to exchange their funds for an asset listed on a security exchange. It is not possible to transact with an exchange if you are not registered with it, for this reason, brokers extend their services to offer transactions to any customer looking to trade within the specific market.
A forex broker is slightly different when compared to a stock broker as most of the trades done would be over the counter. This means that customers have real ownership to the assets that are exchanged, if you have purchased some American Dollars, you will actually have those dollars available to you if you wish to make use of them. There are plenty of other trading mechanisms that are used on today’s market and to better understand one of them, head to our CFD trading explained page.
Having a broker is crucial as it offers customers all over the world the opportunity to interact with one another and complete trades using their specific currencies. Be sure to check out all your broker options before you commit to signing up.
Finding the best online forex broker for beginners
With forex trading explained, you will undoubtedly be interested in what brokers would be the best place to start. Luckily, our online brokers Australia page gets down to the basics of all the operators out there and details exactly what information you can find within our entire service.
When you have made the choice to get going with forex trading for beginners, you will need to first consider what you’re looking for from a broker. Would you like a broker with very high limits to enable you to complete larger trades, or are you looking for a broker that offers customers the ability to trade with little to no fees applicable?
There will also be factors unique to your case that could influence the decision. Our reviews ensure that all the information is covered to make the most informed decision possible. Your first point of consideration should always be safety. Is the broker reputable and licensed? You will also need to seek some financial advice if you are looking to transact with large sums of money. There may be tax/laws applicable to your personal investment portfolio and it is always best to be very well informed about this.
Once you have got a clear image of what you are looking for, you can then browse through our best online brokers for beginners page to take a look at some of the available opportunities.
Each broker will also have their own unique spread associated with the relevant currency pairs within their service. An important part of forex trading basics would be the concept of spreads. A spread is a difference between the bid price and the selling price of one specific foreign currency, or it may even be your local currency itself.
Be sure to read over our low spread broker forex page to find more information relevant to spreads and how they may differ with each online broker.
Have a try of demo accounts
A forex demo account is a perfect tool that is available for forex trading for beginners. It allows any interested individual the opportunity to experience forex trading basics firsthand and determine if the market is really for them. With a demo account, you will be able to enter the customer portal of their website without having to spend any money.
You simply need to register for the service and begin using the demo account option. This allows you to take a look at exactly what the paying customers have on offer with the online broker. The best online forex broker for beginners will undoubtedly have this option available.
Once you have gained access to the demo account, you will then also be able to interact with their online trading platform to make some foreign currency trades using a fictional amount of money credited to the demo account. Having forex trading explained will definitely help out to make this demo account a small success before signing up for the real thing.
This will give customers a feel for how the markets behave and allow a glimpse of whether or not you will be able to trade effectively with the online broker. If you are struggling to make a success of your demo account option, be sure to check our forex trading tips page to get some expert tips on how to trade foreign currencies.
Make use of learning resources
To be considered a good opportunity of forex trading for beginners, an online operator will have to ensure that they have the necessary learning resources available to any interested customers. The world of online trading can be quite intimidating and every attempt the broker goes through to get forex trading explained will help to make your career as smooth and successful as possible.
A learning resource will simply include information related to the foreign exchange marketplace and be set up in such a way that any customer is able to understand and interpret the information. To get some information on one trading technique, head to our forex scalping page.
Our forex reviews take a look at exactly what learning resources are made available by each online operator and allow the best online forex broker for beginners to be accurately determined. The learning resources need to be concise and easy to understand in order to receive a positive rating.
If your chosen online broker has not managed to put any information on offer, you may have to look elsewhere for learning material or look for another broker altogether. You can learn a bit more about forex strategies right here at Wetten Broker Australia.
Other trading instruments
The best online forex broker for beginners will also have a variety of other trading instruments available in order to attract the largest variety of customers possible. It is highly recommended that you first gain all the knowledge you can about one instrument before venturing on to the next. However, it is also worthwhile to diversify your portfolio to ensure that there is not much risk associated with your funds. This is usually done by looking at a variety of investment opportunities and making use of other trading instrument options.
Cryptocurrencies
With forex trading explained, you might be interested in the new trading instrument that has gained a large amount of momentum over the past decade. Cryptocurrencies are digital assets that are not held within a central authority and ownership of the crypto units are proven cryptographically. This allows transactions to be completed anonymously and securely. The best online forex broker for beginners should also have this instrument available to all customers.
ETFs & Stocks
Exchange traded funds (ETF) are securities that allow an individual the collection of securities usually tracked by an index. They are very similar to mutual funds but can be traded throughout the day in the same way that stocks are traded. A stock is a portion of a corporation that can be bought for a specific price. These transactions are also handled on exchanges. Read more about how to buy ETFs in Australia right here at Wetten Broker Australia.
CFDs
A contract for difference (CFD) trading instrument allows customers to enter a contract between the buyer and the seller of the specific asset to settle the difference in price between the current value of the asset to its set future value. CFDs offer plenty of advantages and this has brought about a large amount of support for the trading instrument.
It is important to remember that the investor does not actually own the underlying asset associated with a CFD and that the gain only comes from the difference in value between open and closing of the contract.
Futures
A future trading instrument also offers customers the opportunity to make use of derivative financial contracts in order to try and make a gain using the value of a specific asset. This contract obliges the parties to transact on a specific date, for a specific price, regardless of how the actual market is performing. This allows the investor an opportunity to speculate the price of the specific asset at a future point in time.
Options
The best online forex broker for beginners may also have a few options trading instruments available to customers. This will allow an owner the right to buy or sell the underlying asset at a specific price before a certain date. This allows a certain amount of security when investing in the variety of assets that are available.
Conclusion – Forex trading for beginners
By now, you should have a solid comprehension of the forex trading basics. This includes the concept of foreign exchange itself and just exactly how it has become such a large, global marketplace. Trading of foreign currencies has been around for hundreds of years and there is a larger amount of traders present on the market than ever before.
Forex trading for beginners may seem daunting at first but it is all made easier by gathering as much information about the industry as possible.
Be sure to check through all the offers to find the best option out there relative to your needs and use our reviews to gather all of these details. It is then highly recommended that you make use of the demo accounts before committing to an online broker. Also head to their learning resources to gain some more knowledge about forex trading.
Finally, keep up to date with the other trading instruments that are on offer with your online broker in order to try and diversify your investment portfolio. These trading decisions will be your own at the end of the day but try to use all the information that is made available to you.
Best Online Forex Trading For Beginners FAQ
🥇 Who is the best forex broker for beginners?
When you begin your trading career, you would have hopefully found one of the best operators on the market before committing your money with the service provider. Having a reputable service offer will allow customers to make use of a quality service while paying minimal fees. Our broker reviews detail exactly what you can expect with each of the brokers out there and they are all available right here at Wetten Broker Australia.
🔍 How do I find out the forex trading basics?
Getting started within the forex trading industry will require that you at least know the basics of forex before making trades. You can find information regarding just about every aspect of forex right here at Wetten Broker. We detail all the broker offers, forex strategies, demo account options, how to trade forex and scalping techniques.
✍️ How can I sign up with online forex brokers?
When you are ready to join the ranks of forex traders out there, you will need to have a broker that offers you the trading service. There are plenty available within Australia and you can find the specifics of all of their offers right here. Our tried and tested review structure brings you all the details you will need to make the crucial decision of what online operator to sign up with.
💼 Are forex trading brokers legal?
Whenever you are joining an online broker’s service, it is important to consider whether or not you are on the right side of the law. There are plenty of laws applicable to online trading and there are also licenses that need to be obtained before a broker is able to legally operate within Australia. Our reviews will detail the steps that each broker has gone through to ensure they are legal service providers.
💲 What currencies can I buy with online forex brokers?
With online foreign exchange, you will be allowed to buy more currencies than ever before. You will need to find the specific currency pairs that you are most interested in and do the necessary research to make informed trades within the online forex market. To see the extent of each service offer out there, read through some of our reviews right here at Wetten Broker Australia.
