The Forex exchange market is the most versatile and largest in the world, with millions trading on it due to easy entry, 24 hours access, and high liquidity. Hence, Forex trading is gaining popularity and momentum in nations such as Malaysia, where locals are looking for ways to generate money since the pandemic hit the globe.
Reputed companies like Liteforex Malaysia have set up and are providing services to meet up with the increasing Forex trading demand in the country. But many Malaysian Residents are still unfamiliar with how Forex trading works, the rules to be followed, and which broker to choose.
We’ll cover some important things to remember before you start Forex trading in Malaysia.
Laws and Legalities
Forex trading is termed legal in Malaysia. Trading, or the buying and selling of any foreign currency, is only permitted in Malaysia through licensed commercial banks, Islamic banks, investment banks, and international Islamic banks, according to Bank Negara Malaysia’s announcement in 2012.
Below are some of the basic points that Malaysian Forex traders have to comply with before getting into Forex trading:
- Trading against the Ringgit (Malaysian National Currency) is prohibited.
- Trading on somebody else’s behalf using their money or requesting somebody else to trade on your behalf is not allowed.
- The profit and gains occurring from Forex trading done within the country are taxable. Therefore, Malaysian residents have to declare it just like any other income, either as an individual or a company.
How to Choose a Trusted Forex Broker
To become successful and get good returns in Forex trading is possible only by choosing a legitimate Forex broker. The first thing you should do before getting started is finding the finest broker.
Before making this decision, there are a number of factors to consider. Below are a few of the most important ones to keep in mind.
Compliance With Local Regulations
When choosing a Forex broker, the first thing to look for is their credibility. In Malaysia, a reputable Forex broker will be licensed and registered by the Securities Commission Malaysia (SCM).
The platforms or brokers you use should follow the laws and regulations outlined below:
- The Money Changing Act of 1998 – Licensing and regulation of any money-changing enterprise. This is the law that spells out the rules that Forex brokers must follow if they want to do business in Malaysia.
- The Capital Markets and Services Act 2007 – Controls and provides for matters connected to capital market activity, markets, and intermediaries. All trade brokers are covered by this act because it applies to all organizations participating in the securities and derivatives markets.
- The Exchange Control Act of 1953 – Establishes standards for Malaysians dealing with foreign exchange-related commodities like gold, securities, and currencies, as well as provides restrictions associated with them.
- The Securities Commission Act of 1993 – Gives the SCM the authority to license and regulate securities firms.
Commissions and Fees
Opening a trading account is generally free. However, brokers may charge fees for trading, spreads, exchange operations, data provisions, and other platform features. Spreads are also the way a broker who doesn’t accept fees or commission makes money. Fixed spread, variable spread, and percentage of the spread are the forms of commissions.
A trustable broker charges only the required fee as per market standard, provides flexible options to choose the type of spread, and is transparent by revealing all his fees and commissions prior to the trade.
Demo Account
Authorized Forex brokers will provide free demo accounts for you to use in order to discover how the market and your trading platform work. Instead of using your own money, virtual monies are utilized in this situation. They’re also helpful for experimenting with alternative strategies or trading with different currencies without taking any risk.
Customer Service
A good Forex broker who treats you well even after the trade is completed. Because Forex trading occurs around the clock, a broker’s customer service should be available at all times. This is a crucial factor, particularly for inexperienced traders, so that when you have a question or a problem with your trade, the customer service quickly responds and provides solutions.
Also, check out if the live phone call option is also provided by the broker, along with chat and email options.
Technology and Services
The trader’s access to the markets is through a trading platform. Hence, traders must select the appropriate trading platform based on their trading preferences and needs. A good Forex broker offers a range of hardware, software, and trading applications for the trader to choose from.
A reliable platform will not only have an appealing user interface, but it will also be safe and free of system crashes and freezes. A reputable site will also provide a variety of currency pairs to choose from. They also provide resources and educational material to assist you in your trading activities.
Conclusion
Forex trading in Malaysia is becoming increasingly popular, and to succeed in it demands dedication, thorough research, analysis, and risk management.
Before trading, every aspiring trader should compare the best brokers in Malaysia using the information provided above and choose the one that best meets their needs. A reputable broker can help you boost your chances of success in the competitive Forex market.
