Australia is a leading player in global finance. For one, the country has a vibrant financial market, with more than 2 thousand publicly traded companies. While most of these firms are in the commodities sector, some of the fastest-growing firms are technology-related.
Australia also has a vibrant regulatory structure, with the Australia Securities and Investments Commission (ASIC) putting in laws to protect traders.
This report will look at day trading in Australia and how it works, while also answering some of the most frequently asked questions for those entering the markets.
Australia’s role in economics
Australia is a relatively small country of about 25 million people. It is also one of the wealthiest countries in the world. It has a total GDP of $1.4 trillion and a GDP per capita of more than $62,000. Its GDP per capita makes it the 15th wealthiest country in the world.
Most of Australia’s wealth comes from its great natural resources since it is one of the leading coal and iron ore providers. The wealth is also because of its close relationship with western countries like the United States and Canada.
Most importantly, it has a close relationship with China, the world’s biggest buyer. Indeed, China buys most of Australia’s exports.
It is also a leading buyer of the country’s services like education and hospitality. Indeed, because of China’s resurgence, Australia saw continued expansion for more than 30 years. This growth was disrupted by the coronavirus pandemic.
Role of ASIC in Australia
Australia has a vibrant financial market with thousands of publicly traded companies. At the same time, the country has many online brokerage companies that provide customers with access to local and international assets.
Indeed, some of the biggest forex and CFD brokerage companies like PepperStone and EightCap were all established and are headquartered in Australia
Recently, ASIC has moved to implement strict regulations in the industry. In 2020, it passed MiFID II-style regulations that had some impact on the sector. For example, the regulations reduced the maximum leverage that online brokers can offer.
Like in Europe, the maximum leverage that can be offered is 1:30. This is a bit low considering that some regulators allow unlimited size of leverage. Still, the regulator argued that these rules were necessary to protect customers.
Still, more Australians have embraced the financial market and are using traditional and modern platforms like the PPro8 (DTTW™ proprietary tool) to participate in the financial market.
How to day trade in Australia
So, how do you day trade in Australia? The process of day trading in Australia is relatively easy and similar to what happens in other countries.
First, it is necessary that you understand how trading works and the overall risks that are involved. Fortunately, there are many online educational platforms that can help you know how trading works. There are books, online courses, podcasts and videos that can help you in this.
Have a Strategy and a Demo Account
Second, it is important that you create and test a strategy before you start using real money. Fortunately, many online brokers provide you with a demo account with virtual money that you can use.
The demo account works in exactly way as a real account with the only difference being that they have fake money. Also DTTW™, within its package, offers a demo platform in all respects equal to the traidng software
The right Online Broker
Third, you need to find a good online broker that will execute your trades. The ASX lists about 30 full-service providers that are allowed to execute trades of Australia’s publicly traded companies. The only challenge with most of these brokers is that they give you access to companies listed in Australia.
Most Australians looking to take advantage of multiple assets like cryptocurrencies, forex, futures, commodities, and American and European equities go for online forex and CFD companies. You can check ASIC’s website for a list of approved entities.
At Day Trade the World, we are proud to provide Australia’s with access to a trading platform they can use to access assets from tens of countries. For example, they can day trade Australian stocks in the morning, European stocks in the afternoon, and American equities later in the day.
Most importantly, we provide them with direct market access (DMA), which allows them to select their preferred market maker.
Best time to day trade in Australia
The Australian stock market opens from 7:30 am and closes at 16:00. Between 7:30 am and 10:00 am, there is a preopen (or premarket), which is similar to what happens in the US. The regular session starts at 10:00 am and closes at 16:00.
Still, it is possible for Australians to participate in the financial market for longer than that. For example, cryptocurrency exchanges like Bitfinex and Binance allow people to trade on a 24 hours and 7 days a week.
Similarly, forex brokers allow people to trade for 24 hours 5 days a week. Further, our company gives traders access to markets in various jurisdictions.
So, is there the best time of the day to trade in Australia?
If you are using the traditional brokers, you should mostly trade in the morning hours when there is a substantial volume (because, as you know, volume is very important). For other traders, the best time to trade is when there is an intersection of the Asian and European markets and European and American sessions.
Still, depending on your schedule, it is possible to day trade at any time of the day.
Trading the AUD
The Australian dollar is a popular currency to day trade. It is one of the most volatile also. The currency is usually moved by fundamentals like the latest Australian news and economic data. The most important events are the RBA interest rate decision, retail sales, inflation, trade, and mining data.
The currency is also one of the best known commodity currencies meaning that its price action is related to that of other commodities. It si also used as proxy for the Chinese market because of the trade relationship between the two countries.
The most popular Aussie pairs are the AUD/USD, AUD/NZD, and AUD/EUR.
When to trade AUD?
The Australian dollar is a highly liquid currency especially its pairing with the British pound, US dollar, and the euro. In most cases, the AUD/USD tends to have a close correlation with other major pairs like the EUR/USD and GBP/USD/
The best time to trade the AUD/USD pair is during the Australian trading session and the American session. The Australian session is important because of the economic data that come out during the period.
Further, for more volatility, traders focus on the intersection of the Asian and European and American sessions.
Top Australian data that move the Aussie
There are several important economic data that move the Australian dollar. Some of the most notable ones are:
- Inflation data – Inflation numbers are important because they provide guidance on what the RBA will do. Unlike other countries, Australia publishes its inflation numbers per quarter.
- Wage growth – The RBA focuses on wage numbers that come every month. High wage growth provide signs that the RBA will hike interest rates.
- House price index data – The data shows the strength of the Australian housing market, which is an important part of the economy.
- Retail sales – The Australian Bureau of Statistics (ABS) publishes retail sales numbers every month. Strong sales are signs that the economy is doing well.
- GDP – The quarterly GDP report shows the strength of the Australian economy. It is published four times per year.
Unlike the US, Australia does not publish numbers like durable goods orders and industrial production numbers.
Also, it is worth noting that some numbers from China like GDP and industrial and manufacturing production have a positive impact on the Australian dollar.
FAQs about day trading in Australia
Is day trading illegal in Australia?
No. It is completely legal to day trade in Australia. In fact, there are many local brokers that offer these services.
Is it possible to day trade the ASX 200?
Yes. In fact, the ASX 200 index is offered by most forex and CFD brokers. You can also trade it using the DTTW platform.
How much do you need to start day trading in Australia?
There is no minimum amount needed to start trading in Australia. In fact, some online brokers have a minimum deposit of less than $100.
Day trading has become a good career for many people in Australia. In this article, we have looked at how trading in Australia works and answered some of the most popular questions.
External Useful Resources
- Beginners Guide to ASX Day Trading (Australia) – MiTrade