Advantages/Disadvantages of a AUD account

I currently reside in Australia and I am looking to open a small account with a US based broker that allows AUD denominated accounts.

What are the disadvantages/advantages to keeping my money in AUD as opposed to USD? Besides the fact that it is a bit easier to calculate tax and lower money wire costs.

I would like to begin by trading the EUR/USD pair.

I think you have to choose only how it more comfortable to you and trade!!

If I enter a trade on the EUR/USD pair and my account is in AUD, will I be exposed to EUR/AUD or AUD/USD changes?

You will be exposed to EUR/AUD and AUD/USD changes, because all currency trading goes via the USD as the base currency... EUR/AUD is a cross, and a highly volatile one at present (check the chart).

The advantages of trading in your own currency (depending on broker) are that you don't lose value as you would when you make the conversion to trade in USD. It also slows up the whole funds transfer process (both in and out) because the currency has to be converted before it can be processed and this also incurs an additional cost + the conversion rate you are quoted may not be what it is currently trading at.

However, if you think the USD will continue strong and the AUD weaken, then hold your account in $USD, if you think conversely, then hold your account in $AUD.

The swap is the interest rate differential that is paid into or taken out of your account to cover differing interest rates for different currencies, however, swaps are usually lower/higher (paid less, charged more) than standard rates. It's one of the many ways that broking houses make their money from your trading.

I have two accounts, one in $AUD and one in $USD.

So scalping the EUR/AUD with an AUD account would not be a great idea?

The EURAUD can hum along quietly, then suddenly turn into a mega roller coaster (2-3 seconds is all it takes). Not something for newbies to tackle because your account could be cut to shreds in a heartbeat.

I'd suggest you start with something more straightforward, less risk prone - the EUR/USD (which most closely mirrors action on the USDCHF), or the AUD/USD, or GBP/USD. Stick with the majors to begin with, stay away from the crosses and Yen pairs until you have found your feet, understand how things work, know the relationships/behaviour of various pairs, and have some proven runs on the board.

Live trading is quite different to demo trading.

Scalping any pair that brings you profit is a good thing, but you better know what you are doing if you tackle the volatility of the EURAUD. If you managed to be in profit, you would receive the interest payment on the currency differential. As a first outing however, it absolutely inadvisable to trade this pair no matter what your currency of origin.

Sorry I meant scalping the EUR/USD with an AUD account.

If I enter into a EUR/USD for a minutes and make a small profit of a few pips and in that time the EUR/AUD or the AUD/USD moves, is it possible I could make a loss when closing the EUR/USD position?

No. In reality, it would matter only if at that very same instant, you wanted to go into cash, which is quite unlikely of course. What you see on paper re profits is what you get. It only becomes an issue when you want to take cash out (in AUD) or convert it into USD. At present you are probably worrying about very small amounts that don't need excessive scrutiny.

One of the benefits in trading in AUD is that what you see is what you get. If you show a profit from a scalp on EUR/USD, the profit (and the trade itself) is shown in your account in AUD. You don't have to do the mental gymnastics to convert, which also helps with planning lot size, especially if you need to make a decision quickly.

Inclined to advise that it is best to stick with what you know and are familiar with to begin (trading in AUD currency). You can trade in USD later when you are across the realities and nuances of live trading, or do both. Just find your feet first and keep it as simple as possible. What you want to do is build profit consistently. What currency you do that in is of less importance, at least initially.