Choosing Currency Trading Brokers in New Zealand

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A good Forex broker should provide its customers with many traceable assets. You should not registrar with that broker if it does not offer a minimum of 50 Forex pairs.

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Major currency pairs

For a currency pair to be a major pair, it must have the US dollars as part of its pair. The US dollars can be either the base currency or the quote currency. The major currency pairs are the most popular pairs. They are the most commonly traded also in the Forex market. Their pip spreads are also the lowest. They are equally the most liquid Forex pairs. The most-traded among all currency pairs is the EUR/USD. Studies show that it has a trading volume of 30% daily.

Any currency pair that does not contain the US dollars is called the minor pair. The pairs are formed from three major currencies, which are:

  • Japanese Yen
  • Euro
  • British Pound

How Forex brokers make money

A broker makes its money when any trader places a trade on its platform. The trade can be a buy or sell. The money comes via the bid-price and ask-price difference; you can also call it the pip spread. The pip spread comes when you subtract the bid price from the ask price. If the bid price is 1.2010 and the ask price is 1.2015, it means the pip spread is 10 pips. The amount the broker can make depends on the size of the spread. The broker makes more money as the spread gets wider.

Additionally, the broker can make money via transaction fees. The transaction fee is the money the trader pays each time he opens a trade. There is now heavy competition among Forex brokers in New Zealand and beyond. This forced the hands of many brokers to reduce their transaction fees. The competition also made many brokers reduce their spreads.

How to choose a good Forex broker in New Zealand

You will find so many Forex brokers in New Zealand and they all claim to be good. You need to first investigate the brokers before you register with any of them. You should avoid registering with an unreliable broker. Check below for tips that can help you to make the right choice among them.

  • Licensing is important: You should only register with a licensed Forex broker in New Zealand. A broker that is neither licensed nor regulated can end up stealing your funds. The regulatory body in New Zealand is the Financial Market Authority (FMA). Find out if the broker is regulated by this body or not. You can also go for one regulated by international agencies.
  • Demo account availability: The demo account is a practice account that can help you to improve how you trade Forex. A good broker should be willing to give you free access to a demo account.
  • Check available trading instruments: If the broker offers many trading instruments, it will make Forex trading a lot more interesting. It can also increase your chance of making a profit.

From the information above, you would have understood a thing or two about Forex trading. You can now see what to do when choosing a Forex broker in New Zealand. You will never get it wrong if you follow the information above.

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High Risk Warning: Forex and Contracts for Difference (CFD) are complex financial instruments that are traded on margin. It is possible to lose all your capital. These financial products may not be suitable for everyone and you should ensure that you understand the risks involved. Speculate only with funds that you can afford to lose and seek independent expert advice if necessary. © Copyright 2021