Best Online Brokers Australia
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Compare The Best Online Brokers in Australia
Interested in online trading but confused about which broker to open a trading account with? You’re not alone!
The online trading industry is an extremely competitive one and the choice of online brokers in Australia is seemingly endless. CompareCFDbrokers.com.au has one simple purpose in mind; to provide an independent comparison of some the leading online trading brokers in Australia, so traders can find a reputable, trustworthy and regulated broker to trade with.
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Recommended Online Brokers For 2023:
Leading
CFD Brokers
Who are they?
Standard Leverage
Regulation
Min. Deposit
Segregated Bank Accounts?
ASX Stock Commission
Australia 200 spread
Wall St 30 spread
AUD/USD spread
Spread Type
Trading Platform
Next Steps
Low-Cost
CFD Provider
200:1
SCB
$0
0.07% with $5 min.
0.9pts - FIXED
1pt - FIXED
0.6 pips - FIXED
Fixed
CloudTrade, MT4
Fast-Growing
CFD Broker
30:1 (AU)
ASIC, FCA
$100
No ASX stocks
1pt
From 1.6pts
From 0.5 pips
Fixed & Variable
cTrader or MT4/ MT5
World-Leading
CFD Broker
30:1 (AU)
ASIC, FCA, MAS
$100
0.08% with $5 min.
1pt
1.6pts
From 0.5 pips
Variable
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What Is Online Trading?
Online trading is the act of buying and selling an asset class such as currencies, futures, commodities, indices, stocks etc. through an online broker’s trading platform.
Once reserved for large financial institutions, online trading exploded in the late 1990’s/ early 2000’s when the internet became mainstream – thus allowing everyday investors’ access to the world’s financial markets. Nowadays, you don’t need to be a large bank or have $1m in the bank to trade; anyone with a computer and decent internet connection can apply for an online trading account.
In order to start trading, an individual would need to open a trading account with an online broker so they can execute their trades. There are many brokers to choose from and some are listed above in the comparison table.
It’s important to note that, while the financial markets are easily accessible these days, they should not be taken lightly and your hard-earned savings can be wiped out very quickly if you do not know what you’re doing or there is volatility in the markets. Please be careful.
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What Are The Benefits of Online Trading?
You can speculate on both Rising and Falling markets
Online trading allows you to bet that a particular market will go up as well as down. As an example, when we buy a stock we typically want it to go up in value so we can make a profit, but with online trading we have the ability to “go short” and sell an asset when we think it will decrease in value. This is one of the major benefits of online trading.
Trade using leverage
As mentioned above, online trading is a leveraged product which means you only need to deposit a small fraction of money in order to open significantly large trades. Leverage can be good and bad for retail traders, more on this in the section below.
24/5 access
Online trading lets you trade on markets from all around the globe, at all hours of the day. Most online brokers will offer, at a minimum, the major markets however some brokers will give you access to 30,000+ different trading products!
You do not own the asset
With online trading, you are purely speculating on which direction the price of an asset will move – you do not own the asset (unless you go and buy it direct from an exchange). Therefore, you don’t have to worry about ownership costs etc.
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Top 5 Considerations When Choosing An Online Broker
There are a number of important factors to consider when choosing which online broker to trade with and some of these have been outlined below. Ultimately, deciding which broker to use is a very personal one and the final decision is up to you.
1. Trading Costs
This is one of the most important considerations as the lower your trading costs, the greater the opportunity there is to make a profit, all other things being equal. Please research and compare the costs involved before opening a trading account with a broker. Please ask your broker about the following, standard trading costs;
- Spread charges:Â are spreads fixed or variable? How wide (expensive) are their spreads?
- Commissions:Â are there any commission charges when trading with them?
- Overnight financing charges:Â what do they charge to keep a trade open overnight?
- Exchange fees:Â are there any exchange fees (i.e. ASX data feed fees)?
- Inactive fees:Â unfortunately some brokers charge an inactivity fee which is absolutely ludicrous. Please ensure you know if they will do this and avoid brokers that do charge this ridiculous fee.
2. Regulation
Ensure your broker has the appropriate regulation before opening an account with them. In Australia this would be an AFSL (Australia Financial Services Licence) – look on their website for an AFSL number, this will mean they are ASIC-regulated. Do not trade with a broker who is not ASIC-regulated.
Online financial trading with a regulated entity has many obvious advantages; most notably that a broker will be closely monitored by the countries’ governing regulator and they will be required to work within a certain framework, ensuring brokers run a business in accordance with the local laws.
3. Reputation
Research the brokers you are considering opening an account with – what are other traders or industry experts saying about them? Are they a ASX listed company? Do they segregate clients funds? How long have they been in business?
4. Technology: is their trading platform easy to use?
You need to be comfortable with a broker’s software, including their trading platform and App as that’s where you’ll be making your trades from. If you don’t like their technology, go elsewhere. We’d recommend opening a few demo accounts and testing those before taking the plunge with a live trading account.
5. Range of markets
Ensure that the broker you want to trade with has the markets you are hoping to trade! Most brokers will offer the standard markets (FX, Gold, Silver, Oil, Indices etc.) but if you’re hoping to trade a smaller market or new asset then ensure the broker offers this.[/vc_column_text][vc_empty_space height=”50px”][vc_column_text]
How Does Online Trading In Australia Work?
Before you can begin trading online, you’ll need to open an account with a broker. Then you’ll need to decide which markets you want to trade. For example, do you want to trade forex or Gold? The Aussie 200, Wall St or the UK100?
TradeDirect365’s CloudTrade CFD PlatformÂ
Once you’ve opened your trading account with an online broker, the next step is to fund your account so you can place some trades. Remember, with online trading you’re simply speculating on the price movement of an asset – you do not own the physical asset.
Once your money has been applied to your trading account, you are ready to trade. Please ensure you know the costs involved in opening the trade before you open it. Each broker has different spread and commission structures so do your research before opening your first trade (more on trading costs below).
Another important point to remember with online trading is that you are trading on margin (leverage). This means you only need to deposit a small portion of money to open larger trade sizes. For example, broker X may offer leverage of 200:1 which is a margin rate of 0.5%. If you put $200 into your account, you can potentially trade market positions valued at $40,000 (200 leverage x $200)! Leverage can help boost your profits quickly but it can also decimate your trading account (and life savings) in a heart beat so be careful and know what you’re doing.
The main aim of online trading is to make a profit. If this is not your main aim then you need to reconsider what you’re doing! If you speculate correctly then you should make a profit from online trading. Obviously it’s not always that easy and the truth is around 90% of traders lose money.
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How Much Does It Cost To Trade via An Online Broker in Australia?
There are a number of broker costs involved with online trading;
- Commissions Charge: most brokers will only charge a commission on stock trades. Trades on most other markets, like FX, Commodities, Indices etc. will not incur a commission charge. Check with your broker before opening a trade however.
- The ‘Spread’ Cost: the spread is the difference between the buy and sell price, and is essentially the cost of opening a trade. For instance, the spread on the ASX 200 is 1pt if the buy & sell price is 6,101 – 6,100. The lower the spread, the lower you are being charged, all other things being equal. TradeDirect365, for instance, have some of the tightest spreads in the industry which means they are charging you less to trade.
- Overnight Financing Cost: an overnight financing charge is applied if you hold a trade open overnight. It is a small interest charge to cover the cost of holding a trade open overnight
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