How to start Forex trading in Malaysia as a beginner

How to start Forex trading in Malaysia as a beginner

The popularity of financial trading has increased in Malaysia over the years due to various factors such as the country’s growing economy, the availability of online trading platforms, and the government’s effort to promote investment in the capital market. 

The main regulator for Forex trading in Malaysia is the Securities Commission Malaysia (SC). The regulator is responsible for overseeing the country’s capital markets and ensuring that market participants comply with the relevant regulations. 

Currency trading is becoming increasingly popular in the country as trading Forex comes with many advantages over other asset classes, including: high liquidity, 24-hour trading 5 days a week, leverage, low transaction costs, and accessibility. However, most forex traders lose money due to lack of education, lack of discipline, lack of risk management, overtrading, and emotional trading. Forex trading in MY for beginners can be a challenging journey. In this guide we’ll discuss key steps that you need to take to start trading as a beginner trader.

Learn the terminology

The very first step to start FX trading in Malaysia, is to learn the language of traders. Learning terminology is essential for anyone interested in financial trading. Here are some reasons why it’s crucial to learn trading terminology in Forex: 

  • Understanding trading concepts: FX trading terminology is the language used by currency traders to communicate and understand various trading concepts, principles, and techniques. Knowing the terminology is critical to understanding how the financial market works and the factors that affect currency prices. 
  • Communication with fellow traders: learning trading terminology in Forex allows you to effectively communicate with other traders, brokers, and market participants. Using correct terminology enables traders to express their ideas and understand the opinions of others efficiently. Experienced traders often help beginner Forex traders Malaysia to advance their skills.
  • Access market information: Currency trading involves analyzing market information, including charts, economic and political news. Understanding trading terminology helps interpret this information better. 

Learn how to manage risks

Proper risk management is critical for successful trading. Most beginner traders lose money because they open oversized positions and trade without risk management. As a beginner Forex trading Malaysia, here are some reasons why risk management is important in financial trading:

  • Proper risk management helps minimize losses. Currency trading is risky, and losses can occur at any time. Effective risk management rules can help minimize losses by setting up stop loss levels using proper position sizing and leverage.
  • Keeps preserve trading capital. Capital preservation is critical in trading. As a beginner you should know that most novice traders lose money. And if you use good risk management, you will gain trading experience and keep the trading capital at the same time. 
  • Enhances profitability. Traders that focus on risk management look for quality trades and minimize losses while maintaining stability and profitability.
  • Proper risk management reduces emotional decision making: Emotions can cloud your judgment and lead to making poor trading decisions. Effective risk management strategies help traders control emotions by setting up predetermined levels for risk, rewards, and position sizing. For instance, when you are only risking 1% of your entire trading capital you have less to worry about the market going against your prediction as opposed to when you are risking 10%. And good trading should not be based on human emotions. Trading process should be easy and effortless. The bulk of work should be done during the preparation phase. Successful traders plan their trades and trade their plans. 
  • Risk management improves long-term success. Effective trading strategies can lead to long term trading success. Traders who implement proper risk management have small drawdowns and increase their trading accounts gradually. Which is best valued by investors. In investing risks and rewards are positively correlated, this means that when risks are increased, potential rewards are also increased. Most investors are looking for traders that can manage drawdown periods well. 

Learn about trading instruments 

Learning about the assets you wish to trade is crucial for any trader, regardless of their level of experience. Here are some reasons why learning about assets you wish to trade is essential:

  • Understanding market conditions for each asset class is essential because each currency pair moves differently. For example, strategies and ideas that can be applied to EUR/USD pairs will likely fail on GBP/EUR and vice versa. When learning about trading instruments, traders need to take into account the asset’s liquidity, correlation to other instruments and factors that impact its valuation.
  • Helps develop better trading strategies. Different instruments have unique characteristics, and traders need to understand these characteristics to create effective trading strategies that suit their trading style and risk tolerance. 
  • Helps manage risks better. As already mentioned, each asset has unique characteristics, that includes volatility. Taking into account volatility is crucial for risk management. 

Choose a broker carefully

When you start trading Forex Malaysia choosing the right Forex broker is crucial for your success. It’s important to pick a regulated broker. As already mentioned, in Malaysia the Securities Commission Malaysia oversees the financial markets. However, you can also pick globally regulated brokers. Here are some key factors to consider when selecting a Forex broker:

  • Make sure your broker is regulated and authorized by reputable financial institutions.
  • Choose the broker that offers a reliable, and easy to use trading platform. The most popular Forex trading platforms are MetaTrader 4, MetaTrader 5, TradingView, and cTrader.
  • Look for a broker that offers competitive trading fees. Be noted that some brokers include trading fees in spreads while others charge commissions per traded lot. In addition, there are inactivity fees, and fees on deposits and withdrawals. 
  • Make sure your broker offers live customer support. Professional customer service can save a lot of time, energy and money. 
  • Consider a broker that can offer a wide variety of educational material and tools for research and market analysis, such as seminars, webinars, e-books, economic calendar, etc.
  • Make sure your broker offers the trading instrument classes you aim to trade. Ideally, as a beginner you want a multi-asset broker to test different markets and see which asset class suits you best before making an investment.

Practice on demo account

Demo trading is also known as paper trading and involves trading financial instruments using simulated accounts. When trading demo, traders use live market charts and fake money. Here are some benefits of demo trading, especially for beginners:

  • Demo trading helps traders practice without taking financial risks. Demo accounts allow traders to test trading strategies, understand market conditions, and get familiar with trading platforms without worrying about losing money.
  • Helps evaluate brokers: demo trading enables traders to learn more about brokers and their policies. In addition, traders get information about available trading instruments and trading fees. 
  • Demo accounts help analyze market data. Demo charts in Forex trading are free for traders. 
  • Demo trading is helpful not only for beginners but also for experienced traders. No matter how great a trading strategy is. Every strategy experiences drawdowns. During drawdown periods professional traders reduce trading size, frequency or start demo trading until their strategy becomes profitable again. Having and believing that your strategy is profitable is critical for success as it increases confidence. And without confidence, traders will be afraid of making trading decisions even when the best trading opportunities present themselves. Losing orders can damage a trader’s confidence in a trading strategy. 

On the downside, demo trading is not a great way to prepare psychologically for trading, because real money is not at risk. Traders can experience human emotions such as greed, fear of making a trade, revenge trading, and over excitement when using live trading accounts.  

Learn about technical and fundamental analysis

In order to trade Forex in Malaysia successfully, you need to find the strategy for market analysis. Technical and fundamental analysis are two essential methods used to predict market moves in currency trading. Some traders solely trade based on fundamentals, while others only follow technical analysis. In addition, there are traders that use both methods simultaneously. 

Technical analysis: technical analysis is a method that involves analyzing historical prices and volume data to find trends and patterns that can help predict future market moves. In technical analysis traders use support and resistance levels, various indicators, chart and candlestick patterns and psychological levels. The main drawback of this method is that it doesn’t take into account economic and political events such as elections, inflation and interest rates. For this very reason, purely technical traders avoid placing orders during and prior to major economic announcements. 

Fundamental analysis: fundamental analysis involves analyzing economic and political events, such as interest rates, inflation, geopolitical events, and central bank policies. Typically, major announcements in the Forex market are followed by unpredictable market movements short term. Which is why there are news traders and fundamental traders than swing trade or position trade. 

There are traders that use one method highly profitably and completely fail using another. As a beginner, it’s best to try different trading strategies and methods of market analysis to see what works best for you. 

Have a trading journal 

Having a trading journal is critical for any Forex trader that wants to improve their trading skills and performance. Here are some of the main benefits of keeping a journal:

  • Helps track your progress: A trading journal helps track your progress over time. By recording details of each trade, including entry and exit points, profits or losses, and relevant information, currency traders can evaluate their performance and find areas that require improvement.
  • Makes it possible to identify patterns: A trading journal is very useful for identifying patterns in trading behavior. By analyzing past trades, traders can find errors in their decision-making such as overtading, emotional biases, or any other factors that may be having an impact on results.
  • Is essential in evaluating trading strategies: trading strategies are built for particular trading instruments in given market conditions. There are no universal strategies that work for all markets, all the time. And market conditions are subject to change. Having a trading journal helps traders evaluate their trading strategies, find flaws in them and improve weaknesses.
  • Trading journals improves accountability and risk management. When a trader knows that he will be saving the trade information in his journal at the end of the trading session, his decision-making is improved. 

Most professional traders use trading journals in their trading. A well put together trading journal should include technical details on each trade such as entry and exit price, profit, loss, etc. In addition, traders need to include reasons for entering the market, reasons for exiting and their state. For instance, if a trader feels tired and still decides to trade, this should be commented on in a trading journal, as well as information about other human emotions, such as desire to revenge trade, feeling greedy, etc. 

Create and test trading strategies

Creating and testing trading strategies is an essential part of successful forex trading. Here are some of the steps that will help you along the way:

  • Get clear about your goals in trading. Your trading strategy should be the reflection of your trading goals. If your goal is to remain in the business for a long time, our trading strategy should be aiming to provide you with low drawdowns and steady account growth. Some traders wish to double their accounts within a week and apply risky strategies to achieve this goal, which often results in wiped out accounts.  
  • Backtest your strategy. Trading platforms have various backtesting tools that will enable you to compare your trading strategy to historical data. It should be mentioned that it’s best to take as recent data as possible for the comparison as market conditions often change and what has been relevant 2 years ago in the markets might not be relevant today. 
  • Evaluate the testing results. After backtesting your strategy, check your risks and rewards and search for strengths and weaknesses into your system. Try to improve weak points. 
  • Implement the strategy: once your strategy shows profitability in backtesting, you can move towards demo testing or trade live. However, make sure to always manage your risks and avoid opening oversized orders. 
  • And lastly, you should monitor your performance. Trading journal will be highly useful for this purpose. 

Prepare mentally and financially

Preparation is key to success in life and in Forex trading as well. Preparation both mentally and financially is critical before starting Forex trading Malaysia for various reasons, including:

  • Prepare mentally: Forex trading can be emotionally draining. Therefore, it’s important to prepare accordingly. Trading process should not be difficult when you have a trading system and rules in place. Traders that try to guess and gamble with their money pay the price both emotionally and financially. 
  • Prepare financially: Forex trading involves a high level of risks, especially because it is a leveraged product. With leverage traders can increase their purchasing power multiple times, as a result, even one mistake can become costly. 
  • Traders should not be dependent on income from trading. The goal should always be to trade the right way and not to make the most amount of money possible. When traders have to trade to pay the bills, they tend to overtrade and open losing orders. 

Beginner traders lose money trading financial markets because they do not know how to trade. Professional traders lose money because they fail to manage their emotions. For example, we all know that the best way to health is exercise, sleep and healthy eating, however, not everyone has the discipline to follow rules. Similarly in trading, mental toughness and discipline is essential for profitability. 

Key takeaways

The main regulator for Forex trading in Malaysia is the Securities Commission Malaysia (SC). However, traders can also open accounts with internationally regulated brokers. Learning how to trade profitably with consistency takes time and traders need to take a couple of steps. It’s important to learn trading terminology, risk management, details about different trading instruments, pick the best broker, practice on demo account, learn different methods of market analysis, create a trading plan and trading journal. In addition, traders need to prepare mentally and financially before committing significant funds into trading. 

FAQs on How to start Forex trading in Malaysia as a beginner

How to start Forex trading in Malaysia?

Malaysia Forex trading for beginners can be a challenging journey. Traders need to choose a reputable broker, learn terminology, risk management, technical and fundamental analysis, and practice on demo accounts. 

What are the best Forex tips for beginners in Malaysia?

In order to successfully start trading Forex as a beginner Malaysia, traders need to spend most time learning the basics. And avoid funding their accounts until they become profitable when trading demo. Currency trading is highly competitive and inexperienced traders can easily lose money. Therefore, beginners should never risk more money than they can afford to lose. 

Where to start trading Forex in Malaysia as a beginner?

In order to begin trading Forex in Malaysia, traders first need to select a reputable broker. It’s critical to make sure that your broker is regulated and offers extensive educational material, such as webinars, seminars and glossary. In addition, traders can gain insight into how markets work by researching online.

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