Best Forex Brokers in Singapore

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Contributor, Benzinga
April 7, 2022

Want to jump straight to the answer? The best forex broker for most people is definitely FOREX.com or CedarFX.

Forex trading helps drive Singapore’s thriving economy and with no tax on capital gains, forex profits are unburdened for Singaporean traders, potentially providing even greater opportunity for gains than in other parts of the world.

Best Forex Brokers in Singapore

Best Forex Brokers in Singapore

Take a look at our condensed list of best forex brokers in this country.

  • IBKR Singapore
    Best For
    Lowest Cost Broker
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  • IG Markets
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    Best For
    Forex Execution
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  • Forex.com NON US
    Best For
    MetaTrader 4 Users
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  • Pepperstone
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    Best For
    Customer Service
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  • AvaTrade
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    Best For
    Non US Forex Trading
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  • Saxo Bank Forex
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    Best For
    Serious Forex Traders
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Monetary Authority of Singapore (MAS) Regulation

As Singapore’s central bank, the Monetary Authority of Singapore (MAS) also oversees financial sector businesses, including forex brokers, and has the reputation of being one of the strictest regulators in the world. Similar to regulatory requirements in other regions of the world, MAS regulation requires that forex brokers segregate investor accounts from broker funds to help protect investors from broker insolvency risks or impropriety.

Traders in Singapore will find that many of the leading forex brokers are global players that are also monitored by regulatory authorities in other parts of the world, such as the U.K.’s FCA and Cyprus’s CySEC. Additional oversight for Singapore’s forex market is provided by the Singapore Foreign Exchange Market Committee, a panel comprised of both government authorities and representatives of private banks.

What is Forex?

Forex, short for forex exchange and also called FX, is an integral part of all the products and services that come from a global economy. Forex is the exchange of one currency for another currency. International business travelers and tourists use forex when they exchange their base currency for the local currency when traveling — but that’s a small part of the forex market.

Banks and corporations make up the lion’s share of forex trades, trading one currency for another to complete international transactions. Import and export are intrinsically tied to forex, helping to make forex the largest financial market in the world. While businesses may trade in forex markets as a necessary part of purchasing products or material from other countries, forex trading is often much more than a utility.

Price movements within one currency compared to another, called a currency pair, can create trading opportunities, and with no capital gains tax in Singapore, interest in forex trading is rapidly growing.

Understanding the Forex Market

Many forex trades use leverage to amplify market gains from price movements within a currency pair. Singapore joins a number of other countries, including the U.S., that significantly limit the amount of leverage available to traders. In other parts of the world, forex traders can leverage a trade up to 1:1000 or even higher.

In Singapore, forex trades are limited to a maximum leverage of 1:50, with some currency pairs like USD/MXN that are limited further. Lower leverage, while potentially limiting gains, can also reduce loss liabilities, helping well-capitalized traders to stay in a trade that may change to a more favorable direction and prevents traders from washing out entirely due to leveraged losses.

At 1:50 leverage, a trader needs to have an account value equal to or greater than 2% of the trade. At 1:20 leverage, a maximum leverage for many FX currency pairs traded in Singapore, traders need to maintain an account balance of 5% or the trade. Within a forex pair, the first currency is the base currency and the second currency is the quote.

Profits or losses are based on price movements within the currency pair, but profits or losses aren’t realized until you exit the position. Overnight swap rates, which are charges based on the difference in interest rates for the two currencies, can add to the cost of the trade, although they might also be a credit to your account.

Margin calls are another possible expense if the price movement brings your account value below the margin requirement for the trade, which can be as high as 8% for some currency pairs traded in Singapore. Margin calls can also lead to a forced liquidation of your position on a trade. Because forex trades often involve large amounts of currency, most exchange rates are carried out to the fourth or fifth decimal place.

In an exchange rate quote, the fourth decimal place (1/10,000 of a full currency unit) is called a percentage in point, or a PIP. The fifth decimal place is a pipette, a fractional pip. The Japanese yen diverges from this system, with the second decimal place being the pip and the 3rd the pipette.

To calculate pip value, the value to you as a trader for a one-pip move, you can use an equation with just three elements: 1/10,000 (a pip) ÷ Exchange Rate x number of units = pip value

Pip changeExchange RateUnitsPip Value
.0001.733310,0001.3636983

If the exchange rate (or bid) for SGD/USD is .7333 and you have a 10,000 unit order, each single pip move is worth about 1.36 SGD.

SGD Trading

The Singapore Dollar (SGD) is regularly traded with all major currencies, including EUR, AUD, USD, and others. SGD represents about 1% of global forex trading volume, placing SGD in the top 15 currencies worldwide based on forex trading volume.

Forex Lot Sizes

Forex trading uses “lots” to standardize trading quantities. A standard lot is 100,000 units. Smaller trade quantities are also commonly used.

  • Standard Lot = 100,000 units (1 lot)
  • Mini Lot = 10,000 units (.1 lot)
  • Micro Lot = 1,000 units (.01 lot)
  • Nano Lot = less than 1,000 units (varies depending on quantity)

Not all brokers make nano lot trading available. Through leverage, micro lots or even mini lots are within reach for many traders.

Types of Orders

Traders familiar with stock trading will be pleased to know that forex trading uses the same primary types of orders:

  • Market order: fills your forex order at the best available price
  • Limit order: fills your order only at a specific price and won’t execute if that price is not reached
  • Stop order:  sells your currency holdings at a specific price and won’t execute if that price is not reached
  • Stop loss order: sells your forex order automatically at a specific price to avoid further losses
  • Trailing stop: a stop loss order that automatically adjusts the selling price as you realize gains on a trade to protect a percentage of those gains if the market turns downward

Forex Trading Risks

Regulation by the Monetary Authority of Singapore and other agencies helps to reduce risk for forex traders by limiting leverage and by enforcing rules for brokers to keep investor funds segregated. However, as with all financial trades, traders still face risks to capital.

Exchange rate risk: Exchange rates can change rapidly, with leverage or high trade quantities making even small moves having a significant impact on the dollar value of the trade.

Leverage risk: The Monetary Authority of Singapore limits leverage for forex trades in Singapore, but many currency pairs can still be leveraged up to 1:50, meaning traders can execute trades of up to 50 times the amount of capital they put up for the trade. With leverage, a small drop in the exchange rate for a currency pair can trigger a margin call or force a liquidation.

Volatility risk: Currency prices within a forex pair can change rapidly, possibly creating a challenge for traders who wish to start or exit a position but find that the trading range has become less optimal for the intended trade.

Interest rates: Demand for currencies is often swayed by interest rate changes or even signs that may indicate to the market that an interest rate change can be expected.

Sovereign risk: The actions of a government can affect the value of a nation’s currency. As a specific example, a government can cause selling pressure for its currency if it fails to make debt payments or even if the market suspects a possible default.

Counterparty risk: Over the years, a number of forex brokers have become insolvent. The Monetary Authority of Singapore regulates brokers, but in a market that grants up to 1:50 leverage and in which prices can change in a instant, risk remains even if decreased.

Liquidity risk: Markets only work well if there are enough buyers and sellers. Thinly traded currencies or currencies for countries or regions that have had economic or political news that can change demand may find fewer buyers or sellers. In this case, a trader wishing to buy or sell may not be able to complete a desired trade at an ideal price.

Singapore Forex Trading Strategies

If you want to trade forex successfully, you will need to master some basic strategies:

Price action trading: Price action involves studying the historical movement of price. Using this information, you can identify possible entry and exit points for investments. This trading style is usually meant for short-term moves of less than 1 week. Trend identification, momentum indicators and support and resistance levels are important terms to learn. 

Trend trading: If a market has a definite direction, you can take advantage of trend trading. An uptrend is a market achieving higher highs and higher lows on pullbacks. A downtrend is moving through lower lows and lower highs on retracements. Strong trends may take time to mature, and this strategy may require weeks or months to work out.

Range trading: If a stock is moving around a certain price level, investors may attempt to trade around it. This strategy works well in a market that does not have an obvious trend or significant volatility. The forex market generally has less volatility than other markets, so range trading is an important strategy to learn.

Position trading: If you like researching the long-term fundamentals of a currency, position trading may be for you. Position traders are not worried about short-term fluctuations in the forex market. Macroeconomic factors, less important in price action or range trading, become especially important here.

Forex Trading Example in Singapore

You want to take advantage of the current price of SGD/GBP, which is trading at 0.83960/0.83970. You think this price is low and will soon rise. You want to purchase S$10,000. The margin rate of this currency pair is 3.11%, so you will need £261.13 in your account.

The EUR/GBP price does actually move up. In 4 hours, it’s trading at 0.84450/0.84460. This is a move of 48 points (0.84450-0.83970), with each point = $S0.0001, and your profit is (S$10,000*0.84450) – (S$10,000*0.83970), or £98.

Note: Using margin comes with additional risk. You can actually lose more than your cash on hand. Learn how to use leverage in forex wisely before applying a margin to your investments.

Forex Brokers in Singapore Methodology

As one of the world’s leading forex markets, Singapore attracts forex brokers from all over the world. We looked at a number of key areas with an eye toward customer service, regulation, trade costs, trader tools, and trade execution.

Spreads: Unlike stock trading, many forex trades don’t require a commission for the trade. Instead, brokers make money from the spread between the bid and the ask price. Closer spreads generally mean the trader spends less in trading expenses, but other fees may apply, particularly for trades held overnight.

Monetary Authority of Singapore (MAS) regulation: Singapore’s central bank also regulates forex brokers as well as advises the Singaporean government on foreign exchange matters. As part of regulatory requirements for brokers, leverage is limited and investor funds must be kept separate from broker funds.

Cash management: It’s important for traders to be able to fund their accounts easily and to move money back out of accounts when needed. Ease of cash management allows for more nimble trading, as is often appropriate for forex trading.

Trader tools: Modern forex trading benefits from charting tools to help traders understand markets and demo accounts that allow traders to test trading strategies with no risk. An expansive learning center and an up-to-date news feed also put the tools a trader needs on the trading dashboard.

Customer support: If questions arise or if there is a problem with the platform, it’s important that traders can reach support staff easily to get answers or seek a resolution.

Final Thoughts

As the largest financial market in the world, trading opportunities abound with forex and Singapore’s traders are in the heart of one of the world’s leading forex trading centers. With no capital gains tax on trading profits, forex traders in Singapore have an advantage over traders in the U.S. and much of Europe, allowing a higher effective return on trades.

MAS has published an investor alert list of forex brokers that may be wrongly perceived as being listed or authorized by MAS. This list is useful for confirming MAS regulation designed to provide essential trading protections for Singapore’s growing forex community. Traders are encouraged to do their own research and due diligence in choosing a broker. Any of the brokers in our roundup can be a great starting point, each with their own advantages and unique focus for traders.

Get a Forex Pro on Your Side

FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets plus spot metals with low pricing and fast, quality execution on every trade. 

You can also tap into:

  • EUR/USD as low as 0.2 with fixed $5 commissions per 100,000
  • Powerful, purpose-built currency trading platforms
  • Monthly cash rebates of up to $9 per million dollars traded with FOREX.com’s Active Trader Program

Learn more about FOREX.com’s low pricing and how you can get started trading with FOREX.com.