Forex Malaysia: A Guide for New Forex Traders

Categories: Forex Trading  

Tags: forex  forex trading  forex trading Malaysia  forex broker Malaysia & SEA  

Publish date: 2022-11-18

Table of Contents

  • 1 Introduction
    • 1 What is Forex
      • 1.1 Contract for Difference (CFD)
      • 1.2 What is the difference between Forex trading and stock trading?
    • 2 How Forex Trading Works
      • 1 A Brief Explanation of How Forex Trading Works
      • 2 Important Terms in Forex trading
        • 2.1 Pip
        • 2.2 Exchange Rate
        • 2.3 Leverage
        • 2.4 Margin
        • 2.5 Spread
        • 2.6 Stop/Cut Loss
      • 3 Choose your Forex trading Strategy
        • 1 Position Trading
        • 2 Swing Trading
        • 3 Intraday
        • 4 Scalping
      • 4 How to open a position in Forex trading
        • 1 Choose a Currency Pair
        • 2 Open Price Chart and Set Timeframe
        • 3 Conduct Market Analysis
        • 4 Do Open Position
      • 5 Conclusion
      • 6 Frequently Asked Questions (FAQ)
        • 1 Is Forex legal in Malaysia?
        • 2 What time forex market open in Malaysia?
        • 3 What are the best indicators to use for Forex trading?
        • 4 How Many Pips Can You Earn in a Day or Week?
        • 5 Which timeframe should be used in Forex trading?

What is Forex?

The world trades currencies on the decentralized global market known as forex, often known as foreign exchange, FX, or currency trading. The foreign exchange market is the world's largest and most liquid, with an average daily trading volume of more than $5 trillion.

Foreign exchange is a term used to describe the buying and selling of one currency for another, usually on a global scale. The forex market consists of all transactions relating to foreign currencies.

Contract for Difference (CFD)

Forex is a type of Contract for Difference (CFD) trading. This is an agreement between you and your broker to pay any difference in the price of a currency pair between the times you open and close your trade. This means that neither you nor your broker must keep any currency on hand.

Other CFDs that you can trade include commodities, metals, equities, energies and many more. Therefore, all Forex trading is CFD trading, but not all CFD trading is Forex trading.

What is the difference between Forex trading and stock trading?

When people think of trading, they often think of stock trading and believe Forex trading is almost the same thing. But this is incorrect.

Forex trading is a complex and highly speculative form of investment in which traders speculate on the value of currencies, commodities, and other assets. Stock trading, on the other hand, is a more traditional form of investment in which investors buy and sell shares of common stock.

How Forex Trading Works

In short, Forex is the activity of transferring currencies with other currencies between sellers and buyers at a previously agreed price. Most of these activities are aimed at generating profit. So, we can consider Forex trading as a type of business and investment activity, some even make Forex trading a profession that is taken seriously.

One way to think about it is that trading in forex is like playing cards with other people around the world. Each player has his or her own deck of trading cards which are referred to as accounts at an online bank or brokerage firm. Each card represents a different currency pair that you can trade against others, just like there are 52 cards in each deck but most players only use four at any given time: 1, 2, 5 and 10 point cards (the 4 suits). When your opponent plays a higher-value card than yours you have to pay by giving up something else from your hand if you want to keep playing the game. If you give up too much then your opponent wins and takes all your money!

The goal for forex traders — and it's a tricky one — is to profit by accurately predicting fluctuations in value.

Important Terms in Forex trading

For those of you who are new to Forex trading, you may be a little confused by the conditions in Forex trading. However, there are actually only a few basic conditions that you must know. Here are some of them.

Pip

Pips or points are the smallest changes that occur in a currency pair. For example, the USD/JPY pair has a value of 1 pip of 0.01. While 1 pip for the EUR/USD pair is 0.0001.

Exchange Rate

Is the value of a currency when compared to the value of other currencies. For example EUR/USD is worth 1.3200. This means that 1 euro is equal to 1.3200 US dollars.

Leverage

The leverage feature allows you to trade with a higher value than the actual capital. For example, a leverage of 1: 100 means that with a capital of only USD 1,000, you can trade up to 100 times that amount, which is $100,000.

Please note that leverage can dramatically amplify your profits, but it can also just as dramatically amplify your losses.

Margin

Margin is a deposit fund required to maintain or open a trading position. Margin is divided into two types, namely Free Margin and Used Margin. Used Margin is a deposit fund used to maintain a trading position. While free margin is a deposit used to open a trading position.

Spread

The spread is the difference between the ask and bid price of a currency pair. For example, the EUR/USD pair at 1.3200/05 means that the spread is around 5 pips, which is between 1.3200 and 1.3205.

Stop/Cut Loss

Is a feature used to stop losses occurring.

Forex Malaysia - Choose Your Forex Trading Strategy

To achieve consistent profits, a trader is required to have a trading strategy. According to the professional Market Analyst/Researcher, there are 4 types of best trading strategies used by world-class traders. An explanation follows.

Position Trading

This strategy uses a long-term trading system from several weeks to several months. Usually, traders who use this strategy consider Forex trading as an investment. They also generally use trend following to determine their decisions (i.e. trade by following the direction of trend movement).

Swing Trading

This Swing Trading strategy usually has a duration of 1 Day to 1 Week. Open buy and open sell positions are usually placed at price reversal points, ie buy at support, sell at resistance, Trade Bounce, and Trade Pullback. An indicator that is often used in this trading system is the Moving Average (MA) indicator.

Intraday

This strategy is done by opening and closing positions on the same day. Entry and exit positions that are done on the same day cause profit and loss to be known on the same day. The time frame that is often used in this trading system is 1 Hour or 4 Hours. This technique is generally chosen by traders who have the characteristics of easy to move and find new opportunities the next day.

Scalping

This strategy is used by traders who want to make a profit very quickly. For beginner traders, this strategy is not recommended because it will drain emotions. Scalpers are required to have high composure and concentration to determine open positions. So, where is the best forex strategy? All of this will greatly depend on your trading goals, the time you can spend trading, and your goals and personality. If you have a lot of free time or are a full-time trader, then scalping and intraday strategies are perfect for you. However, if you only have a short amount of time to trade forex, swing and intraday trading strategies are perfect for you. On the other hand, if you are a person who is easily influenced emotionally by price movements and a beginner in Forex trading, then it is not recommended to use scalping strategies. Why? Beginner traders will certainly find it difficult to determine price movements if using a low time frame, for example from 5 minutes to 15 minutes.

How to open a position in Forex trading

The moment when opening a position is the most important moment in Forex trading. Mistakes in opening positions often end in losses. Here are the 4 main steps in opening a position using the MetaTrader application.

Choose a Currency Pair

In choosing a currency pair to trade, it is very important to pay attention to the available spread. You can check using a trading application such as Metatrader. The spread factor makes the buy and sell price at each broker different from the market price of the pair. Spreads will vary and depend on price changes. The spread determines the trading costs that must be incurred. The bigger the spread, the bigger the trading cost so it affects the amount of profit that will be earned.

Open the Price Chart and Determine the Timeframe

To open a chart for a specific pair, click on the currency pair then drag and drop on the graphics screen. For example in this example you select the EUR/USD pair. Once the EUR/USD price chart appears in your Metatrader, right-click and select the desired "Time Period". 

Conduct Market Analysis

Analytical techniques in Forex trading are very diverse. You can use technical or fundamental analysis. Technical analysis generally uses indicators that are already available on the MetaTrader platform. While fundamental analysis is generally done based on emerging news. If you use technical analysis and want to open the Bollinger Band indicator on Metatrader, you can click "insert" on the toolbar and select "Indicator", then "trend" and "Bollinger Band". 

Doing Open Positions

Once you can predict which direction the price will move, you can immediately open a position by clicking "New Order". 

Once "New Order" is clicked, you will be given two options namely Market Order and Pending Order.

Conclusion - Forex Malaysia

Forex trading is the process of trading the currencies of countries in the world with the aim of making a profit. The first thing you must do as a way of trading forex is to choose a trusted broker. The characteristics of a safe and reliable broker are recognized legitimacy, responsiveness, and having various testimonials related to its service, quality, and user convenience. We strongly recommends that you open an account with trusted brokers, namely FXCM Group, FXCM-markets in Malaysia.

FXCM Markets is a leading provider of online foreign exchange (FX) trading, contract for difference (CFD) trading, spread betting, and related services. The company's mission, since its inception in 1999, has been to provide global traders with access to the world's largest and most liquid market by offering innovative trading tools, hiring excellent trading educators, adhering to strict financial standards, and striving for the best online trading experience in the market.

FXCM Group has successfully obtained licenses from various leading regulatory bodies in Europe, Asia, Africa, etc.  The headquarters of the FXCM Group are located at 20 Gresham Street, 4th Floor, London, EC2V 7JE, United Kingdom. The Financial Conduct Authority authorises and regulates FXCM LTD in the United Kingdom. The registration number is 217689. Companies House registration number 04072877. Registered in England and Wales.

FXCM Markets LLC (“FXCM Markets”) is incorporated in St Vincent and the Grenadines with company registration No. 1776 LLC 2022 and is an operating subsidiary within the FXCM group of companies (collectively, the "FXCM Group" or "FXCM"). FXCM Markets is not required to hold any financial services license or authorization in St Vincent and the Grenadines to offer its products and services.

FXCM EU is a Cyprus Investment Firm ("CIF") licenced and regulated by the Cyprus Securities and Exchange Commission ("CySEC") under licence number 392/20.  These standards are known to be strict and must be followed by countries in Europe, so that the safety of customer funds is guaranteed.

Trading Forex takes a commitment to learning, and you should be ready to compare brokers in Malaysia to find one that suits you.

To achieve consistent profits, a trader is required to have a trading strategy. There are 4 main types of trading strategies, namely position trading, swing trading, intraday, and scalping. So, where is the best forex strategy? All of this will greatly depend on your trading goals, the time you can spend trading, and your personal goals and characteristics.

Discipline is essential to any successful trader because it helps him maintain control of his emotions – which can be a major obstacle to success. Strategy is integral in order to develop an effective plan that will help you make money. This guide aims to give you some basic tips on how to become disciplined, by addressing the following three key areas:

  • Focusing your attention on the right things at the right time
  • Keeping your goals in focus
  • Developing a trading system that works for you

If you start trading Forex without these skills, you may profit from a few trades, but you will eventually lose. So, if you are new to Forex trading and just want to make a few trades, you should start with the free demo account offered by most brokers.

Frequently Asked Questions (FAQ)

Here are three questions that are often asked by Forex traders in Malaysia. In general, these questions are often asked by new traders or people who are just learning Forex trading.

Is Forex legal in Malaysia?

Forex is legal in Malaysia, as long as it is conducted in accordance with the law.

What time forex market open in Malaysia?

The Forex market is open 24 hours a day, 5 days a week, from Sunday 5pm EST (Monday 5am Malaysia) through Friday 4pm EST (Saturday 4am Malaysia).  Different worldwide time zones play a role in the forex market's ability to trade continuously throughout a 24-hour period.

What is the most appropriate indicator to use for Forex trading?

There is no single indicator that is considered the best in Forex trading. The main purpose of making indicators is to identify and predict. This indicator is highly dependent on market conditions, trader characteristics, and the strategy used.

How Many Pips Can You Earn in a Day or Week?

Determination of profit targets based on pips is highly inappropriate. The forex market is very volatile and inconsistent. Even using such a strategy, you can lose money if the market conditions are not very supportive.

Which timeframe should be used in Forex trading?

The time period used will greatly depend on the strategy you use and the time available for you to trade. When performing multiple timeframe analysis, traders generally use a ratio of 1:4 or 1:6, with a four- or six-hour chart serving as the longer timeframe and a one-hour chart serving as the lower timeframe.

Scalping methods generally use a time frame of 5 minutes to 15 minutes. For day traders usually use a period of 1 Hour to Daily. While swing trading strategy usually uses a daily to weekly timeframe.

Disclaimer : This blog's content is NOT intended to be securities brokerage, investment, tax, accounting, or legal advice, an offer to sell or buy, or an endorsement, recommendation, or sponsorship of any company, security, or fund.

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