How to Start Forex Trading in Malaysia

Ready to start trading forex in Malaysia? Check out Benzinga's favorite Malaysia forex brokers.

Although online forex trading is relatively new to Malaysia, forex trading is officially allowed for residents of the country. Traders should find the country quite easy to operate in since it has rather liberal trade policies and laws.

If you live in Malaysia and want to trade forex, you will still require a profitable strategy and a sound trading plan, as well as a reputable online forex broker to trade through. Read on to find out how to assemble those elements so you can get started trading forex in Malaysia.

Get Started

Earn cash back on your FX trades

Open an account in as little as 5 minutes. Spot opportunities, trade and manage your positions from a full suite of mobile and tablet apps.

Get Started

Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Show More

Get Started with Forex in Malaysia

Malaysia’s local market has become quite attractive for forex brokers due to growing local demand, so some major brokers now have offices in the country. Only a few brokers currently offer customer support in Malay or websites translated into that language, so speaking English can substantially broaden the selection of brokers you can deal with. 

Islamic traders wishing to comply with Sharia law may find Malaysia especially good for swap-free Islamic trading accounts since Islam is the country’s official religion. The Islamic Financial Services Act (2013) requires financial services to comply with Sharia law.

Even if you have never traded any financial market, you can get started trading forex via an online broker. Just follow the 6 basic steps outlined below.

• Step 1: Get a modern internet-connected device.
• Step 2: Select an online forex broker that takes clients from Malaysia.
• Step 3: Ask the broker to open a margin account for you.
• Step 4: Fund that account using a payment method the broker approves of. 
• Step 5: Use or download the broker’s forex trading platform. 
• Step 6: Make an initial forex trade. 

Malaysia Forex Trading Strategies

Once you have the ability to execute forex trades, you will want to develop and practice using a good trading strategy to incorporate into your trading plan. That will significantly increase your chances of success when trading forex. 

Several popular strategies used to trade forex could be suitable for you, depending on your experience level and personality type. The 5 basic strategies listed below have become popular for forex traders to use from just about any country, including Malaysia. 

• Scalping: A highly active trading strategy that aims to profit from very short-term moves in the forex market. Scalpers quickly get into and out of the market with the goal of winning a few pips each time. 

• Day trading: An intraday strategy where all transactions get closed out at the end of each trading session. This helps them avoid taking the extra risks involved in holding overnight positions.

• News trading: This intraday strategy aims to use the exceptionally high volatility seen when key economic or geopolitical news is released to make trading profits. 

• Swing trading: A strategy where the goal is to buy low and sell high by using momentum-based technical indicators to suggest which levels are high or low. Swing traders may take overnight positions. 

• Trend trading: A longer-term trading strategy that seeks to profit by identifying and following directional market movements known as trends. Trend traders typically look for retracements to establish positions along with the prevailing trend until the trend ends and may protect their profits with trailing stops. 

This daily candlestick chart shows a downward trend in the USD/CAD currency pair from 1.41403 to 1.33144. A trend trader could have identified and taken advantage of that move by analyzing the 14-day ADX and 10-day moving average trend indicators displayed on the chart. Source: MetaTrader.

Forex Trading Example in Malaysia

The Malaysian ringgit (MYR) serves as Malaysia’s national currency and has the symbol RM. The Bank for International Settlements (BIS) reported that the ringgit accounted for about 0.1% of daily turnover in the forex market in April 2019. The MYR also ranked 34th in trading activity in that period among the world’s currencies.

A current quote for the USD/MYR exchange rate is 4.29 Malaysian ringgit to 1 U.S. dollar.  If you had the view that the USD/MYR rate was going to rise, then you could purchase 100,000 U.S. dollars against the Malaysian ringgit at that 4.29 exchange rate. If the USD/MYR rate then rallied to 4.30, you can compute your trading profit with the following equation: 

100,000 USD x (4.30-4.29 MYR/USD) = 1,000 MYR

To convert your profit in Malaysian ringgit into U.S. dollars, you would perform this calculation:

1,000 MYR ÷ 4.30 MYR/USD = 232.56 USD

Conversely, if your view was wrong, and the USD/MYR exchange rate instead declined to 4.28, then you could compute your trading loss as follows:

100,000 USD x (4.28-4.29 MYR/USD) = -1,000 MYR

When converted into U.S. dollars at the USD/MYR exchange rate of 4.28, that loss would be:

-1,000 MYR ÷ 4.28 MYR/USD = -233.64 USD

Making Money with Forex in Malaysia

As with trading from any country, making money trading forex from Malaysia generally requires having a profitable trading strategy and the discipline to follow it. You can also use another trader’s plan or copy a successful trader using a social trading platform. 

When trading, the most essential element of your success will be the trading plan that you develop around a profitable trading strategy. Such strategies can vary from short-term to quite long-term in their focus.

Many good trading plans have objective trading criteria that remove the discretionary element in trading. They also tend to incorporate good money management practices and some form of risk/reward analysis. Due to changing market conditions, you might find that an initially successful trade plan requires revision to remain profitable. 

Best Online Forex Brokers in Malaysia

Forex trading is not formally regulated in Malaysia, although another financial regulatory oversight is provided by the Securities Commission Malaysia (SCM) established in 1993. The SCM oversees futures and other exchange-traded markets, but not forex brokers. Bank Negara Malaysia is the national bank of Malaysia and manages the value of the Malaysian ringgit. 

Brokers that have an international presence and have established a Malaysian office would probably make a good choice for Malaysian traders. Having a local office means customer support is probably offered in Malay, and legal action could be facilitated in case an issue arises. 

A set of well-regulated forex brokers that will accept Malaysian traders as clients appear in the table below.

Forex Terminology

Forex traders have evolved a peculiar set of jargon terms they use among themselves. You will probably want to familiarize yourself with these unique terms before starting to trade. Here are some common words you will need to know:

• Pip: An acronym that stands for “point in percentage.” This is the tiniest change that can occur in the exchange rate of a currency pair.
• Lot size: The number of currency units you trade. Standard lots are 100,000 base currency units, mini lots are 10,000 units and micro-lots are 1,000 units. 
• Orders: Instructions given to your broker to make trades for you. You can give limit, stop loss, market and take profit orders.
• Margin calls: If your trading positions require additional funding due to a market move or regulatory change, you may get a margin call from your broker asking you to deposit more money. 

Is Trading Forex in Malaysia Right for You?

Trading forex well means you will need to acquire considerable market knowledge, develop a decent trading plan and have enough discipline to keep to that plan. You will also need enough risk capital to fund your chosen strategy adequately and enough free time to implement it. If you meet those requirements, then trading forex from Malaysia could be right for you.

If you would like to try your hand at forex trading, consider choosing one of the reputable forex brokers mentioned above that takes Malaysian clients and ask to open up a trading account.