Your forex broker is going to provide you with a platform from which you can buy and sell the currency pairs. The forex broker simply offers you a platform in which you are able to see the movements of the forex market and where you can also place your buy orders and sell orders.
Since you will be trading using the platform provided by your forex broker, it is always important to choose your forex broker wisely. Here are our most favorite of our brokers, and we have ensured that each of them is licensed according to the Money Changing Act of 1998.
Choosing a forex broker in Malaysia
The choice of a forex broker is the next step after making a decision to start forex trading. It is a crucial element and should be done carefully to ensure that you get a forex broker that offers the best services, and is legally registered to allow you to trade.
Here are some common and important questions that you should ask when choosing a forex broker:
- Is the forex broker a non-dealing desk or dealing desk broker? A dealing desk forex broker is one who interferes with your orders while on the other hand, the non-dealing desk broker offers you a direct access to the foreign exchange markets.The main difference between the two is that the dealing desk brokers tend to have fixed spreads while non-dealing desk brokers have variable spreads.
- What is the maximum leverage that the broker offers? Leverage is an additional amount of money that a broker offers you so that you are able to hold a larger order in the market. It is given in terms of a ratio like 50:1. It multiplies the amount of money that you are using to trade and thus also magnifies your losses and gains. It’s advisable that for retail traders with small amounts in their accounts, they should consider brokers with a larger maximum leverage. But if you have a large amount of money in your account, then you may consider a smaller leverage as it will also reduce your losses.
- How wide are the spreads? The spread is the difference between the ask price and the bid price. The bid price is the exchange rate at which your buy order will enter the market while the ask price is the exchange rate at which your sell order will enter the market. The size of the spread is critical depending on the method of trading that you want to use. For instance, large spreads are not good for short term trading like scalping.
- What type of accounts does the forex broker offer? The type of account you open determines the lot size. The less the amount of money you want to invest, the less the lot size you should consider using when trading and you should consider an account that offers small lot sizes. In most cases, the account types offered by brokers are micro, mini and standard accounts. The standard account is the ‘largest’ (allows the largest lot sizes).
- What is the minimum initial deposit that the broker allows? If you have a small amount money to invest, you may want o consider a broker that allows the lowest minimum initial deposit. However, the amount of initial deposit is in most cases affected by the type of acount that you open.
- Does the broker have a demo account? A demo account is very helpful especially for forex beginners as well as for the professionals for testing different trading strategies. Some demo accounts will be time limited, where after your demo period you will be encouraged to sign up for a funded account.
- Does the forex broker offer customer services? It is important that you choose a broker that offers customer service since you will be able to communicate your grievances if any, so that you can get the required help. The most important service to look for are means of communication like chats, messages, emails and calls. Note that some brokers will have 24 hour service either 5 or 7 days a week.
- Does the broker offer bonuses to first timers? A bonus to your initial capital would do a great deal in providing enough cash to trade especially for a beginner. Do not rely on bonuses however, because they are often come with fine print and are used as a mechanism to drive in new customers.