What is futures trading and can you trade with them in Malaysia

Futures Trading in Malaysia: Opportunities and Profitability

The basic premise of a futures contract is the agreement between buyers and sellers to buy or sell a contract on a specific date for a predetermined price in the future. Whoever buys cheap and sells high makes a gain while the other party loses money. If a trader has enough experience then futures trading can be a source of steady profits. But as in the case of other derivatives trading futures contracts also bear a high risk of losing money while speculating on its prices. In Malaysia, there are several players offering futures contracts, and since the trading activities are overseen by a local authority both trailers and investors are in a safe place. Let’s discuss if futures trading is worthwhile for Malaysisnas and if it can be a profitable career. 

Futures trading for beginners in Malaysia futures

Futures are traded on Bursa Malaysia which is the national stock exchange of the country. This is good news for Malaysia because having a local well-established exchange can be a great place to learn and trade futures markets. The exchange is a place for stock trading, ETFs, and futures trading. The main regulatory body overseeing the futures market is the Securities Commission Malaysia (SC) and it operates under the purview of the Malaysian Ministry of Finance. The SC regulates all aspects of Malaysian capital markets including futures trading, Forex trading, and brokers of both markets. The brokers operating in Malaysia have several responsibilities including minimum capital requirements, client asset segregation, and reporting obligations. Having a well-regulated futures market Malaysia outshines all other developing Asian markets and enables Malaysians to become successful traders in various markets. The Malaysian stock exchange is one of the safest places in the world to trade financial futures and other derivatives. The only thing remaining for beginners is to receive a quality education about these markets and their specifics. After which it will be possible to trade profitably and make a living from futures trading. 

Types of futures contracts in Malaysia

Several types of futures contracts can be traded in Malaysia enabling traders to cover a wide range of underlying assets if needed. Major futures contracts traded in Malaysia include:

  • Equity Index Futures: these are futures based on the performance of the stock market index, FTSE Bursa Malaysia KLCI Index Futures, which is based on the Kuala Lumpur Composite Index.
  • Commodity Futures: these futures are based on the price of commodities such as metals and energies. Since Malaysia is a major producer of palm oil its futures contracts are actively traded on Bursa Malaysia Derivatives.
  • Interest Rate Futures, currency futures, and single stock futures: these futures are based on corresponding underlying assets and are great tools in the hand of traders to speculate on a wide range of underlying assets. 

What makes futures different from stock trading or Forex is their expiry date and contract size. Trading futures is risky and requires extensive knowledge of both underlying assets and futures contract specifics. 

Futures trading profitability in Malaysia

Since there are local regulators and the futures market is well-established and robust in Malaysia the trading seems very attractive. Regulations and the local regulator are key to feel safe for Malaysian investors and traders and since there is a local exchange that has decades of history it is not only possible to trade safely but to find experienced traders and learn from them. This unique opportunity makes it possible to trade profitably from Malaysia with local instruments which can a tremendous advantage for local traders who can get all the important news quickly from local sources. The well-regulated nature of the futures market in Malaysia empowers transparency and investor confidence. The Securities Commission Malaysia (SC) ensures fair practices, investor protection, and market integrity. A strong regulatory framework instills trust in the market and attracts local and international institutional investors to participate in the vibrant futures trading ecosystem of Malaysia. Another reason why futures trading is profitable in Malaysia is the fast advancement of technology and trading platforms and electronic trading systems provide low latency access to markets from all over the world making trading very flexible and attractive. Accessing real-time data and being able to use advanced analyzing tools is yet another contributor to why futures trading is profitable in Malaysia. In the end, for futures trading Malaysia presents significant potential for profitability due to diverse futures contract offerings, robust economic growth, effective regulation, and technological advancements. As in any trading venture, futures trading too, will be profitable when enough effort and skill are used to gain knowledge and develop profitable trading strategies and modern technologies enable any average trader to access super powerful trading tools. 

FX futures contracts in Malaysia

Forex futures contracts are great ways for investors and traders to hedge against foreign exchange risks or speculate on currency movements. The futures of FX traded on Bursa Malaysia Derivatives are called the Ringgit-Dollar futures contacts. These futures are based on the exchange rate between the US dollar and the Malaysian Ringgit. They are quoted in ringgit per US dollar and each contract represents a notional amount of USD 100 000 (one standard lot). With this futures trading example Malaysia is one of the best places in Asia to trade FX futures and locals can do this in their native currency. It is much easier for traders to analyze their own country’s currency as they can receive all the information faster from various local news channels and act in time to catch the moves. FX futures are great instruments for investors and large companies to hedge currency risks and minimize potential losses due to currency rate fluctuations. Having the ability to hedge risks using a well-regulated asset is the best way for large companies to minimize losses and this also contributes to trading volumes enabling average day traders to make a living. 

Popular FX Futures in Malaysia

There are several futures trading on the Malaysian futures markets:

  • Ringgit-Dollar futures: futures contract based on the exchange rate between the Malaysian Ringgit (MYR) and the United States Dollar (USD). Ringgit-Dollar futures is the best way to hedge against exchange rates between the two currencies or to speculate on their price rate. 
  • Ringgit-Yen futures: MYR against the Japanese Yen (JPY) allows investors and traders to take positions on the MYRJPY exchange rate. 
  • Ringgit-Euro futures: perfect for hedging against Euro and MYR exchange rate or speculating on it. 
  • Ringgit-Singapore Dollar futures: This is probably the most interesting future for Malaysians as it allows them to speculate on the price rate of the MYR and SGD exchange rates. Singapore is a very developed Asian country and Malaysians can get news and important trends faster than other traders because of local news channels. 
  • Ringgit-Australian Dollar futures: Allows investors and traders to take positions on the MYR AUD exchange rate using this futures contract. 

With these FX futures trading Malaysia attracts thousands of traders and allows local and international traders and investors to have a successful trading career. Regulations together with well-established exchanges allow Malaysia to become one of the financial centers in Asia. 

FAQs on what is futures trading and can you trade with them in Malaysia

Is futures trading legal in Malaysia?

Futures trading is legal and regulated in Malaysia. To trade FX using futures contracts Malaysia can be a great place as local exchanges and local regulators are overseeing their activities. This regulatory oversight makes it a safe place to trade and invest in Malaysian futures which is a great advantage for this developing country. Several futures are offered on the official stock exchange that operates for decades in Kuala Lumpur and can be accessed by traders and investors for speculating and investing purposes. The existence of a legal framework with decades of experience makes it very attractive to trade various stocks and securities in Malaysia including futures and ETFs. 

Should you trade with futures in Malaysia?

Malaysia has had a local regulator and local stock exchange operating since the 1970s. This makes it one of the best-established places in Asia to trade on futures and stock markets. What’s more interesting is that the locals can trade their native currency pegged pairs and futures. So, to trade futures Malaysia is one of the best places and offers a very flexible and diverse range of securities and assets. When having enough experience and knowledge trading futures in Malaysia can become very profitable and can help local traders make a living on the financial markets. 

Can regular people trade futures in Malaysia?

Since the futures markets are very accessible due to modern technologies and advanced trading platforms with fast internet connections regular people can access futures markets in Malaysia. Since there are well-established financial markets locally regular people also can receive a quality education and put it into practice in a safe environment as the financial markets are well-regulated locally. Not only is it possible to access futures markets for regular people, but it also is one of the safest financial markets an average person can gain access to.

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