CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Compare Brokers in Australia

For our australia comparison, we found 20 brokers that are suitable and accept traders from United States of America.

We found 20 broker accounts (out of 147) that are suitable for Australia .

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Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data. *Availability subject to regulation.

The Ultimate Guide to

Best Online Brokers for Australia

The primary Australian stock market is the Australian Securities Exchange (ASX), and located in Sydney, Australia, it’s also referred to as the Sydney Stock Exchange. The ASX was formed in 1987 by a conglomeration of six regional securities exchanges and a more recent merger in 2006 with the Sydney Futures Exchange.

The ASX is regulated by the Australian Securities and Investment Commission (ASIC), an institution that supervises all Australian financial markets, as well as the clearing and settlement of securities. It is important to note that in order to conduct any financial service business, including being a registered forex broker, it’s necessary to apply for the license through ASIC.

Currently, the ASX ranks 16th among the world’s largest stock exchanges, and allows for the listing of shares and equity derivatives. In addition, there is also listings for bonds, hybrid securities, exchange traded funds (ETFs), exchange traded products (ETPs), warrants, indices, derivatives based on interest rates, as well as grain and energy commodities.

The ASX categorizes its premier market with an All Ordinaries Index (XAO) reflecting the top 500 companies listed on its platform. Note that the eligibility criteria for XAO is the market capitalisation of its members, as liquidity is not considered in this index (with the exception of foreign domiciled companies). In addition, ASX continues to further segment stock indices into S&P/ASX 20, the S&P/ASX 50, the S&P/ASX 100, the S&P/ASX 200 and the S&P/ASX 300 indices; in short classifying the top 20, 50, 100, 200 and 300 qualified corporations listed on ASX by varying criteria related to the company’s liquidity.

Furthermore, the ASX has instituted the ASX Compliance which operates as a separate division of ASX. ASX Compliance oversees the adherence of listed entities and participants with ASX listing and operating rules for the various exchange traded markets. ASX also works closely with ASIC by notifying the government regulator of any rule violations.

In terms of forex trading, the Australian dollar (AUD) is a highly traded currency.  The AUD is managed and issued by the country’s central bank, Reserve Bank of Australia (RBA). As of 2016, The Bank for International Settlements (BIS), an international organization that aims to promote financial cooperation by fostering collaboration between central banks, ranked the AUD 5th among the most actively traded currencies.

BIS determined that AUD composed roughly 6.9% of overall forex market turnover. Furthermore, in accordance to the International Monetary Fund (IMF) the AUD ranked 6th among the world’s most popular currencies held as reserves by central banks, comprising about 1.62% of total central bank reserves of the fourth quarter of 2018. 


How to Trade in Australia

The type of trading undertaking in Australia, may it be asset or stock trading, can vary greatly between brokers. The majority of online brokers provide a forex trading capability and CFD which is popular since they typically allow trading in a broader range of assets. With stock trading, the ASX aims to provide a transparent and fair market for investors in wide range of asset classes, as well as Australian stocks and indices.

Additionally, the ASX Group of exchanges currently has two trading platforms. The first is known as ASX Trade and allows the trading of ASX listed equity securities, while the second is the ASX Trade24 system that facilitates trading in ASX listed derivative securities.

Due to the high popularity of the AUD, many forex brokers are situated in Australia.  Nevertheless, Australian traders can choose from a wide selection of brokers based anywhere in the world using margin trading accounts opened with foreign online brokers.

When considering trading with an online broker in either forex or in derivative trading such as contracts for difference (CFDs), having an Australian based broker may provide distinct advantages to foreign online brokers. Firstly, a locally situated broker will be registered with ASIC with a need to uphold its reputation. Secondly, any disputes that could potentially arise could be handled locally. Thirdly, a local broker’s normal business hours and market focus will usually be more akin to those needs of an Australian trader. However, if a foreign broker is better suited for your needs, it is important to ensure that it is governed by a well-regulated jurisdiction.

In considering online brokers there are some factors that may be helpful to bear in mind such as demo accounts or minimum deposits.  Many online brokers offer a demo account, complete with virtual money for traders to use for practicing, testing a strategy or even the broker’s services. Alternatively, some brokers also offer live trading accounts where a minimum initial deposit is normally required to begin trading with real money. There are also those catering to Sharia law compliant or Islamic accounts, which do not have swaps on rollovers. 

Biggest Opportunities of Trading in Australia

Australia’s financial services sector is relatively new compared to markets in Europe and Asia. Also, the population of Australia’s 25.06 million people sparsely covers the subcontinent’s 2.9 million square miles, with most of the population concentrated in the major cities and neighbouring areas. 

According to export.gov, Australia welcomes exports such as electronic products, chemicals, machinery and agricultural products from developed countries. Prospect sectors include building products, cloud computing, auto parts, medical equipment, mining, oil and gas equipment.

The country also provides additional opportunities for businesses as follows:

  • Since January 1st, 2005, the Australian Free Trade Agreement (AUSFTA) lowered the threshold for foreign investment as well as providing enhanced intellectual property protection, stimulating greater two-way investments. Additionally, since the inception of AUSFTA, more than 99% of goods exported from the United States now enter Australia duty-free.
  • Despite Australian GDP growth in 2019 slowing down to its lowest level in the past 28th years, nominal GDP expanded by +4.9%, mainly due to an increased demand for Australian natural resources.
  • The RBA, Australia’s central bank, recently cut its benchmark Cash Rate to an all-time low of 1.25%. Due to the nation’s current economic slowdown, the RBA is expected to make additional cuts to the Cash Rate that will most likely reach 1.00% by July or August of 2019.
  • Australia is one of the gateways to doing business in the Far East, as well as New Zealand and the rest of Oceania.

With respect to enforcing contracts, starting a business, obtaining credit and dealing with construction permits, Australia ranked 5th, 7th, 8th and 9th respectively in accordance to the World Bank. They also ranked Australia 18th for the general ease of doing business there.

Biggest Challenges of Trading in Australia

One of the biggest non-tariff challenges of doing business in Australia is due to the remoteness of the subcontinent. Moreover, many foreign companies that open for business in Australia discover that Australia buys many products from established emerging markets suppliers. Products made in Australia by a foreign company may therefore have to compete with low cost goods already imported from these competitively priced markets.

Moreover, the Australian dollar has also been quite volatile over the last twenty years, according to historical data provided by MetaTrader. In October of 2008, the AUD traded as low as 0.6008 against the U.S. Dollar, rallying up to 1.1079 by July of 2011. The AUD currently trades at the 0.7000 level against the dollar, with a good chance of declining further if the RBA lowers interest rates.

As an overview,  in accordance to the World Bank  registering property and obtaining electricity, Australia ranked 50th and 52nd. Furthermore, the business environment was also rather unfavourable for trading across borders, protecting minority investors and paying taxes, with Australia ranking 103rd, 64th and 26th respectively in those areas.

Summary

Traders and businesses should generally find Australia a very secure place to operate, due to its mature economy and a stable political structure. Additionally, financial institutions with offices in Australia receive oversight by ASIC, as well as ASX Compliance if involved with exchange traded securities.

As a rule of thumb, when looking to trade from Australia via an online broker, traders really should ensure that the financial firm offers an adequate asset class range, is adequately regulated, and has a good reputation and a full featured trading platform. Acceptable brokers should also provide a secure place for a margin deposit by keeping its clients funds separate from its own in case of financial difficulties.