How does forex trading work in Malaysia?

One of the main reasons that people are attracted to the forex markets is the inherent volatility. Those who partake in forex trading can trade the most liquid markets, with fiat currencies like the Malaysian ringgit traded against the value of others. Trillions of dollars' worth of transactions are made daily. Traders aim to buy low and sell high, with the ability to lock in a profit between the buy and sell price. It sounds good in theory, but forex trading also carries notablerisk. For every winning trader, there are multiple losing traders. The key to becoming a successful forex trader is the ability to control your emotions and maintain your discipline by sticking to your researched trading plan.

The dynamics of trading Malaysian ringgit forex pairs

More people in Malaysia are considering becoming retail investors to supplement their income. Investing and trading forex pairs, notably those involving the Malaysian ringgit, allows individuals to diversify their income for the long-term. Typically, the more attractive a nations economy is, the greater the value of the countrys fiat currency. The attractions can range from thriving industries to tax benefits.

One of the most influential factors to invest in the Malaysian ringgit against other key currencies like the US dollar is the nations palm oil industry. Its a case of supply and demand here. When demand outstrips supply, the ringgit becomes a more valuable currency. Drilling it down to its most simplistic terms, forex traders look to invest in a currency when a countrys economy is doing well.

Common forex trading strategies for beginners

The most popular forex trading approaches for newcomers to the forex markets include:

• Price Action using historical charts to pinpoint patterns and determine where the price will most next.

• Positional hold one or multiple positions for the long-term (weeks, months, even years).

• Scalping open and close multiple forex trades over a short timeframe to accumulate lots of small profits.

• Range Trading requires technical analysis to pinpoint areas of support and resistance.

How to place your first forex trade

Now that you have a basic handle on the dynamics that move the value of fiat currencies like the Malaysian ringgit, use this step-by-step guide to place your inaugural forex trade:

• Select the right currency pair

  Choose the currency pair you wish to trade. This means you will buy or sell one currency against another. The most popular forex pairs involving the Malaysian ringgit are MYR/USD (US dollar), MYR/CNY (Chinese Yuan), and MYR/AUD (Australian dollar).

• Consider the fundamental and technical analysis of your chosen currencies

  Once youve narrowed down your trade to two currencies, its important to assess the conditions of both currencies. Use technical analysis based on historical charts and data, as well as fundamental analysis using news and press releases to get the market sentiment.

• Understand the spread charged by your broker

  On-screen there will be two prices offered for each currency in a forex pair. The difference between the market price and the price offered by your broker is called the spread. Spread sizes will vary from broker to broker, but ideally, youll want minimal spreads to maximize value from your trades.

• Decide your trading position

  Once you understand the available prices, you just need to decide whether to take a buy (long) or sell (short) position on your chosen currency. This should be based on your earlier technical and fundamental analysis.

The forex markets are open 24 hours a day, Monday to Friday, so theres always an opportunity to trade during the week.