The currency market is one of the most active in the world, with a daily trading volume of more than MYR 20 trillion ($5.1 trillion). One of the primary reasons for the forex market’s rising appeal is that it has a low barrier to entry. All you need to get started with forex trading is a solid internet connection, a computer, and a trading platform.
The forex market, on the other hand, is volatile, and forex trading in Malaysia is fraught with danger. These are some examples:
Leverage is the practice of borrowing money from your broker in order to execute greater trades. In a 1:10 leverage scenario, this implies you can execute a deal of MYR 40,000 ($10,000) with only MYR 4,000 ($1,000). It is critical to recognize, however, that the use of leverage multiplies both earnings and losses. In bad market situations, you may potentially lose more than your initial amount.
A leverage of 1:10 indicates that you can obtain exposure to a transaction size or notional value that is ten times the margin necessary to fund the deal. Leverage is typically stated as a ratio such as 1:110, 1:50, or 1:100. The level of leverage allowed varies depending on the regulatory criteria in the country in which your forex broker is based.
Leverage increases your risk. It’s a two-edged sword.
Before you use any leverage, be sure you understand your risk profile.
Leverage can result in huge losses that surpass your initial investment under turbulent market circumstances, so use with caution and only risk what you can afford to lose. Furthermore, in forex trading, a little deposit known as the margin is required in order to access the supplied leverage. Minor price swings might result in margin calls, in which you must pay an extra margin.
Interest Rate Risk in Investing
Interest rates have a considerable impact on a country’s currency rate. For example, if a country’s interest rate rises, its currency is expected to gain due to increased investment. If, on the other side, interest rates fall, the currency falls as investors begin to withdraw their investments from the nation.
The impact of interest rates on exchange rates can generate significant fluctuations in currency values. This is why traders utilize techniques such as fundamental analysis to try to foresee such situations and avert massive losses.
This risk arises when there are mistakes in communication, handling, and confirmation. The most significant source of this risk is the time gap between the start and termination of a contract. Because the forex market is open 24 hours a day, the exchange rate might change before a deal is concluded. As a result, it’s better to go with a broker that offers quick or extremely rapid trade execution.
Benefits of Forex Trading in Malaysia
Forex trading is popular in emerging nations because it gives chances for arbitrage in the global market. What does it imply? It implies you may profit from currency fluctuations in the forex market.
Consider going to your local money changer and exchanging RM42,000 for the current rate of USD10,000. If the USD climbs in value the next day (1USD=RM4.3), you may convert the same USD10,000 to MYR43,000 and earn by RM1,000.
That is, in essence, the premise of forex trading.
Forex trading platforms do provide bonuses to its clients. What exactly are bonuses? Bonuses are cash supplied by a forex broker in a live account in order to advertise their platform.
Customers can possibly receive the following types of bonuses:
- No-deposit bonus cashback program
- Bonus for new customers
- Bonus for Loyalty Program
The welcome bonus is the most popular type of incentive offered by forex brokers. It is offered to first-time clients who sign up and does not require a deposit. You should be informed, however, that forex broker providers maintain the right to restrict this amount from withdrawal until you have utilized the platform. You may wonder why these firms are prepared to give money away for free.
To begin with, they intended to persuade users to sign up and trade on their platform. The forex sector is oversaturated, with a plethora of choices to pick from. As a result, in order to stand out, they must incentivize customers for joining up.
Second, the amount of money given out is generally of little value and is deducted from their marketing expenditures. Because forex trading advertisements are not permitted in Malaysia, welcome bonuses are one of the most efficient methods of marketing a forex trading platform.
Broker forex Malaysia, like FXTM for example, provides a $30 no-deposit welcome bonus to first-time users. To earn the bonus, you must first open a Live Trading Account with FXTM and make a minimum deposit of $150 within the following 30 days.
Foreign Exchange Liquidity
What exactly is liquidity? Assume you own an RM500,000 property in Shah Alam. You want to sell the house tomorrow for RM500,000 or less. However, there are no purchasers for the house, and you must wait several months before receiving calls from potential buyers. This signifies that the asset you hold (the Shah Alam house) is illiquid or has a low liquidity.
Stocks, cryptocurrencies, and FX trading are examples of high liquidity markets. This implies that there are always buyers and sellers in the market. Increased liquidity simply indicates that more transactions are taking place. For example, USD/GBP is one of the most liquid currency pairings in forex markets, and traders may profit from this.
You’ll always be able to sell it to someone, and you’ll always be able to purchase it from someone.
As a forex trader, you would not have to worry about the manner of sale or to whom you would sell. The only thing that matters is the cost. To profit from forex trading, you must first purchase the currency at a cheap price and then sell it at a higher price. There are several factors that can influence price movement and liquidity, including:
- Environment geopolitical
- Stability in politics
- Natural calamity
- The national interest rate
- Traders’ feelings
These are only a few examples, but there are numerous other factors that might influence currency movements. They help to maintain currency liquidity and keep the markets running.
What is the bare minimum for Forex trading in Malaysia?
The Internet era, as well as improvements in forex laws, have made forex trading available to the majority of Malaysians. Everyone in the country now has easy access to both domestic and international forex brokers. However, in order to begin trading, you will need a particular quantity of money. While there are other significant aspects to consider, the minimum amount to start trading is one that many people consider.
When you create a trading account, you will be required to make a minimum deposit. It should be noted that this is not the same as the amount of capital required to engage in the currency market. The minimum deposit amount varies each forex trading site, with some requiring a large initial payment and others requiring a smaller sum.
Keep in mind that certain brokers may provide you with a no deposit forex bonus to assist you in getting started. If you are a novice forex trader, you must first determine if you have the discretionary money to engage in the forex market. To determine if you have adequate cash to begin forex trading, you must first examine your market expectations. You should also consider the degree of danger you are willing to take. If you want to make rapid money but only have a small amount to invest and are naturally cautious, you will have a harder time succeeding in forex trading.
Given this, does it make a difference if you had MYR400 ($100) or MYR4000 ($1000)? It does, really. Most traders who invest MYR 400 ($100) have a lesser revenue stream, and others lack the patience to expand. Instead, they end up putting too much money at risk in order to achieve bigger returns, and they end up losing everything.
Nonetheless, you may start with MYR400 ($100) and progressively build up to substantial cash. This implies that you just need to risk $1 every transaction, which corresponds to one micro lot position. This pip fluctuation is worth 10 cents in a regular market environment. So, if you continue to trade in this manner, you will be able to earn around MYR8 ($2) every day.
Investing more than 1% of the MYR400 ($100) in an attempt to earn rapid gains may result in a zero account balance.
If you have adequate funds and a consistent monthly income, you can begin trading with as little as MYR4000 ($1000). In fact, several forex gurus advise beginning day trading with at least MYR12,000 ($3000). With this type of account and a risk of little more than 1% on each transaction, you may possibly earn roughly MYR 280 ($70) every day.