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You can start trading forex online in Malaysia by following this simple guide. Both beginners & intermediate level traders can use this guide.

We will explain everything you will need to get started with Forex trading.

In simple terms, the exchange of one global currency into another currency can be termed as Forex Trading. Forex market is a global decentralized market where the conversion or exchange of global currencies takes place over-the-counter. The traders can be commercial banks, investment banks, businesses, retail traders, brokers or authorized dealers.

What is Forex Trading?

Currencies are exchanged in the Forex market for a number of purposes. For example, if a business a Malaysian business ABC wants to carry out an acquisition in the USA, then it has to convert its MYR into US dollars to pay the American company.

How the international exchange rate is set? There are two ways: Fixed Exchange Rate and Floating Exchange Rate. In the former, a predetermined currency value is set against a global currency such as US dollar. For example, Oman has fixed rate since 1986 where 1 Omani Rial = USD 2.6008. In the fixed rate, the national currency remains largely unaffected by market movements.

On the other hand, under floating exchange rate the country allows its currency to fluctuate in the global market and a currency’s value is determined by it's demand and supply. If demand for a currency rises, the value of a currency also appreciates in normal circumstances. The vice-versa is also true.

Forex Real life example

Let’s take an example to understand how the exchange works. Suppose an American wants to visit Malaysia. He now searches on Google to find out the exchange rate of US$/MYR. He finds out that currently $1=4.16 MYR.

So he plans to convert his $500 in MYR, which should be around 2080 MYR.

But when he actually converts his currency, he gets only 1976 MYR. Why is that? Because currencies conversion are not free. Currency exchange providers such as banks normally levy a transaction charge which can range from 2-5% or even more. That’s why, he got 1876 MYR ($500*3.9520MYR) instead of 1976 MYR (500*4.16).

How Online Forex Trading works?

As mentioned earlier, Forex trading deals with exchange of global currencies. In recent decades, it has emerged as an attractive investment avenue for brokers, individuals and institutions around the world.

As with every trade, investors trade in Forex market for profit. The entry to FX market is simple but the learning curve is very steep.

Most brokers now offer their online trading platforms & apps that retail traders can download. The retail investors can make money in the FX market by speculating on the currency prices.

If a trader after doing his research thinks that the Euro would become stronger against the US Dollar, then he/she can place a buy order on EURUSD.

Each FX transaction consists of a simultaneous sale and purchase of currency pair where the investor’s position (short or long) determines his loss or profit in that particular trade.

In this chapter we will explain all the forex trading terms that you will generally come across.

So, take time to learn these before moving on.

Forex Trading Terms

Here are some of the basic forex trading terminologies

Pips: Percentage in Point

A pip is the most basic or smallest measurement of change in value of one currency against another in a currency pair. A pip means 1/10000 of the quote currency. Most of the currency pairs are taken up to 4 decimal points, except Japanese Yen (only 2 decimal points).

For example, if EUR/USD moves from 1.3878 (the value of 1 USD) to 1.3879, then the change of 0.0001 (1.3879-1.3878) will be termed as one pip.

Some currency pairs count up to 5 decimal pints (0.00001 or 1/10 of a pip). The 1/10 of a pip is called pipettes.

Currency pairs

In any currency exchange, two transactions occur at the same time. For example, when someone converts Dollars into Euros, he is selling dollars and buying Euros. That’s why, currencies are always quoted in pairs such as USD/EUR or USD/MYR. Whichever currency is quoted first is called the base currency, and the second, counter currency. So in a USD/EUR, USD is the base currency and EUR is the counter currency.

Currency Pairs are quotation of two different currencies such as USD/Euro or USD/MYR. The value of first listed currency (also called base currency) is quoted against the second currency called quote currency.

Currency Pair Example


The availability of high leverage is one of the main reasons why so many people prefer forex & CFD trading. Usually brokers provide leverage to traders/investors for a small amount of money called margin requirement.

Example: Suppose you want to trade a 1 standard lot size of $100,000 for the currency-pair USD/Euro through a broker who asks 1% of total transaction as margin. So with just $1,000 as margin money (1% of $100,000), you can open your trade i.e. participate in this deal. Here, your margin based leverage is 100:1 (100000/1000). However, leverage is a very risky pursuit, thus it should not be used at all or be used wisely.

Bid/Ask and Spread

Market makers provide two ways market for all currencies – buy and sell quotes. The quoted buy price is always lesser than the sell price.

The price at which market maker or broker is willing to buy a currency is called bid price, and the price at which they are willing to sell is called ask price. The difference between their sell price and buy price is simply called spread or bid-ask spread.

Lot size

Lot size is the contract size of a traded currency. There are different lot sizes in the Forex market which represent the units of currency in a lot size.

Lot sizes:

  1. Standard Lot: A standard lot or 1 lot consists of 100, 000 units of a currency.
  2. Mini Lot: It represents 0.10 of a standard lot which consists of 10, 000 units.
  3. Micro Lot: 0.01 of a standard lot which represents 1, 000 units.

In this chapter we will have explained what you should consider before choosing a trading platform.

There are 3 regulated Forex brokers in Malaysia mainly but these cater to institutional and wholesale investors.

Retail forex trading is still not allowed in Malaysia. Local banks are restricted in providing any kind of leverage to investors mainly to discourage speculation.

Most of the popular retail forex brokers in Malaysia are foreign brokers regulated by overseas regulatory bodies such as UK's FCA or Australia's ASIC. Remember, there is no such global centralized body to manage the forex trading, each country has it's own local regulators.

Malaysian retail traders usually trade in currency products through foreign regulated brokers as these investments are not regulated by local regulatory bodies, and their investments are deemed as foreign investments. However, it can be a risky pursuit as these investments are not protected by the local government. So it becomes important to choose a reputed broker which are regulated by Tier I and Tier II regulators such as FCA, ASIC and CySEC.

Forex brokers operating in Malaysia provide different type of accounts which depends on various factors such as:

  • Minimum deposit
  • Order execution
  • Trading platforms (MT4, MT5, etc.)
  • Stop limits
  • Currency account (EUR/GBP/USD)

Before choosing a platform, check these basic services along with investment protection guarantees. Read carefully and compare before dealing in currency-trade.

Opening a forex trading account normally requires a few steps.

We have explained the points that you must watch out for during this step.

Here we go.

Basic steps involved in opening a forex trading account:

1. Compare Forex Brokers: Once you have understood the basics of Forex trading, your next step would be selecting a broker. However, this is not very easy. The selection of a broker should be based upon following criteria provided in the table.

Feature Offerings
Available Intruments
  • Forex Trading
  • CFD Offerings
  • Check the Average Spread of popular currency pairs
  • Commission charges
Deposit and Withdrawal
  • Minimum initial deposit
  • Bank wire
  • Debit/Credit card
  • Wallets like Skrill
Trading Platforms
  • Do they have their own proprietary platform?
  • Or do they use platforms such as Meta Trader 4/5 or cTrader?
Trading Tools
  • Demo Account
  • Copy Trading
  • Negative Balance Protection
Mobile Trading
  • Android/iOS App
  • Mobile Alerts
Research & Studies Customer Service
  • Daily market commentary
  • Forex news
  • Economic calendar
  • Forex Education
Available Currency Pairs Check how many currency pairs does the broker have on its platform & app.

2. Select a broker of your choice: After selecting a broker, you will first need to sign up on their online trading platform. After signing up, you will need to select a trading account among the followings (most brokers offer one of these accounts):

  1. Standard Account: This is a real Forex trading account in which you deposit your own money. The broker usually provides a fixed spread with this account but it may vary broker to broker.
  2. ECN Account: An Electronic Communications Network (ECN) account is provided by ECN brokers where you get direct access to currency markets. With this account, a lower commission is normally charged per trade, thus it can affect a trader’s actual profit. It is recommend for professional traders.
  3. Micro/Mini Account: This account is mostly recommended to beginners in Forex trading. The Micro or Mini accounts can generally be opened with a fraction of money (less than $5) However, ask your broker if there is any minimum deposit requirement before opening your account.

3. Submit KYC documents for account verification: Once you have selected the Forex account type, you need to submit the KYC (know your customer) documents which will be verified by the account provider/broker.

4. Deposit Funds: There are several ways to deposit funds in your Forex trading account. The most popular way is credit card deposit or via Wallets. You can also transfer funds from your existing bank account to your trading account if the broker supports local bank transfer.

5. Download the Trading platform and start trading: After completing all the above requirements, your next step would be downloading a trading platform like MT4 or any other. Popular trading platforms are MT4 and MT5.

Before you start trading forex:

Before you jump start trading in Forex, it’s necessary to learn first the basics of it. The best way to learn the trade is to first get familiar with the Forex market, observe how the currency pairs are performing and execute your strategies with a no-risk demo account. The recommended methods to learn the trade can be divided into four categories:

  1. Research and Education: Google is your friend. Get the basic knowledge through Google search, YouTube videos and by reading articles from credible Forex websites
  2. Download a Forex Terminal: While learning the basics, download a Forex terminal of your choice. One of the most popular Forex terminal is MetaTrader 4.
  3. Start with a Demo Account: Once you get familiar with the Forex terminal, open a Demo Account to trade in virtual currencies. Get to know how the system works: analyze charts of different currency pairs, try to open orders, buy/sell methods and so on.
  4. Dive a little Deep into the Forex: In this stage, take note of whatever you come across on the trading platform and dive a little deeper to understand some of the important concepts such as:
    • Candlestick charts
    • Time frames
    • Classic patterns
    • Technical and Fundamental analysis
    • Indicators

One of the greatest economist of 20th century, John M Keynes once said “The market can stay irrational longer than you can stay solvent.” Every profitable trade comes with associated risk.

The Forex market is no different. Some of the risks are beyond the individual control such as political risk or change in interest rate of a country. However, there are ample other reasons why traders lose their money. Poor risk management, lack of a trading plan, unwise use of leverage and unrealistic expectations are some of the common mistakes.

  • 1. Leverage Risk: Leverage is often called a double-edged sword because if used wisely it can amplify a trader’s profit but at the same time, the unwise use can cause significant losses. For example, in a 100:1 leverage factor, a trader could trade USD$100,000 with just $1000 capital. So suppose a currency pair moves 1 pip against you that would mean a loss of $10 for you. If it changes to 50 pips loss than half of your margin money are gone in seconds. The opposite is also true. You can also make a profit of $500 if there is a 50 pips rise in currency value in your order direction.
  • The unwise use of leverage in the Forex trading often results in significant loss to currency traders and investors. Let’s take an example to understand this. Assume your broker provides leverage: margin in the ratio of 100:1. It means you can trade up to 100 times of the margin money (deposited with a broker) in specific currency pairs. So if the margin money is suppose US$100, you get a leverage of US10,000. We know that the currency movements are measured in pips. Now let’s assume there are strong chances that USD will depreciate against GBP. By using the leverage, you have bought 10,000 GBP. At the time of buying, GBP/USD was trading at US$1.9581. In the next trading session the currency value changed to $1.9681 which means there was 100 pips rise in the value. So in this trade, you made a profit of 100 USD (0.0100 *10, 000). But in the opposite scenario, if the value of USD drops to $1.9381, there was a 200 pips drop in the currency value. In this trade, you lost 200 USD and your trading account becomes negative. So make sure that you use the leverage wisely.
  • 2. High Volatility: In normal market conditions, major currency pairs such as EUR/USD or USD/GBP tend to remain stable. But some pairs like USD/RUB or USD/TRY are considered most volatile currency pairs. Volatile currencies can swing to any direction, at any time. The unpredictable swing can magnify both the losses and gains in a currency trade. Use your own trading strategy and avoid herd mentality.
  • 3. Unpredictable market movements: Forex is considered the most unpredictable market among all the capital markets. The release of a new economic data or a new bilateral/regional trade deal can cause volatility in Forex market. Similarly, financial news affect the market sentiments. So the best practice for beginners would be to watch out for news, use proper risk management and avoid volatile currency pairs.
  • 4. Unregulated brokers: Choose your broker carefully as protecting your investments from unscrupulous brokers should be your top priority. A simple online research, customer review and their license status (Tier I and Tier II) will help you to avoid taking unwanted brokers.

We have briefly explained what are some of the popular forex trading strategies.

These are broadly divided in Fundamentals & Technicals.


General Forex Trading Analysis and Strategies

Any FX trading strategy is incomplete without having a solid grasp on the Forex analysis techniques. Traders use three general types of forex analysis to predict the market and analyze historical trends. Two important trading analysis techniques are: 1. Fundamental Analysis; and 2. Technical Analysis

1. Fundamental

The fundamental analysis is mostly centered on analysis of the inpact of news &the country's fundamentals like interest rate of a country on it's currency. Monetary policy announcements usually have a sizeable impact on the FX market. For instance, if the US Federal Reserve announces a reduction in interest rate then investors might move their money in those countries where the interest rate is higher. However, it’s not that simple as it sounds. Other factors such as GDP growth rate, inflation, unemployment rate and political stability are also some of the important fundamental factors which affect the FX market. These factors mostly determine the direction of a country’s interest rate. Keep an eye on the financial/economic news and new economic data releases.

2. Technical

The technical analysis is how the traders analyze the patterns in currency price movements to determine when and where to enter and exit a trade. Technical analysis is all about data and charts. Start by learing basic concepts like moving averages, supply/demand or support/resistance, trend lines, volume and other chart pattern. Once you understand the basics, move to difficult concepts like Fibonacci Retracement Lines or Bollinger Band

Don’t get overwhelmed by these technical concepts. It takes time and practice to master any skill.

Is there any best strategy to make profit from every FX trading? There is no definite answer to this question. Everyone is different, no size fits all. Learn about all the strategies & then choose the Forex strategy according to your trading style and risk tolerance. Whatever strategy consistently provides you return on your trade during all market conditions, is the best strategy for you.

Some of the popular trading strategies have been given below:

  • Trend Trading: When the price of a currency is moving overall in one particular direction (up or down), that is generally termed as Trend. The trend trading is simply identifying those trends and deciding entry and exit of your position in a currency trade.
  • Swing Trading: It is a medium term strategy where the traders first analyze the ‘swings’ (highs and lows) over a period of time that can be from one day to one week.
  • Day Trading: As the name suggests, day trader opens and closes an order within a single day, instead of keeping it open overnight. All the positions are closed before the end of a trading day.
  • Support and Resistance Trading: It is one of the most widely used technical analysis technique. It is simply a method to analyse a chart to identify the tipping point of a currency pair. The support is an area on a chart that shows the potential buying pressure on the price. It means the price has although dropped but it is not dropping further. At the support, the buyers are more likely to buy because sellers are unlikely to sell as they won’t be able to make profit out of the deal.

Resistance is an area on a chart that shows potential selling pressure. The price has risen but is struggling to rise further. At this price level, supply becomes strong to prevent the further rise. In this scenario, the sellers are more likely to sell but buyers will avoid buying because it becomes expensive to trade with.

Forex Trading FAQs

How much money is required for trading forex online in Malaysia?

This will depend on your broker's minimum deposit. Different brokers have different deposit requirements. For example, XM offers a Micro trading account with a minimum deposit of USD 5. However, to make your risk under control without using too much leverage, you would require larger sum of money. Remember to only invest what you can afford and never risk more than 3% of your trade capital on a single trade.

What are CFDs?

A contract for difference (CFD) is an agreement between the two parties (trader and investor) to exchange the difference in price of an underlying asset at the end of the trade. The difference in price is calculated from the point when the contract opened to when it ended. In CFD trading, neither broker nor an investor owns any underlying asset. Let’s take an example to understand how CFD trading works:

Assume that Apple Inc is trading at sell/buy price of $159/$160. You buy 1000 Apple shares expecting price-rise. Let’s say the CFD broker has 5% margin rate. It means you have to deposit 5% of the total transaction value which will be $8, 000 (1000*160*5%). Now suppose you predicted right and the sell/buy price moved to $169/$170. So you decide to close your position by selling at $169. In this trade, your gross profit will be (169-160)*1000= $9000.

What do you need to start trading forex online?

  • Device – Reliable PC/Laptop/Mobile
  • Internet Connection - Reliable Internet Connection with good speed.
  • Trading Platform – Web or Mobile or Integrated trading platform.

When is the best time to trade fx in Malaysia?

Unlike stock market, the forex market never sleeps. The market remains open 24 hours in different parts of the world. It begins at 5PM EST on Sunday until 4PM EST on Friday in a week. In any region, the forex market operates for 9 hours.

Market Time-zone in Eastern Standard Time (EST)

  • New York FX: 08 AM to 05 PM
  • Tokyo FX: 12 AM to 09 PM
  • Sydney FX: 05 PM to 02 AM
  • London FX: 03 AM to 12 PM

Some of the trading sessions overlap, and this is usually the busiest period of the day trading and accounts for bulk of the currency trade. From the above chart, it becomes clear that Tokyo and Sydney trading sessions overlap for few hours. Similarly, London FX overlaps with the New York FX.

Malaysian Forex market remains open 5 days a week from Monday at 05:00 AM EST till Saturday at 04:00 AM EST. So it overlaps by few hours with Tokyo and Sydney FX markets.

Best Time to Trade: The best time to trade is when at least two of the markets (London, New York, Sydney and Tokyo) are open. The trade session becomes most active when two markets’ period of time overlap with each other. As it creates a heightened trading atmosphere which results in significant movements in currency pairs. For example, the most active period for Malaysian Forex market would be 05AM to 09 PM as it overlaps with Tokyo market.

What is the difference between forex trading & Stock Trading?

Both Forex and Stock are different financial instruments where one involves high level of speculation and the later is for long term investment although there are many day traders trading stocks for speculation.

Stock Forex
Stocks are traded at stock exchanges like NYSE. Forex trading is done over-the-counter.
To trade in stocks one requires more capital than forex. It uses the leverage to magnify currency holdings.
Investors either buy the shares or sell the shares but not at the same time. The buying and selling happens at the same time.
The bid-ask spread is higher in stock trading. The spreads are relatively smaller than the stocks.
Stock market operates around 8-9 hours/5 days a week. Forex is a 24/5 market.