Forex traders in Malaysia continue to do well even during the pandemic period as the trading continues non-stop as far as the market is concerned. The market is the same wherever in the world you are and Malaysia is no exception. The only things that change from country to country are the laws and regulations that surround the FX market and this is the biggest challenge for many FX traders living in jurisdictions that are not very conducive for FX trading as they believe that such markets tend to pull funds out of a country in a manner that is illegal and also in a way that cannot be easily tracked by the regulator and this makes them highly uncomfortable.
As far as regulations are concerned, Malaysia has adopted a middle stance in the sense that it has not fully opened up to FX trading nor has it forced the market to shut down. The only criterion for the FX trading to be made legally by traders in Malaysia is the fact that it needs to be done at a broker or an exchange that is regulated and licensed within the country.
Is Forex Trading Legal and are Malaysia Forex Brokers Regulated?
Forex trading is legal in Malaysia as long as the trader does the trading at a broker or exchange that is regulated and licensed by the government. This is the key aspect as there are only a few brokers within the country that are regulated. And since they are expected to follow a strict set of regulations, they are various restrictions on what clients they can solicit and how. The offers that they give and the marketing tactics that they usually adopt would not be allowed by the regulators in the long run and hence this forces them to restrict the way that they do marketing and also severely limits the offers that they can give to the potential clients.
This is taken advantage of, by brokers and other firms who are not licensed or monitored by the regulators and the authorities and they give out several offers to attract the clients. Some of the offers that are given are quite outlandish and it is clear to those who are experienced in this industry to know that the broker would not be able to fulfill the offer or the promise and it would end up in the users losing their funds or it might turn out to be a scam. This leads to even more issues and problems and even tighter control from the regulators which again doesn’t affect the unregulated companies in any way but unfairly targets the regulated ones. This becomes a cycle.
There have been many scams reported in the FX industry in Malaysia and most of these are due to the lack of knowledge and awareness from the traders and investors. One of the most common scams is to collect funds from investors with the promise of big returns through FX trading and once enough funds are collected, the traders who promised returns to disappear from the scene leaving the investors with lost funds and also emotional turmoil. This has been happening for a long time and the FX market has been one of the most misused trading industries for this kind of scam which has earned it a very bad reputation in Malaysia.
What Risks are Involved with Forex Trading in Malaysia?
There are a set of common risks as far as FX trading is concerned which is there not only in Malaysia but in any part of the world, you are in. These include not having proper risk management and taking position sizes that are not in line with the account size that you have. This is one of the most common risks that are there in FX trading or for that matter in any kind of trading. The reason for it is a simple fact that people are greedy. Most of the new traders are attracted to the market for the riches that it is supposed to offer and so when they get lucky initially and make some money, the next time, they try to put in much larger positions in the hope of making some quick money.
But the market and trading are not so very easy cos if it was, then it would mean that anyone would be able to make a lot of money. So it is this greed that makes them take large trades and forget about money management and this is the biggest risk as it leads to the loss of the entire account in due course of time.
The other risks include finding the right broker, making sure that what you are doing is legal, and paying your taxes on your profits on time. News time trading is another risk that many new traders easily fall prey to and this also needs to be avoided at all costs. Those who do not have much knowledge about the markets or do not have the time to spend in the market are lured by scamsters who promise them abnormal returns. This is another major risk in the FX market in Malaysia. There are many such scam companies and plans that are doing the rounds for a long time in Malaysia dn despite enough warning from the regulators, the investors do not seem to learn and they continue to remain greedy and they also continue to get scammed.
The Popularity of Forex Trading in Malaysia
Forex Trading in Malaysia is very popular among various age classes. This is a profession that can be learned by anybody and it also gives the traders a worldwide knowledge of how each economy operates and also gives them a glimpse of the world outside Malaysia. Many new traders also view this as an industry to make some quick money but it isn’t actually. Bt they do not learn that unless and until they blow up their accounts a few times at least.
On the other hand, the investment into the FX market field also continues to grow strongly in Malaysia. Many people and investors want to start some business about the FX market and so they either choose to start brokerages or some associated businesses like investment companies and the like. It is these companies that tend to make FX more famous and this can be both for the right and wrong reasons. Whichever way it works out, ultimately the industry that is likely to bear the brunt of the backlash is the FX industry.
What You Will Need to Trade Forex in Malaysia
One of the most important things that a trader in Malaysia would need for FX trading, apart from trading knowledge, of course, is a good FX platform. It is a Malaysia forex trading platform, then there is nothing like it but this is where the traders need to exercise some caution. The reason is that though there may be many trading platforms in Malaysia, they need to make sure that they are not scams and are not out there to cheat the investors and traders off their funds.
They need to verify that the FX trading platform that they plan to trade In is licensed and regulated in Malaysia. It is very easy to know and understand that more platforms in Malaysia are not regulated than those that are indeed regulated. This has to be kept in mind while searching for them. The best way would be to check with friends and family who are already using FX trading platforms for a long if you can find any. If you are unable to do so, then you will have to rely on the reviews and ratings that you see online to decide on whether you want to open an account with an FX broking platform in Malaysia or not.
Again, anything online needs to be taken with a pinch of salt and the trader should not blindly believe what he sees or reads on the internet. It is always better to experience trading and the broking platform firsthand by themselves before deciding to use any platform for the long term. To that effect, it is important that the traders deposit a small amount into each of the shortlisted brokers that they have and then trade in each of them, complete a withdrawal, and complete a full cycle of operations before deciding whether they want to trade on a specific platform or not. This appears to be the best approach not only in Malaysia but in any part of the world to choose the right broker.
The Connection Between the Bank Negara and Forex Trading
Bank Negara is the central bank of Malaysia. Like in most countries they are the ones who are responsible and the most worried about as far as FX trading in the country is concerned. The reason is that the FX rates of the Malaysian Ringgit fall under their purview and the flow of funds into and out of Malaysia is also under their ambit. Since FX trading involves all of these and more, the bank needs to keep an eye on how FX trading is carried out in the country.
It is also important that the bank monitors the trading, the brokers, and the platforms that are out there so that it can regulate the platforms and the flow of funds and also want the gullible investors and traders of the risks that are involved in FX trading also about specific unlicensed platforms in the country who are out there to scam people off their money. It is indeed a tough task to maintain a strict and vigilant eye on all of these issues but Bank Negara needs to do that so that it can keep such fund flows under control.
What Leverage is Available for Forex Trading in Malaysia?
Just like in many other countries, leverage is offered by many brokers in Malaysia as well. The leverages vary from 1:1 to 1:2000 as well but as many experienced traders would know, the higher leverages are just a means of attracting the smaller, retail traders into the mix and make them trade more so that the brokers can earn more as well. It is just a ploy to keep the retail traders interested and also to lure them into the brokerages that many brokers offer such high leverages. It is indeed a well-known fact that leverage can be a double-edged sword. It can be used to a trader’s advantage but at the same time, it poses a lot of risk to the trader as well.
Unless someone knows how to use the leverage to their advantage the trader should choose as low leverage as possible. Though, while trading with fewer funds, having less leverage might be a bit irritating and can lead to impatience for the trader, if the trader understands his wholesome purpose and looks at the longer term, then it is very likely that he would prefer lower leverages as well. Using high leverage might be interesting and very useful as long as the trader is in profits but once the losses begin to pile up, trades taken with high leverage just show up the fact that there was almost mil money management practiced by the traders which were accentuated by the use of the high leverage and this could lead to the account getting margin called pretty quickly. So unless the trader understands what he is getting into, it is always better to use only nominal leverage and this should not be a factor when choosing the broker that he wants to trade with. Any broker would be ready to offer reasonable leverage that a sane and experienced trader would ask for and so it is not a very important factor that should be considered when choosing a broker.
What is the Minimum Investment in Forex Trading in Malaysia?
Practically speaking, like in many parts of the world, the amount that you can invest should not be a great deal breaker when you trade with any FX broker. Nowadays, most of the brokers are fine with the trader starting with a very minimal account and many brokers even offer cent accounts to traders for exactly that reason. They do understand that many retail traders might require such an account to make themselves comfortable with trading using real accounts as many of them do not want to make that direct jump to a real account from a demo account.
With this understanding, any kind of investment amount can be used for trading in Malaysia but what is more important is that the trader should be comfortable with what he is investing with. This will ensure that the trader can trade with a free state of mind and can ensure that he takes the best trades. If he invests his life savings then that would mean that he is going to be under a lot of pressure for every trade that he is going to make and that is not good for the trader in the long term. So invest as much as the trader is comfortable with and generally most brokers have taken even very small amounts as deposits to help the trader get a feel of trading with a real account.