Typically, there are no
commissions charged. There are no clearing fees, exchange fees or government fees. The only
transaction cost that a trader needs to be aware of is the spread, or the difference between
the bid and ask prices quoted by the broker. When choosing the broker always check for tight
spreads in order to contain these transaction costs. If you are trading with a regulated and
reputed broker, chances are that they offer high liquidity and tight spreads.
Ideal for Beginners and Seasoned Traders
The forex market is extremely accessible, with low barriers to entry.
Getting started is easy and does not require too high an investment. Many novice traders
find it easier to understand how the forex market works than other asset classes like
commodities or even stocks. Of course, the learning continues through the life of a trader.
However, with capital as low as AUD 100, one can enter the exciting world of forex trading.
The large number of opportunities in forex and leverage as high as 30:1 provided by some
brokers make this market attractive for seasoned traders.
No Central Exchange or
The forex market is decentralized, meaning that it is not controlled
by a single regulator or exchange. There are no middlemen. You trade directly with another
trader. The forex broker only facilitates the transaction. The absence of central exchanges
and regulators for not only keeps trading costs low, but also ensures there are no sudden
hiccups in the market or sudden large price swings. Although there is no central regulator
for the global forex market, this does not mean it is completely unregulated. There are
leading organisations that are responsible for regulations in their respective countries. In
fact, before you begin forex trading, ensure that the broker is regulated by one of the leading regulatory
authorities, like the ASIC (Australian Securities and Investments Commission), the FCA (the
UK’s Financial Conduct Authority) or the CySEC (Cyprus Securities and Exchange Commission).