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When Should You Trade In AUD In Forex Markets?


Anyone that wishes to have a well-balanced and diversified, forex investment portfolio should think about the Australian dollar (ISO code “AUD”). It has the merits of being considered a “commodity currency” (which means that its trading patterns are closer to the Canadian dollar than those of the British pound). It also is an official International Monetary Fund reserve currency (meaning that central banks can buy it for their own portfolio diversification manoeuvres). Due to the location and size of Australia’s major trading partners, it trades with a distinctly Asian feel to it. Lastly, since Australia has relatively high interest rates, if you go long many AUD-related pairs, you should get paid a little bit extra every 24 hours just for staying in the trade.

Newbies may want to open up 1 or 2 “demo accounts” with a forex bank or broker and test various AUD-related forex trading strategies. The reason for this is that by opening more than 1 account at the same time, you can monitor comparative execution costs.

How Much Time Is Needed To Start Trading Forex?

Unless you have a banking or international trade background, learning how to profitably trade forex could take quite a long time. The reason for this is that forex is one of the largest global capital markets in existence, operating through the trading of more than 80 currency pairs on an almost non-stop basis. Such complexity takes time to understand and even more time to learn how to profitably trade. Use of what is known as a forex “demo account” (widely available through many forex banks and brokers) should help immensely. Better yet, open 2 forex demo accounts and run the same trade through both accounts at the same time. In such a manner, you will be able to directly compare execution costs.

Main Benefits Of Trading AUD In Forex Markets

Trading the main AUD-related currency pairs (e. g., AUD/USD and AUD/JPY) offers a number of unique benefits. First, the AUD is an International Monetary Fund reserve currency whose largest trade volumes generally do not occur when Europe is open for business. Secondly, due to the close relationship of Australia’s export industries and China’s industrial centres, trading in AUD-related pairs is always done with an eye toward Beijing. This gives the AUD an unusual “non-European” forex trading profile. The AUD/JPY is also a “positive interest rate carry”, meaning that you can be rewarded – daily – for continuing to hold a net, long position in this currency pair. This could also occur in the AUD/USD, depending upon whom is your bank or broker.

Tracking The Aussie Dollar In Forex Markets

The bulk of all AUD-related trading is done in either AUD/USD or AUD/JPY. Significant trading volumes also occur in EUR/AUD and GBP/AUD. One reason for this is that both the AUD/USD and the AUD/JPY are usually “positive interest rate carry” trades, financially favouring the buyer every 24 hours. In order to have this happen with either the EUR/AUD or the GBP/AUD, you would have to go short – a risk many are unwilling to take for long periods of time. The most significant AUD-related trading hub is in Sydney (and, then, in Tokyo). Australian banks, in general, prefer to buy their own currency rather than sell it. So, again, there is a bias to the AUD long side of life.


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