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How Australian Forex Brokers Affect Your Strategies

Australian Forex Brokers Graph

There are a lot of forex traders who do not understand the impact that Australian forex brokers have on the strategies that they can use.  There are certain strategies that you can easily use with Australian forex brokers.  However, there are other strategies where you have to find the right forex broker.  It is important that you know which strategies could be problematic before you look at the brokers.  When you know if the strategy is a problem you will only look for brokers that allow you to trade with the strategy.

Australian Forex Brokers and Hedging Strategies

There are a lot of traders who look to direct hedging to limit the risks they face on the market.  When you use a direct hedging strategy you will be opening a buying and selling position on a single currency pair.  When you have both trades open you can determine which one will make you a profit.  Once you have determined this you can close the losing trade and ensure profits.

However, the problem comes when you try and open your second position.  There are a lot of Australian forex brokers that do not allow you to open a trade in both directions on a single currency pair.  Of course, you will find some that allow this, but you may have to look quite hard.  To overcome this you may be able to open two accounts with your broker, but you will lose time with the logging in and out of the accounts.  This lost time will impact the effectiveness of your hedging trade.

Your Broker and Carry Trading

Carry trading is a passive way of making money on the forex market.  To make a profit you simply have to hold the right currency pair overnight.  When you have the currency pair your broker will credit you with a rollover percentage which is the difference between the interest rates of the currencies in the pair.  The problem is that not all brokers offer rollover credits.

If you are going to be completing carry trades you have to confirm that your broker allows this.  You also have to find out what the cut off time is for your trade.  As the forex market runs for 24 hours you have to find out when you broker closes the day to calculate the rollover credits.  If you do not have the trade open before this time you will not make a profit.

Trading Within the Spread

A very rarely used trading strategy is to trade within the spreads.  This is an extreme short-term trading strategy that has you making a profit within the spreads.  Of course, this is something that very few forex brokers will allow because it affects the profits that they make.  If the broker does allow you to use this trading strategy you may find that you have to pay a commission to trade.  It is also a very hard strategy to master and is not recommended to new traders.  The fact that so few brokers allow this, means that very few traders even consider it to be a viable option.


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