Forex Trading Malaysia: My Experience with 3 Forex Brokers
Let me just start this forex trading Malaysia guide by saying that yes, forex is legit, but many forex brokers are not. If you combine that with the haram factor (oh yes, forex trading is haram), then it’s not the most appealing of industries to enter.
But I’m getting ahead of myself. Let’s start from the beginning. We will cover terms like forex trading, leverage, and my experience with forex brokers.
The Forex Temptation
If you’re a finance nut like me, chances are you have been exposed to Forex broker advertisements. Maybe from Facebook, maybe from YouTube, definitely from Google.
I mean, you’ve ignored those forex broker ads, of course. You’re already used to it. It’s likely that your eyes sorta glaze over those ads, barely even registering it.
But once in a while, they catch your attention. And you, with your tight budget, starts to wonder, what if forex trading is the solution to my financial problems?
As someone who felt the exact same thing and kinda dabbled in it, let me give you the lowdown on forex trading, including my experience with a few forex brokers.
Forex trading Malaysia basics: What is Forex trading
Forex is short for Foreign exchange market, and trading is buying and selling, so forex trading is essentially the buying and selling of currencies. It’s the world’s largest liquid market, and literally any currency from a sound government can be traded against each other.
(Liquid means that the value is ready to be spent, to be transacted. RM1 million in cash is highly liquid, you can use portions of it for anything. RM1 million in property have to be sold in order to be spent, so it’s not considered liquid)
Financial institutions and individuals (aka retail investors) trade currencies in this market. Forex trading for beginners starts with learning the simple principle of supply and demand – if a lot of people are buying currency X, the price will go up. If a lot of people are selling currency Y, the price will go down. (It’s more complex that than but enough to know for now).
Forex exchange market hours are Monday-Friday. It is closed during weekends and public holidays.
Basics of buying and selling currencies
You have used the services of the currency exchange booth, either at the mall or bank, yes? They usually display their buy and sell price, for example:
- Sell 1 USD for MYR 4.25
- Buy 1 USD for MYR 4.05
They make money by charging you a fee for the service, as well as pocketing the margin, or the difference between buy and sell price.
How about you? Can YOU make money this way? Yes, IF you previously bought USD for a lower price and wait to sell it at a higher price. For example, if you bought 100 USD for MYR 3.50 each a month ago (let’s say), and sold it to the currency exchange booth for MYR 4.05 each, then you would have made 55 sen profit for each USD (before deducting fees).
What a simple way to make money, right! Theoretically, if you bought USD1000 at RM3.50 and sold at RM4.45, you would have made RM950, or 27% profit in less than a year.
But of course there’s a catch: wild currency fluctuations don’t happen very often. The forex chart above happened in 2015, and since then USD/MYR pair has been comparatively stable. In 2021, USD/MYR traded between the MYR 4.00-4.25 range.
In fact, this type of ‘trading’ is considered so safe, you can open foreign currency accounts in banks and hold many types of foreign currencies. Your deposits are even protected by PIDM.
(Alternatively, you can also keep the money as physical cash. Or if you’re crypto-savvy, you can keep a type of cryptocurrency called stablecoins. Up to you).
Forex brokers and forex leverage
Now, the above example is NOT the high-risk, high reward forex trading you’re thinking of. Some of you may even think – USD 1000 capital and only RM950 profit in a good year? That’s not good enough for me! How about the people who profited thousands within days? I want to know *that* type of forex trading.
That’s where forex brokers which offer forex leverage come in. You no longer care whether the currency will rise or fall, because you can profit from both circumstances.
Forex brokers essentially make money by charging you fees to enter trades. Most, if not all brokers offer a service related to technical analysis, whether webinars, seminars, classes, or their own forex chart software, helping you spot patterns and trends.
There are countless forex brokers out there, and aside from the technical analysis service, one of the main features people look for is how much forex leverage they offer. For example, let’s say you have USD100 in capital:
- If they offer 1:10, that means you can trade USD 1000 worth
- If they offer 1:100, that means you can trade USD 10000 worth
This is what makes it high risk, high return. If you have winning trades, you can 10, 100x your profits. But the reverse is also true – and that’s the dangerous part.
Technical Analysis and Reading Forex chart
So I mentioned patterns and trends. I won’t go too much into details right now, that’s literally whole books and courses. Basically, there are forex chart indicators that a trader can use to predict whether the market will go up or down, and by how much. From the information, they will ‘long’ or ‘short’ the market.
This sounds simple in theory, but because the market is so wildly unpredictable, and indicators can be read wrongly, many inexperienced traders will lose money. Technical analysis is not an easy skill to learn.
The problem: many forex brokers make it sound easy
So if you ask me, can you make money from forex trading in Malaysia, I will say yes, it is, but you have to be super careful where you learn forex trading from, because forex brokers will usually try to make technical analysis sound super simple. This ad says you can learn in 4 days (??!! many people take months/years to learn! And they have probably lost a lot of money as ‘tuition fee’ in the process!)
As mentioned, Forex brokers charge you fees to enter a trade, so basically they don’t care if you make a profit or a loss – they will make money either way. It is in their best interest to encourage you to enter as many trades as possible in the shortest time frame.
It’s not uncommon for inexperienced traders – people who were misled into thinking technical analysis is easy – to wipe out their whole account in a single trade. On top of that, they may even owe debt!
There’s no hard data (that I can find), but this article says that 95% of traders lose money in Forex. In the comments, someone said that he is still losing money despite being 3 years in!
Not all forex brokers are unethical… but many are
To be fair, some forex brokers are more honest than others. They have the reputation for offering good customer service, transferring your earnings quickly, and have easy-to-use trading platforms.
Some forex brokers use the ‘Free to start. Free to try. Free bonus money.’ approach. Understandable, a lot of companies use this tactic too.
Others are a bit more… unethical. I’ve seen forex brokers that do advertisements that appeal solely to your emotional, desperate side. ‘Get $XXXXX of cash in a few days!’-types. If you are financially tight, this would be very dangerous. Emotions make a shit trader.
Other forex brokers hire forex influencers who imply forex trading is an easy way to get rich. You know the trope: posing in front of big houses and cars, bling outfits, bling watch. This is not bad, per se – but they conveniently ignore people who lose all their money while trying to copy them.
Let me share my own experience with 3 forex brokers. You’ll see what I mean by unethical.
Forex broker #1 – That time I unknowingly worked in a forex company
In my early twenties, I applied for a lot of jobs in KL and was selected for what I thought was an executive-something position. This company has (had?) a really fancy office with KLCC view. Their office space took a whole floor in a shiny office tower, the fixtures were swanky, and the staff looked professional.
I was told that before they can sign me on, I have to undergo a week-long training. Monday came, I was really excited, although I didn’t really know what the job really entailed. I was a Shah Alam kid and this was a job in KL – whatever it was, I was eager to learn.
I was put in a small group of about 4 people to train together, and mentored by an elder woman who asked us to call her Madam. From the start, she was really nice, and encouraged us to bond.
I didn’t realise this at the time, but the ‘training’ was actually a crash course in technical analysis. She printed out forex charts, showed us how to spot indicators, and asked us to practice calculating potential profits from the example trades.
Right off the bat, we were making hypothetical thousands of ringgits in just a few hours. She showered us with praises when we correctly spotted trends, and her manager told me that she foresee me doing really well, at the rate that I’m learning.
By mid Day 2, I thought that the job was to manage funds for other people. The thought didn’t scare me. I was high from all the praises – I even thought I was naturally talented at it!
By Day 3, Madam told me that I have a lot of potential and should continue to work there, but she said, and here I quote, ‘it would be really hard for people to view you as respectable fund manager if you are not managing an account‘.
How do I get an account, I asked.
We fund our own accounts, she said.
Madam told me she managed her husband’s account, and how it turned out to be more profitable than they thought and their retirement is all but guaranteed. ‘You should get your family members to join,’ she said, ‘so your family will be richer, instead of random people’.
She pointed to the large screen which showed a bunch of live currency forex charts. ‘I get all the support system for trading here, we colleagues help each other so our accounts get bigger’.
She pointed to some staff members and told me the accounts they managed. That staff also manages her family account. That one over there manages two accounts for friends and family.
All it takes to open an account, she said, is RM500,000.
I’m ashamed to admit that I was so brainwashed with the idea that I asked my dad if he could open an account. I might have freaked him out. He said no real fast.
When I told that to Madam, she said that she was disappointed with my father’s ‘lost opportunity’. She then suggested that I should find some family friends to ‘pool together the RM500,000.’
By this time the alarm bells rang. The next day, I didn’t even bother turning up.
I don’t know if the company was a scam. The paperwork, the establishment screamed legit.
I think that this is just the way this company, which is actually a forex broker, recruited clients. Other forex brokers use ads. They used the job vacancy section. They turned their employees into clients.
That was a bullet dodged. Thank goodness we didn’t have RM500,000 lying around, like normal people.
Forex broker #2 – Get customers from Webinars and Seminars
On another occasion, I enlisted myself in a 12-week technical analysis forex trading webinar. The quality of the material was good but not great, and they kept dangling the ‘pro classes’ where they promised to teach me how to make money while I traded live.
Did you get that? The classes were a customer recruitment method for a forex broker, after all! After the webinar ended, the staff followed up via email and phone calls relentlessly, for months in an effort to sign me up.
That wasn’t the only one. I also went to a free ‘learn ways to make extra income’ seminar advertised in The Star. Their ‘special method’ for forex trading uses Chinese astrology, I kid you not. I can’t imagine how they even use dragons and sheep in technical analysis!
(They also pushed for the audience to buy the full coaching course, which carried a 4-5 figure price tag (credit card payment is available of course).
Forex broker #3 – Online Forex Copy Trading broker
Yes, I got sucked in forex copy trading as well. Basically what happened what I funded my account with cryptocurrency, and ‘copied’ the trades performed by high-performing traders.
Needless to say, I lost all my money there. I say this from experience – don’t believe forex copy trading’s ‘easy way to make money’ promises. It’s not as easy as they make it sound.
Forex trading Malaysia: What you NEED to remember
I shared these stories not to scare you, but to remind you that the financial instruments may be legit, but many parties out there will want to exploit your desire to make money.
After all of these learning experiences, I became more selective with my investment opportunities. I also developed extra sensitivity to the psychology of limited-time offers. The moment some coach is like, ‘IS FEAR HOLDING YOU BACK FROM RICHES’, I’m like, STFU YES SO WHAT.
I’m happy being a slow investor. I like to have time to research, and have a healthy sense of fear. Perhaps it’s not making me fast money, but I’m not losing money either.
Remember, No 1 Rule of making money: Don’t Lose Money. I think it’s fine to lose *some* money – it’s inevitable in the learning process, and even the best investors/traders lose money at least some of the time. But definitely learn to limit your losses. If you wan’t to dabble with forex out of curiosity (like I did), only use play money, not rent money.
Do you have any experience with forex trading? Was it positive or negative? Share in the comments section so all of us to learn.
Your job offering experience is so interesting! How did the bell rings if you actually still thinks they are legit?
I play a bit of forex thru banks forex accounts – the fees are not low compare to the countless financial services outside but at least am sure it’s legit and am backing on mid-short term (3-6 months) movement instead of daily trades or what not.
You know that nagging feeling on the back of your mind screaming ‘danger! danger! danger!’?
That’s how I knew. Instinct ftw!
Do you have any sources for TA class?
Investopedia has a pretty good section TA – see http://www.investopedia.com/university/technical/
If you want actual classes, many available in Malaysia are done as part of a trading platform’s customer acquisition strategy. They’re not bad but you do have to check a few things, like how much they require to open account with them (RM1k? RM500k?), the type of trading (currencies, futures, etc).
You can also take webinars on coursera and similar if that’s more your style.
search moshed.com or guru at fb such “bbma oma ally”,”fmcbr” or malaysian trader community.
woah, didn’t know moshed.com exists. Looks like a great source for trading for Malaysians. Thanks for the heads up!
Yes, many newbies now love to trade forex, but most of them thinking fast money, but ended up with loss all their hard earned money. It is not easy to make money with forex and the statistic still the same, only 5% happily earned money from forex trading. The person that offering classes but need you to open an account under his/her link, they not typically make money from forex trading, but they got money from your entry lot (broker commissions). If you still want forex to be your passive income, you may start to Google Copy Trade or PAMM investment.
I’ve never heard of PAMM investment before, how interesting. Thanks for sharing Nasrul!
Thanks for sharing. Really guide for noob like me. Currently I’m learning about stock investment, just started a month. But my friend ask me about forex, I know a little bit but not detailed to explain.
So basically, forex analysis same as stock analysis, technical analysis, but is it the analysis is same?
1 question that make me doubt, how about the syariah status? From what I know, forex trading not syariah compliant but I see many people still trade forex. And many people know forex than stock trading.
Sorry if too many question. Just asking for your opinion. 🙂
Yes, you can say that the technical analysis is similar for other types of investments like stock, except that forex technical analysis is way more short-term focused than stocks.
On syariah, I’ve seen a few forex platforms that say they are syariah compliant. Never used them though, and not the best person to answer this.
Hye Suraya, thanks for the reply.
I have been reading some article about the syariah compliant. Based on my understanding, individual forex trading (specifically) still syariah compliant but still have many rules to follow. So for me, rather than hassle about the syariah, better I learn about invest in a stock. Still, have an issue on syariah but small than forex trading.
If the technical analysis is similar, so its good for a forex trader tries to invest in a stock if don’t want to much hassle about syariah like me.
I am just curious.
Do you trade ?
Hi Leo Choo,
Yes, but only with test money, not real money. I also tried copy-trading with bad results.
Every system comes with a 50/50 probability. This is a well-known remark in algorithmic backtesting circumstances. With that being said, a lot of charlatans took this as an opportunity to pull in some side money via teachings. Ever wondered why your system had its lost/win moments (That eureka moment where you thought you’d actually made it). That is a form of illusion and many chose to believe that their system works. In actual fact, it isn’t. It just had a slight probability of 50-50 to which you may hit the jackpot sometimes. Just like Toto or any form of lottery, in actual fact, it’s a probability game.
My form of advice to you and to anyone who is reading this, any system you found online or in any webinars/seminars, be EXTREMELY cautious and wary. If it works, why would the broker still advertise it heavily via partnerships? Wouldn’t it be a losing game for the broker since most of the brokers chose to hedge against your trades 90% of the time? And, for the charlatans, who are actively selling courses and teachings via programmes, do you actually think a professional/profitable trader would spend time in teaching? I’ve known a handful of Simex and Wallstreet traders who rack in an approx 6 – 7 figures per annum across their entire portfolio and would not even care to teach because of the risk they’ll have to undertake as their reputation are hang down the line. Alongside with reputation, the profits from teaching would not sustain their lifestyle unless a “Community” were build to make their lifestyle sustainable.
Hence, you’ll see tons of charlatans creating FB groups, Telegram groups or whatsoever to get you into the game by trading. Why? The more you train, the more they earn based on the commissions and affiliates you signed up with. The bigger the community, the richer they are. Sheep are slaughtered for years in this industry due to the lack of transparency. If you really want to succeed, there is no way out in FX. You may perhaps give it a try in stock trading as it’s all about the fundamentals of the company, unlike FX where it’s manipulated at will by the Institution’s order (having side interest by the broker kills your opportunity to earn as well). Good luck, and find some truth before believing in whatever “holy grails” you found online.
Thanks for your insightful comment! Question about the 50/50 part though – isn’t it more of 33/33/33? The market can go up, down or sideways. Therefore one has more probability to ‘lose’ as a sideways trade also costs money in fees!
There’s a term called “Trending market”. Hence, most charlatans will teach you to follow the trend by default. By following it and with the system churning out at least 50% of odds in your favor, it’s a heavy bias probability game till you lose every single penny in your wallet. Brokers had a statistic, it’s known to be 95% of the traders who faced a series amount of losses for years (3 – 5 years) and only the 5% elite traders survive with a measly profitable portfolio. Plus, a broker would not play this game of probability with retailers if retailers were always winning. They just knew retailers are a bunch of new suckers, hence, slaughtering them in the process with time because statistics never lied. Nonetheless, charlatans are having a good time “teaching”, “selling”, and “earning” your commissions.
Thanks Jack for the comment. Are you in the game?
Been in the trading business (Banking Industry – Sell side) for 8 years. Now, trading stocks with HLB – Bursa.
Do we have to declare our earnings once withdrawn? How about taxes consequences? Like you, I’m also a slow investor and somehow got my forex account making some money over the years but I don’t yet ever use the earnings.
In Malaysia, profit made from trading is taxable, yes. However many forex exchanges are technically illegal (or flagged in Investor Alert List). Better to get an accountant to give proper advice
Yeap, been trading for 7 years. totally agree on your points. I strongly suggest everyone to do research on the broker before signing up. Look up their fb page etc to see user comments. Red flags will be unable to withdraw profit. Long delay/hastle to withdraw.
Another thing I recommend to check is, compare charts with other brokers or sites (tradingview). Sometimes, broker A may show a different price movement compared to broker B. ( Manipulation/stop loss hunting ).
For the beginners who are still at the learning stage, know this first, dont ever think what your learning will work out like you wish it do. Always think in probability. The only way to make money here is by having risk management. Treat this as get rich slow scheme. Keep that in mind.
Lastly, whatever profits you made, try to withdraw it out as much as you can. Reason being, you may never know when this brokers may close shop. No matter how small the profit is, just cash out.
Thanks for your comment Fox, great advice!