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How To Legally Start Forex Trading In Malaysia

Updated: May 02, 2024
Vuk Martin
Contributor
Opinions expressed by Traders Union Contributors are their own.
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Dr. BJ Johnson
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Fact-checked by
Mirjan Hipolito
Cryptocurrency and stock expert
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Table of Contents

  • Rules and Regulation
  • Best Forex brokers
  • Is Forex haram or halal
  • How to start trading
  • Which Forex broker is the best
  • Summary
  • Related articles
Editorial Note: While we adhere to strict Editorial Integrity, this post may contain references to products from our partners. Here's an explanation for How We Make Money. None of the data and information on this webpage constitutes investment advice according to our Disclaimer.

RoboForex - Best Forex broker for 2024 (Malaysia)

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If you would like to learn about the best brokers in your region, please use the “Find my broker” service.

Yes, Forex trading is legal in Malaysia.

  • Forex trading in Malaysia is regulated by Bank Negara Malaysia (BNM).

  • Leverage is limited to 1:50 for retail traders in Malaysia.

  • Traders can engage through licensed local institutions or approved offshore brokers.

  • Forex trading can be aligned with Islamic principles, being considered halal if it adheres to Shariah-compliant methods.

Forex trading presents financial opportunities for the people of Malaysia with the promise of financial growth and market dynamics unlike any other. The allure lies not just in the potential for profit, but also in the complexity and the global interconnectedness of Forex markets. Why do traders from Malaysia gravitate towards Forex trading, and what makes it a subject worth exploring?

This article will explore the legal framework governing Forex trading in Malaysia, dissecting the intricacies of its regulation and the moral considerations underpinning its practice. Offering a comprehensive guide, we aim to equip Malaysian traders with the knowledge necessary to navigate the Forex landscape both legally and ethically.

  • Is Forex trading available in Malaysia?

    Yes, Forex trading is available and legal in Malaysia, regulated by Bank Negara Malaysia (BNM).

  • Is Forex trading haram or halal?

    Forex trading can be considered halal if it adheres to Shariah-compliant trading methods, avoiding overnight interest and speculative practices.

  • What time can you trade Forex in Malaysia?

    Forex markets operate 24 hours a day, five days a week, thus, Malaysians can trade Forex at any time, considering global market hours. For further information, read our article on Best Time to Trade Forex in Malaysia.

  • Do Forex traders pay tax in Malaysia?

    Forex trading profits are subject to Malaysian tax laws. It's advisable for traders to consult with a tax professional to understand their tax obligations.

Rules and Regulation

Licensing in Malaysia

Forex trading in Malaysia is regulated by the Securities Commission Malaysia (SC) under the Capital Markets and Services Act 2007. The regulatory framework aims to ensure market integrity, investor protection, and financial stability in the Forex market. Investors should trade with licensed brokers, conduct due diligence, and stay informed about their rights and protection to mitigate risks associated with Forex trading.

Investor protection in Malaysia

Forex investors in Malaysia are protected by the Securities Commission Malaysia (SC), which regulates the Forex market and ensures the integrity of the financial system.

Malaysia has policies to protect Forex investors:

  • licensing of Forex brokers;
  • restrictions on Forex trading.

Taxation in Malaysia

Forex taxation in Malaysia is governed by the Inland Revenue Board Malaysia (IRBM), which administers the country's tax laws. Forex traders are required to report their trading income to the IRBM and pay income tax on their profits at the applicable tax rates. Malaysia has progressive income tax rates, ranging from 0% to 30%, depending on the individual's total taxable income.

Best Forex brokers in Malaysia

1
9.4/10
Go to broker
Your capital is at risk.
Minimum deposit:
$10
Bonus for deposit:
60%
Regulation:
FSC
Review

RoboForex is a well-established brokerage company offering a broad spectrum of trading opportunities for active traders and investors alike. With an impressive selection of over 12,000 financial instruments - including currency pairs, CFDs on stocks, indices, metals, energies, and futures - RoboForex provides a versatile trading environment.
The broker boasts competitive trading conditions: tight spreads starting from 0 pips, high leverage up to 1:2000, and fast execution speeds. The broker also offers the CopyFx investment program, which allows traders to copy the strategies of successful investors and earn passive income. Additional perks include instant fund withdrawals and some of the industry’s highest affiliate payments (up to 84%).
RoboForex prioritizes reliability and client satisfaction, establishing itself as a trusted partner for traders worldwide.

Pros/Cons

•Availability of favorable trading conditions and a minimum deposit

•Unique investment program CopyFx

•Highest affiliate payments: up to 84% of the fee paid by the referral

•Market launch - STP and ECN

•Instant withdrawal of funds

•Minimum deposit - $10

•A small number of currency pairs - 36, for accounts: Pro, Pro-Cent, ECN, Prime

•Lack of tools when trading on the R StocksTrader platform

Study Review
2
9.2/10
Go to broker
Your capital is at risk.
Minimum deposit:
$5
Bonus for deposit:
50%
Regulation:
MISA
Review

Pocket Option caters to both Forex and binary options traders, offering a wide range of trading instruments, a copy trading service, and passive income opportunities.
Clients can trade CFDs on currencies, cryptocurrencies, stocks, indices, and commodities with spreads starting from 1.2 pips and no additional commissions per lot. Pocket Option's unique "My Safe" service offers up to 10% annual interest on unused account balances.
While the platform excels in serving active traders, its demo accounts and referral program also offer value to beginners. However, the lack of cent accounts and ECN options could be a drawback for certain professional traders.

Pros/Cons

•MetaTrader provides for trading binary options and CFDs;

•A demo mode is available for all account types;

•To register, you may use your Google email or Facebook/Google account;

•Active, social, and algorithmic trading is available on MT4 and MT5 accounts;

•Spreads are from 1.2 pips for Forex and no fees per lot;

•Referral program for retail clients with rewards of up to 50%-80% of the referee’s income;

•“My Safe” service that provides for crediting 10% per annum on the account balance not involved in trading;

•Cash back and promo codes for binary option traders;

•50% deposit bonus.

•The broker offers neither cent accounts for novice traders to test strategies and advisors, nor ECN accounts with near zero spreads for professional traders;

•Real-time communication with operators is available upon funding the account.

Study Review
3
9.1/10
Go to broker
Your capital is at risk.
Minimum deposit:
€10
Bonus for deposit:
100%
Regulation:
CySEC
Review

FBS is an international broker with a strong presence in Asia, offering a wide range of trading instruments including Forex, stocks, indices, energies, and metals. With over 90 international awards and 27 million clients across 150 countries, FBS boasts a strong global reputation.
The company provides flexible trading conditions: leverage up to 1:3000, floating spreads from 0.7 pips, commission-free trading, and fast execution speeds starting at 0.01 seconds. FBS ensures client security with negative balance protection and offers a user-friendly experience on familiar trading platforms.
While FBS doesn't currently offer cryptocurrency trading or passive income options like PAMM accounts and copy trading, its competitive conditions and extensive educational resources make it a compelling choice for traders seeking a comprehensive and accessible experience.

Pros/Cons

•negative balance protection;

•a large selection of trading instruments;

•the support service works 24/7.

•no cryptocurrency;

•auto copying is not available;

•no PAMM accounts;

•not suitable for short-term trading, such as scalping;

•the support service works in a limited number of languages;

•only two real accounts.

Study Review

Your location is United States

If you would like to learn about the best brokers in your region, please use the “Find my broker” service.

Is Forex trading haram or halal in Malaysia?

In Malaysia, where Islam is the official religion and deeply integrated into the national identity, the question of whether Forex trading is haram or halal is significant. Islamic finance principles prohibit gambling (maisir) and uncertainty (gharar), both of which are inherent in speculative trading practices.

However, Forex trading can be considered halal if it adheres to Shariah-compliant methods of trading. This includes using Islamic accounts that do not incur overnight swaps or interest (riba), and employing strategies that avoid excessive speculation and ensure transactions are backed by actual assets. Moreover, trading should be conducted with a clear intention and not for gambling purposes.

As such, Malaysian Muslim traders often seek guidance from Islamic scholars and financial advisors to ensure their trading activities are in harmony with Islamic laws, making Forex trading a practice that can be aligned with Islamic principles, provided it is conducted responsibly and ethically. For more information, read: Best Forex Swap Free (Islamic) Accounts 2024

How to start Forex trading in Malaysia?

Embarking on the Forex trading journey in Malaysia requires a blend of education, strategic planning, and risk management. Here's how to get started:

  1. Educate Yourself: Before diving in, it’s crucial to understand the Forex market, its workings, and the factors that affect currency movements. Utilize online courses, webinars, and books to build a solid foundation.

  2. Choose a Broker and Open an Account: Select a broker regulated by Bank Negara Malaysia (BNM) or a reputable international body. Look for brokers offering Islamic accounts if you require Shariah-compliant trading. Opening an account typically involves submitting identification documents and completing a registration process.

Find out the list of top brokers in Malaysia in our article Best MT4 Brokers In Malaysia for 2024 - TOP 5.

  • 3

    Setup Platform, Analyze the Market: Most brokers provide access to a trading platform, with MetaTrader 4 (MT4) being one of the most popular. MT4 is legal and widely used in Malaysia for its advanced analytical tools and automated trading capabilities. Familiarize yourself with the platform and start analyzing the market using technical and fundamental analysis.

    • For further insights on platforms, read our article Best Online Trading App In Malaysia for 2024 - TOP 5.

  • 4

    Trade and Control Your Risks: Begin trading with small amounts. Employ risk management strategies such as stop-loss orders to protect your capital. Remember, discipline and patience are key to long-term success.

Which Forex trading broker is the best in Malaysia?

Selecting the best Forex broker is pivotal for a successful trading experience in Malaysia. Here are tips to guide your choice:

  • Regulatory Compliance: Ensure the broker is regulated by BNM or other recognized international regulatory bodies. This safeguards your trading activities and investments.

  • Account Features: Look for brokers offering accounts that suit your trading style, including Islamic accounts for Shariah-compliant trading. Compare leverage, spreads, including Islamic accounts for Shariah-compliant trading. Compare leverage, spreads, and the availability of educational resources.

  • Customer Support: Effective support is crucial. Opt for brokers with a strong reputation for customer service, offering support in multiple languages, including Malay, to facilitate seamless communication.

  • Platform Reliability: A reliable trading platform like MT4, with comprehensive analysis tools and stability, is vital for effective trading. Test the platform through a demo account to ensure it meets your needs.

For more information, read our list of brokers in our article 20 Best Forex Brokers Malaysia in 2024.

Summary

Forex trading in Malaysia offers a realm of opportunities for traders, guided by a robust regulatory framework established by Bank Negara Malaysia. Whether through regulated local brokers or reputable international platforms, traders can navigate the market effectively, adhering to both legal and Islamic principles.

Education, strategic broker selection, platform familiarity, and rigorous risk management are paramount steps to embarking on this journey. With the right approach and resources, Forex trading in Malaysia can be both a profitable and ethically aligning venture, opening doors to the global financial markets for Malaysian traders.

Team that worked on the article

Vuk Martin
Vuk Martin
Contributor

Vuk stands at the forefront of financial journalism, blending over six years of crypto investing experience with profound insights gained from navigating two bull/bear cycles. A dedicated content writer, Vuk has contributed to a myriad of publications and projects. His journey from an English language graduate to a sought-after voice in finance reflects his passion for demystifying complex financial concepts, making him a helpful guide for both newcomers and seasoned investors.

Read more
Dr. BJ Johnson
Dr. BJ Johnson
Developmental English Editor

Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.

Read more
Mirjan Hipolito
Mirjan Hipolito
Cryptocurrency and stock expert

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).

Read more