In short, if your broker is regulated by a major regulator around the world, you will be fine using this broker. Taking a short position is just like placing a bet that the exchange rate will decrease. Regulation means that standards and practices are strictly reviewed.
Is Forex Trading Legal & Are Malaysia Forex Brokers Regulated?
Though, Bank Negara proved it can handle it. Today, the Malaysian National Bank does handle over 50 different officially registered and quite popular Forex brokers in the country. The Bank is also in charge for all the complaints about or from traders, brokers and independent financial agencies that have any connection with financial trading market.
Bank Negara Malaysia was set up to provide certain financial services that would position the whole country to future growth with the purpose to turn into a really recognized developed country by the year Financial trading on the local currency in the Forex market was considered by this establishment to propel the nation to compete at the global markets.
Trading in Malaysia is not illegal. It is fully official and conducted with the national laws for financial activity. After its program for economy growth, Malaysia has provided the opportunity for Bank Negara to operate in this market, as well. Being a developing country, Malaysia aims to permit its residents to trade freely in the foreign currency market with official and convenient Forex accounts that should be, though, executed and at first opened only with licensed onshore banks or offshore banks as well as identified and approved International Islamic Banks.
It is curious that Malaysia does allow its residents to open a specific Forex account — joint account. The joint account lets several people to group and to trade with their money together. In forex trading, currencies are traded in pairs. As you sell one currency, you are buying another. The first currency in the currency pair is known as the base currency while the second currency is known as the quote currency.
In this example, the base currency is the Euro while the quote currency is the US Dollar. For more information read more in this article about on choosing which forex pairs to trade, and which to avoid.
A trader then speculates whether the quote prices will decrease or increase and trade the currency pairs based on what you believe would be profitable. As you get better at fundamental and technical analysis and become more familiar with your preferred currency pairs, finding profitable trades will become easier. Taking a short position is just like placing a bet that the exchange rate will decrease. But if the price moves in the opposite direction of your speculation, then you end up making a loss.
However, if a trader speculates that the exchange rate will rise, then they would buy the currency pair by placing a buy order or opening a long position. Forex trading does contain significant amounts of risk. In order to mitigate that risk, you really need to develop a good trading strategy and have a good understanding of risk management in forex trading. At this point, you can either open a demo account or invest an amount of money to get you started.
To get these accounts, sign up for a regular live account and your account manager will make it swap-free for you before you trade. If you are a Muslim considering retail forex trading, then be sure to review the many materials on the Internet and reach your own personal assessment before acting as your conscience guides you.
To protect yourself from fraud, it is highly recommended that you invest the time it takes to complete a detailed review before making your final decision. Safety and security should be uppermost on your priorities. Check credentials with authorities, verify that there truly is a local office to support your needs, and validate the quality of your short list with other traders in the area.
Be careful to avoid offshore firms. Pressing your legal rights in a foreign jurisdiction can be a nightmare waiting to happen. Choosing the best forex broker among the many available offers may be a difficult task, but with our help, we hope that you will find it easier.
We have prepared the above list of some of the most reputable and competent forex brokers in the market, and since you will lose nothing by taking a look, it is a good idea to check it out before you make a final decision about your forex broker!