Here are the Best Forex Trading platforms for Beginners
|Broker Name||Highlights||Fees||Account Minimum||Current Offers||Learn More|
Low spread & over 1000 trading instruments
on Exness website
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.
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.
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).
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.
Here are some of the basic forex trading terminologies
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.
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.
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.
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 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.
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:
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.
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.
|Deposit and Withdrawal||
|Research & Studies Customer Service||
|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):
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 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:
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.
We have briefly explained what are some of the popular forex trading strategies.
These are broadly divided in Fundamentals & Technicals.
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
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.
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:
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.
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.
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.
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)
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.
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.
|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.|