Forex trading: Compare the best forex brokers in NZ 2021 | Finder NZ

Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.

Forex Trading Finder™ – Forex trading comparison

Compare online forex brokers and start trading in the world's largest financial market.

Updated . What changed?

Fact checked
Foreign cash
Data updated regularly
Name Product Minimum Opening Deposit Minimum Spreads for Major Currencies Commission Minimum Trade Size Platforms
BlackBull Markets Forex Trading
USD 200
0.0 - 0.8 pips
$0
0.01 lot
MetaTrader 4, MetaTrader 5
Margin FX is a complex financial product and traders are at high-risk of losing all of or more than their initial investment.. Trade up to 64 currency pairs with a New Zealand registered and based provider.
Plus500 Forex Trading
NZ 100
Variable and adjusted according to market spread.
$0
Varies with instrument
Plus500 WebTrader
Margin FX is a complex financial product and traders are at high-risk of losing all of or more than their initial investment.Open an account and experience Plus500's easy-to-use proprietary trading platform, 24/7 online chat support and free real-time forex quotes.
IG Forex Trading
AUD 0
0.6 - 1.5 pips
$0
1 lot
MetaTrader 4, ProRealTime
Margin FX is a complex financial product and traders are at high-risk of losing all of or more than their initial investment.Choice of trading platforms. Choose optional extras like advanced charting, reporting and order types. Over 90 currency pairs to choose from.
loading

Compare up to 4 providers

Forex is a common abbreviation for foreign exchange, and forex traders buy and sell global currencies on the foreign exchange market. The main goal of forex trading is to make a profit by exchanging one currency for another at an agreed price, for example exchanging New Zealand dollars for Australian dollars.

Forex is the world’s most traded market but it can be risky. With this in mind, forex trading tends to suit experienced traders, rather than beginners.

Looking for a forex trading platform?

Data updated regularly
Name Product Minimum Opening Deposit Minimum Spreads for Major Currencies Commission Minimum Trade Size Platforms
BlackBull Markets Forex Trading
USD 200
0.0 - 0.8 pips
$0
0.01 lot
MetaTrader 4, MetaTrader 5
Margin FX is a complex financial product and traders are at high-risk of losing all of or more than their initial investment.. Trade up to 64 currency pairs with a New Zealand registered and based provider.
Plus500 Forex Trading
NZ 100
Variable and adjusted according to market spread.
$0
Varies with instrument
Plus500 WebTrader
Margin FX is a complex financial product and traders are at high-risk of losing all of or more than their initial investment.Open an account and experience Plus500's easy-to-use proprietary trading platform, 24/7 online chat support and free real-time forex quotes.
IG Forex Trading
AUD 0
0.6 - 1.5 pips
$0
1 lot
MetaTrader 4, ProRealTime
Margin FX is a complex financial product and traders are at high-risk of losing all of or more than their initial investment.Choice of trading platforms. Choose optional extras like advanced charting, reporting and order types. Over 90 currency pairs to choose from.
loading

Compare up to 4 providers

How does forex trading work?

Forex traders aim to profit from the change in value of one currency against another. Their trading decisions are based on which way they think forex prices will fluctuate in the future.

A common way to trade forex is through contracts, such as futures contracts or CFDs (contracts for difference). Rather than buying and holding foreign currency, the trader enters into an arrangement with a broker to profit off any change in the exchange rate between two currencies. Of course, if the exchange rate between the two currencies doesn’t move in their favour, the trader stands to lose money as well.

On the global forex market, all currencies are quoted in pairs. For example, NZD/AUD, GBP/EUR and NZD/USD are just a few common pairs. When a trader initiates a forex trade (or ‘opens a position’), it’s as though they are buying one currency and selling another at the same time. If the value of one of the currencies moves against the other, the trader ‘closes out’ their position, selling the other currency and buying back the original currency they sold.

Let's look at an example

Say you opened a position with a broker that saw you simultaneously buy New Zealand dollars and sell US dollars. If the Kiwi dollar strengthens against the US dollar over the coming days or weeks, you would then seek to close out your position by trading your US dollars for Kiwi dollars – getting more New Zealand dollars back than you originally sold. That’s how a profit is realised on forex trades.

Of course, it’s important to remember that at no stage during the above transaction do you actually own or take delivery of the currencies involved in the trade. That’s why forex traded in this way is considered a derivative instrument, because its value is based on an underlying asset, without that asset ever being physically exchanged between the parties.

Forex trades of this type are typically leveraged, meaning you only contribute a small stake towards the total value of the trade. Most currency contracts are large – the minimum amount you can trade is typically 1,000 units (for example, $1,000). That’s because currencies’ exchange rates only fluctuate by small amounts – usually by tenths or hundredths of a cent. So to realise any significant profit or loss, you need to trade at high volumes.

Leveraged trading (or trading on margin) allows you take out a small stake in a much larger trade, with your broker typically making up the shortfall.

If the exchange rate moves in your favour, you stand to profit off the full amount that was traded, not just your small stake. Of course, it works in the opposite direction as well, so if the exchange rate moves against you, you are liable for the losses incurred off the full value of the trade.

That’s why forex trading is typically considered to suit more experienced and less risk-averse traders. These days, the trading platforms offered by forex brokers are relatively sophisticated and come with a range of features and tools designed to help traders get the most out of their trades.

What are the benefits of forex trading?

Why trade forex? Here are some of the potential benefits:

  • Trading hours. Forex markets are highly accessible, with many open 24 hours a day. Unlike the New Zealand Stock Exchange, for example, which only offers normal trading between 10am and 4.45pm on business days, the global forex market runs around the clock (but not on weekends). This means foreign exchange prices are constantly going up and down and there are plenty of opportunities for traders.
  • Leverage. Because forex is a leveraged product, individuals can trade on the market for a smaller initial outlay. In order to place a trade, you only need to spend a small percentage of the full value of your position, which means there is a much higher potential for profit from a small initial outlay than in some other forms of trading. Unfortunately, this also means there is a greater risk of suffering a loss.
  • Liquidity. As forex is the world’s most traded market, there are always plenty of buyers and sellers making trades. This makes currency markets highly liquid, helping to ensure fast transactions and low spreads.

Graham Trades USD/EUR

USAtoEurope

Graham is a veteran investor and chooses to trade in forex as a CFD. Believing that the US dollar will likely increase in value against the euro, Graham enters a contract with his broker to trade $100,000 worth of US dollars at €0.90 per USD$1. His forex contract at the time of purchase is worth €90,000. Because his forex trading platform allows him to place trades at a margin of 1%, this investment costs Graham $1,000 to place.

Graham’s prediction is correct and the US dollar rises to €0.925, resulting in a profit of around NZD$3,500 for Graham, less any transaction fees.

What forex trading platforms are available?

There are several forex trading services that are available to New Zealand traders. These include:

Before deciding on the right trading platform for you, make sure to compare the fees and benefits of several providers.

What are the costs of forex trading?

Just like trading regular shares through an online broker or broking platform, you need to make yourself fully aware of the fees and charges that apply before you begin trading forex. The main costs you need to be aware of are:

  • The margin. Compare the margin you will be required to meet in order to make a trade with a range of providers. This could be 0.5%, 1% or some other figure, and this will affect the amount of money you will have to spend to open a forex position. For example, if your account has a margin of 1%, a trade worth $100,000 will require you to spend $1,000.
  • The commission. Some providers charge a commission for every trade you make. These fees are generally quite low, such as a few cents per thousand dollars. However, some providers will not charge any commissions on your trades. Other fees may apply to credit and debit card payments.
  • The spread. You’ll also need to consider the spread, which is the difference between the buy and sell prices for each currency pair and is effectively what a broking platform will charge you to make a trade. Look for a trading platform that offers tight spreads to minimise the cost involved.

What types of currency pairs are there?

A currency pair is always structured in the same way, following a universally accepted ranking order and always showing the value of a base currency (the first) being traded against a quote (the second) currency.

There are three types of currency pairs that you need to be aware of, these being the majors, minors and exotics.

See our full guide on major, minor and exotic currency pairs.

Major currency pairs

The major currency pairs are considered any market that features the US dollar. The majors are the most frequently traded currency pairs and are therefore the most liquid forex markets to trade.

As a forex trader, this liquidity means that the majors feature relatively stable prices and the lowest spreads – or brokerage costs – when taking a position in any of these currency pairs.

Major currency pairs:
EUR/USDEuro/US dollar
USD/JPYUS dollar/Japanese yen
GBP/USDBritish pound/US dollar
USD/CHFUS dollar/Swiss franc
USD/CADUS dollar/Canadian dollar
AUD/USDAustralian dollar/US dollar
NZD/USDNew Zealand dollar/US dollar

The US dollar is the world’s leading reserve currency and is involved in about 88% of currency trades globally. Drilling down one step further, the EUR/USD currency pair is the most heavily traded and therefore most liquid currency pair in the world.

Minor currency pairs

If a currency pair doesn’t feature the US dollar, it’s considered to be a minor currency pair. The minors are sometimes called currency crosses because the market means you’re no longer required to first go through US dollars, as was once the case.

The minors aren’t as liquid as the majors, meaning you’ll see that they move more erratically and have wider spreads displayed on your forex trading account.

Minor currency pairs:
EUR/NZDEuro/New Zealand dollar
EUR/GBPEuro/British pound
EUR/AUDEuro/Australian dollar
AUD/NZDAustralian dollar/New Zealand dollar
GBP/NZDBritish pound/New Zealand dollar
GBP/JPYBritish pound/Japanese yen
GBP/CADBritish pound/Canadian dollar
CHF/JPYSwiss franc/Japanese yen
NZD/JPYNew Zealand dollar/Japanese yen

The most widely traded minor currency pairs consist of pairs in which the individual currencies are also majors. Some of the more popular minors are EUR/GBP, GBP/JPY and AUD/NZD.

Exotic currency pairs

The final type of currency pair is known as an exotic. The exotics are essentially minors that feature currencies of emerging market economies.

The nature of emerging markets is that they’re less stable and much more illiquid as a result. This means that when it comes to trading exotic currency pairs, you’ll experience wild price swings and much wider spreads.

Exotic currency pairs:
NZD/SGDNew Zealand dollar/Singapore dollar
NZD/HKDNew Zealand dollar/Hong Kong dollar
EUR/TRYEuro/Turkish lira
USD/HKDUS dollar/Hong Kong dollar
JPY/NOKJapanese yen/Norwegian krone
GBP/ZARBritish pound/South African rand
AUD/MXNAustralian dollar/Mexican peso

Keep in mind that the wide spreads mean you may not see your trade executed at the price you expect. When you’re trading exotics, you need to make sure you know what you’re doing and manage your risk accordingly.

Which currency pairs should I trade?

Picking the right currency pairs to trade depends on your experience as a forex trader. If you’re new to the game, the safest approach is to stick with the major and minor pairs. This is because the markets are much more stable and you’ll get lower spreads. Exotic pairs are more difficult to work with because they’re much more erratic and their low liquidity means you’ll see higher spreads.

Whichever currency pairs you decide to trade, simply make sure you’re managing your risk. It’s imperative to understand that while the opportunity for moves may be larger in the exotics, this also means that your risks are amplified if the market moves against you.

What do I need to open a forex trading account?

Most forex trading platforms will typically allow you to apply for an account within minutes online. While the application process varies between providers, you will usually have to fill out an online application and then await a response from the provider to learn whether or not your application has been approved.

You will usually have to supply:

  • Your name
  • Your date of birth
  • Your address
  • Your contact details
  • Your country of residence
  • Proof of ID, for example a driver’s licence or passport

What are some common forex trading strategies?

Just like with any other form of investment, there are several strategies you can consider when trading forex, ranging from the basic right through to quite complex approaches. One strategy traders can use is to perform technical analysis or fundamental analysis to try and accurately predict the future performance of currency pairs.

Another common strategy is known as the day trading strategy, and it is based on the simple premise that you do not hold any forex positions overnight. Because the longer you hold open a position the greater risk of you suffering a loss, traders can close all the positions they hold before the end of the trading day and therefore minimise risk.

A third common strategy is support and resistance levels. This involves researching the past fluctuations of a currency and using them to predict future price movements. The previous upper limit of a price is its resistance limit and the previous lower limit is its support limit. This can help traders make an educated guess as to when a currency’s value may rise or fall.

For more information, check out our beginner’s guide to forex trading.

What are some of the risks associated with forex trading?

Just like any other type of investing, forex trading comes with a level of risk attached. It’s important to be aware that foreign exchange trading is highly risky, so you need to be aware of all the dangers involved with this sort of trading. These include:

  • Leverage. Even though you only have to pay a small percentage of the value of your trade upfront, you are still responsible for the entire amount. So while profits can be magnified if the market moves in your favour, so too can losses if the market moves against you. Be aware that your losses may be greater than your initial investment.
  • Volatility. Foreign exchange rates are volatile and can quickly move against you, causing you to lose a significant amount of money.
  • 24-hour trading. As markets are open 24 hours a day, you may need to devote plenty of time to tracking any open positions.
  • Currency markets are complex. Predicting currency markets is quite difficult as they can be affected by a wide range of factors. Unexpected events can also cause rapid fluctuations in currency values.
  • Minimal protection. Even stop loss orders which are designed to minimise your losses can only offer limited protection against the risks involved.
  • Scams. The forex sector tends to be a magnet for scams and fraud. If a dodgy trading platform goes broke and disappears, there may be no way to get your money back, so the safest approach is to only ever trade through a trusted broker authorised by the Financial Markets Authority. You should also be extremely wary of special offers that sound suspiciously good, and of forex trading seminars and courses that make outlandish promises.

Forex trading is complicated and features a high level of risk, so consider your options carefully before deciding whether it’s the right option for you.

Frequently asked questions about forex trading

Forex trading glossary

  • Ask price. This is the lowest price at which a trader can buy a currency.
  • At best. This is an instruction given to a broker to purchase or sell a currency at the best rate currently available in the market.
  • Base currency. This is the first currency listed in a currency pair. It shows the value of one currency when measured against another, for example NZD/USD.
  • Bear market. A bear market situation is when prices sharply decline.
  • Bid price. This is the price at which an investor can sell a currency.
  • Bull market. This is a market where prices are rising.
  • Forex. An abbreviation of foreign exchange.
  • Hedging. This involves opening a new position in opposition to an already open position in order to protect against exchange rate fluctuations.
  • Leverage. Leverage refers to a trader’s ability to control a large amount of money in the foreign exchange markets after only having to invest a small percentage of the overall value of a trade.
  • Margin. The amount you are required to spend to open a trade.
  • Margin call. This is a warning message when your trading account does not hold sufficient funds to maintain all the positions you have open.
  • Spread. The difference between the bid price and the ask price.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

More guides on Finder

    Ask an Expert

    You are about to post a question on finder.com:

    • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
    • finder.com is a financial comparison and information service, not a bank or product provider
    • We cannot provide you with personal advice or recommendations
    • Your answer might already be waiting – check previous questions below to see if yours has already been asked

    Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

    By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use, Disclaimer & Privacy Policy.

    Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
    Go to site