How To Start Forex Trading In Malaysia
You can begin forex trading in Malaysia by first learning about the forex markets, practicing with a demo account, and creating a trading plan where you can set financial goals and manage risks. After that, select a reputable and regulated forex broker of your choice, open and fund your account before you start trading
There are a few things you should know or consider before starting your Forex trading journey in Malaysia. We have outlined the steps, essential tips, and brokers you should consider. Whether you're just starting or you want to enhance your trading skills, this guide is going to provide you with the useful information you need. From the basics to the tax and legal status of forex trading in Malaysia, we've got you covered.
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How can I legally trade forex in Malaysia?
You can legally trade forex in Malaysia with brokers that are licensed and regulated by the Securities Commission of Malaysia (SCM) and Bank Negara Malaysia (BNM), which are the regulatory bodies overseeing financial activities in the country.
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How much do traders make in Malaysia?
The amount of money traders make depends on the trader's risk to reward management and the trader’s level of experience. Forex traders in Malaysia make between MYR 2,000 to about MYR 45,000 monthly.
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How can I become a trader in Malaysia?
To become a trader in Malaysia, you have to open a trading account with a local broker based in the country or a foreign broker that is licensed by local regulators like the Securities Commission of Malaysia (SCM) and Bank Negara Malaysia (BNM).
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Is forex trading tax-free in Malaysia?
No, forex trading is taxable in Malaysia. Although there’s no capital gain tax on forex gains, Malaysian traders are subject to income tax.
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.
How to start trading in Malaysia: step-by-step guide
Educate yourself: Before diving into trading, take the time to educate yourself about the financial markets, trading strategies, and risk management. To understand the basics of Forex trading, there are various online resources, courses, and books available that can provide valuable insights into the world of trading.
Select a reputable and licensed broker: Choosing a reputable and licensed broker is a critical step. Look for brokers who are regulated by the Securities Commission of Malaysia (SCM) or other recognized regulatory bodies. Check to see if the broker has a user-friendly trading platform, competitive spreads, and a good reputation for customer service.
Develop a trading strategy: Create a trading strategy that includes your financial goals and risk tolerance. Determine how much money you are willing to invest and set up guidelines for risk management. A trading plan helps you stay disciplined and focused, reducing the likelihood of making impulsive decisions based on emotions.
Open a trading account: Once you've chosen a broker and have a trading plan in place, you can proceed to open a trading account. Most brokers allow you to open an account online. During the account setup, you may need to provide some personal information and financial details. After your account is verified, you can fund it using the chosen deposit method.
Start trading with a demo account: Before risking real money, consider practicing with a demo account provided by the broker of your choice. A demo account allows you to trade in a risk-free environment using virtual funds. This is an excellent way to familiarize yourself with the trading platform, test your strategies, and gain confidence without exposing yourself to actual financial risk.
Best Forex Trading Time in Malaysia
Malaysian Forex traders will need to consider how their time zone aligns with the best times of day to trade the markets in order to make better trading decisions. Meanwhile, the best times to trade forex in Malaysia are between 8 and 11 a.m. EST, which coincides with the hours of the European and American trading sessions. And in Malaysian time, this is equivalent to 9 p.m. to 12 a.m. GMT+8. Most traders consider it the best time of day to place trades, particularly intraday trades, because the market is more liquid at that time.
5 Tips For Forex Beginners
Here are 5 essential tips for beginners looking to start trading in Malaysia:
Choose a reliable forex broker: Choose a broker who is regulated by the Securities Commission of Malaysia (SCM) or another well-known regulatory body. Check that the broker has an easy-to-use platform, clear fee structures, and a good reputation for customer service.
Open and fund a trading account: Once you've chosen a broker, proceed to open a trading account. Provide the necessary documentation for verification, and after that, fund your account using a secure payment method. Make sure to start with an amount you are comfortable with and can afford to lose.
Start with demo trades: Before risking real money, use the broker's demo account to practice trading. This allows you to familiarize yourself with the trading platform, test different strategies, and gain confidence without the fear of actual financial loss.
Establish your financial goals and targets: Define clear financial goals and targets before engaging in live trading. Determine the amount of capital you're willing to invest, set profit targets, and establish risk management strategies. Having a well-defined plan helps guide your trading decisions and minimizes emotional responses.
Start trading: Once you've practiced with demo trades and established your goals, it's time to start live trading. Begin with smaller positions and gradually increase your exposure as you gain experience and confidence. Continuously monitor the markets, stay informed about economic indicators, and be ready to adapt your strategy based on market conditions.
Best Forex brokers in Malaysia
Pocket Option
Pocket Option was launched in 2017. The broker gives its clients access to trade currency pairs, commodities, stocks, cryptocurrencies, and indices. To operate in the financial markets, the company has developed its own unique trading platform. In addition, Pocket Option clients can trade in MT5. The broker’s service is available in more than 95 countries and regions globally. Pocket Options top priority is the high quality of customer service, constant improvement of trading technologies, and financial innovations.
The company's clients get access to many bonus offers, and participate in a profitable affiliate program. Thanks to unique rewards, traders can increase their profile level and purchase resources in Pocket Option's own Market store to increase their profitability while trading.
Leverage is a tool that is offered by numerous brokers to traders. With leverage, traders can open larger positions, allowing them more exposure to the market in which they are trading despite their small initial deposit, and PocketOption offers a maximum leverage of 1:100 on its MT5 Forex account.
The company behind the Pocket Option website that provides brokerage services is PO Trade (SV) Ltd, which is registered in Saint Vincent and the Grenadines, considered to be a Caribbean offshore tax haven. The company says on its website that it is regulated by the International Financial Market Relations Regulation Center (IFMRRC), which is not an official regulatory authority.
Tickmill
Founded in 2014, Tickmill focuses on innovations, allowing customers to trade not only manually but also using the services for automatic copying of transactions by their more experienced colleagues.
Tickmill’s focus on innovation is what the company is proud of and why traders choose it. A selection of basic training materials makes the broker a suitable option for those who have just started to master Forex trading.
Tickmill is a brokerage company that attracts traders with low spreads and comfortable trading conditions. It offers users a spread from 0.1 pip for the currency pairs of EUR/USD. The broker is also suitable for experienced traders who prefer both manual and automated trading.
Tickmill is regulated by the Seychelles Financial Services Authority and the UK Financial Conduct Authority. The broker is also regulated by the Cyprus Securities and Exchange Commission. All this is a guarantee of the reliability and safety of funds for a trader.
Exness
Exness has been in operation since 2008. Exness is the best broker for both active and passive investment. It offers a wide variety of trading instruments along with reliability and innovation. The broker offers a range of accounts, depending on the needs of traders. For beginners, the broker offers cent and demo accounts, and for active traders, ECH accounts with low spreads from 0.1 pip.
Exness offers services via its registered offices in the British Virgin Islands, Seychelles, Curaçao, South Africa, and Cyprus. Retail customers cannot get services from offices in Cyprus or the United Kingdom.
Exness is governed by the strictest regulatory agencies, including the Cyprus Securities and Exchange Commission (CySEC) and the UK's Financial Conduct Authority (FCA). Exness is subject to financial services authority (FSA) and FSCA regulation as a securities dealer (South Africa).
Pros and Cons of Forex trading in Malaysia
Before you start trading the Forex market, there are some advantages and disadvantages you should consider. TU experts have highlighted some for you below:
👍 Pros
• Accessibility and flexibility: Forex markets operate 24 hours a day, five days a week, providing traders in Malaysia with flexibility in terms of when they can engage in trading. This allows individuals to participate in the market outside of regular working hours.
• Leverage can be used to increase profit: Leverage is frequently provided by Forex trading platforms, allowing traders to control larger positions with a small amount of capital. While this increases profit potential, it is critical to use leverage with caution because it also increases risks.
• Possibility for profit in rising and falling markets: Forex trading offers the opportunity to profit in both rising and falling markets. Long positions can be taken when anticipating an upward market movement, and short positions can be taken to benefit from a downward market movement.
👎 Cons
• High risk and volatility: The Forex market is known for its high volatility, which can lead to significant price fluctuations in short periods. While this volatility presents opportunities, it also increases the risk of substantial losses, especially when using leverage. In fact, you may lose all your invested capital.
• Complexity and skill requirement: Forex trading is complex and requires trading skills. Becoming profitable in forex trading requires a good understanding of technical and fundamental analysis, risk management, and market psychology. Beginners may find the market too complex, and it takes time and effort to develop the necessary skills.
Is Forex haram?
According to Sharia laws, certain financial transactions are considered haram, which includes those involving interest (riba), gambling (maisir), and excessive speculation (gharar). In the context of Forex trading, whether it is considered haram or not depends on how the trading is conducted. If Forex trading involves elements such as earning or paying interest, engaging in speculative activities without proper justification, or resembling gambling, it may be deemed haram. For example, trading on margin with interest-bearing loans or participating in highly speculative trades that resemble gambling could be inconsistent with Islamic principles.
However, Forex trading can be structured in a Sharia-compliant manner. This involves adhering to Islamic finance principles, such as avoiding interest (riba) and conducting trades based on underlying assets with clear economic purposes. Many brokers offer Islamic or swap-free accounts that comply with Sharia principles by eliminating overnight interest (swap) and ensuring that trades are backed by physical assets. So, while forex trading is not necessarily haram, the way it is conducted can determine its compliance with Sharia principles.
Team that worked on the article
Winnifred Emmanuel is a freelance financial analyst and writer with years of experience in working with financial websites and businesses. Her expertise spans various areas, including commodities, Forex, stocks, and cryptocurrency. Winnifred tailors her writing to various audiences, including beginners, while also providing useful insights for those who are already familiar with financial markets.
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.
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).