The Securities Commission of Malaysia (SCM), regulates local Malaysian businesses involved with securities and capital markets including Forex brokers regulated in Malaysia.
While there is an advantage to your broker being regulated by the SCM, it is not the only factor that should be considered – and since Malaysian residents are not legally required to trade with Malaysia regulated brokers, the choice is more open.
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This is our list of leading Forex brokers offering services in Malaysia, who value regulated brokers with competitive trading conditions and the best education material.
The Securities Commission of Malaysia (SCM), regulates local Malaysian businesses involved with securities and capital markets including Forex brokers regulated in Malaysia.
While there is an advantage to your broker being regulated by the SCM, it is not the only factor that should be considered – and since Malaysian residents are not legally required to trade with Malaysia regulated brokers, the choice is more open.
Read more
This is our list of leading Forex brokers offering services in Malaysia, who value regulated brokers with competitive trading conditions and the best education material.
FXTM is an award-winning ECN/STP broker popular with beginner traders and experienced traders alike. Its popularity is due to the very wide range of accounts types, from instant execution accounts with very low minimum deposits to ultra-low spread ECN accounts - MT4 is supported across all account types and MT5 is available on the ECN accounts. An Islamic option is available for all account types but only on the MT4 platform.
With recognition from the FCA and CySec, excellent training material, and 24/7 customer support, FXTM is a great broker for all traders.
Tickmill offers very low spreads and commission, a 30 USD welcome bonus for all new traders, fast market execution on the MT4 platform and has an excellent reputation in the industry.
All accounts can be converted to Islamic accounts and all clients have access to free AutoChartist and Copy Trading (via Myfxbook) - great tools for traders of all experience levels. A regular winner of trade execution and trading conditions awards, Tickmill has the reputation, and the performance, traders should look for in a broker.
OctaFX is a client-focused, international broker with a loyal following of Malaysian traders. The website is fully translated into Bahasa Melayu and OctaFX are always running competitions and promotions for Malaysian clients; these include a 50% first deposit bonus, demo trading contests with cash prizes and frequent lottery giveaways (prizes include scooters, laptops and other gadgets).
An Islamic option is available for all account types and new traders will like the excellent analytical section and range of useful trading tools such as AutoChartist, copy trading and an account monitoring service that lets beginners learn anonymously from successful traders. Trader education for beginners is well-presented and platform support is almost unbeatable, with MT4, MT5 and cTrader all offered.
eToro pioneered social trading in 2012 and has been widely recognised for making the social trading experience as smooth and engaging as possible. eToro has since grown to become one of the largest Forex brokers in the world, and its success has made it clear that many traders view an active and helpful community as an essential part of their trading strategy.
eToro's trading model is quite different from most other brokers and may take some time to get accustomed to, but if you are looking for a fun and simple social trading experience, then eToro is the best.
Good value, beginner-friendly and hugely respected all over the world, AvaTrade is one of the most reputable brokers in the industry. With support for the leading trading platforms, great trading conditions on Islamic accounts and top-quality multilingual support, AvaTrade has built a brand on a solid reputation and continues to please its many new and existing customers.
AvaTrade offers trading in Forex, commodities, cryptocurrencies, exchange-traded funds, options, bonds, and equities and is a good choice for any type of forex trader ranging from beginners to scalpers and intraday traders to long-term traders.
HotForex is an award-winning, global broker and has a reputation for client satisfaction.
Trading conditions are varied across four account types, but spreads are generally tight (and are often zero pips on the market execution account). All accounts are also available as Islamic accounts, and HotForex also offers copy-trading and managed accounts. All clients have a dedicated account manager, and deposits and withdrawals are free no matter the funding method.
HotForex has managed to attract a broad-based global clientele by offering multiple language capabilities and has a dedicated Malaysian team.
XM Group (XM) is a full dealing desk broker which offers floating spreads and suits all kinds of traders. XM offers swap-free Islamic accounts as well as a variety of other account types to suit traders. It is a perfect broker for scalpers, intraday traders as well as long-term traders because of the tight spreads, fast execution times and good analysis software. XM has a low minimum deposit making this broker accessible for traders just starting out.
Markets.com is a large, global broker with high security standards and an excellent reputation. It has a good selection of platforms to choose from, including its own well-designed and feature-rich trading platform, and spreads are in line with brokers of similar stature. Other benefits are the huge range of tradeable instruments, a wide selection of different account base currencies and excellent trading tools.
Based on their security measures, segregated trading accounts, and negative balance protection, the security of client funds is clearly a priority.
Founded in 2001, easyMarkets has always innovated, introducing tools like negative balance protection and guaranteed stop-loss before anyone else. This innovation has continued with its unique easyTrade, Freeze Rate and dealCancellation tools, all intended to assist new traders and keep trading transparent and simple.
easyMarkets still provides the strong basic services expected from a broker while constantly innovating to meet the greater expectations of the client base. With simple account types, a strong variety of platforms to support traders, and a 50% deposit bonus for new traders, easyMarkets is easy to recommend to Malaysian clients.
GKFX is a new and popular broker on the Asian market, winning many of the most industry's most respected awards - the first coming only a year after their launch in 2012. It offers massive leverage of up to 1:1000, no minimum deposits for new traders, Islamic versions on all accounts and a strong focus on integrity and quality service for its clients.
A number of useful tools are also available, including AutoChartist and Trading Central - alongside ZuluTrade and Autotrade for those who prefer social trading - and the MT4 platform is fully supported, with hedging and scalping allowed.
A very popular broker all across Asia, FBS offers tight spreads and leverage of 3000:1 on three accounts, including the 5 USD Micro Account. At any given time, FBS will be running at least 10 bonuses and contests and deposits and withdrawals are instant and free via local Malaysian banks like Maybank and CIMB.
Other accounts are equally impressive - with negative spreads on the ECN account - and support for both versions of MetaTrader is offered. Education and market analysis are both excellent and 24/7 customer service is great for beginners. All accounts are available in an Islamic version, except for the ECN account.
HYCM's parent company has been involved in asset trading for over 40 years and its various subsidiaries are regulated by the FCA, CySec and the DFIC. A market-maker broker, HYCM still offers attractive trading conditions, with a market-execution account for those who prefer commission over wider spreads. Support for both MT4 and MT5 is offered alongside a comprehensive market education suite that will be beneficial for all traders.
Founded in 2010, Pepperstone is an Australian ECN broker known for tight spreads, fast trade execution and broad trading platform support. As our highest rated pure ECN broker, if you want to pay a small commission for tighter spreads, you won't find much better than Pepperstone.
Pepperstone's award-winning 24-hour support provides the foundation for its excellent customer service, where personalised assistance is available via a number of methods. It won the fastest-growing company award (2014) in Australia, from BRW Magazine and in the same year, emerged as the winner of the Governor of Victoria Export Awards cementing its reputation as a serious contender in the industry.
XTB is one of our highest rated brokers, and for good reason; super-low spreads, 1:500 leverage, fast market execution, excellent education and analysis, and a flexible cash-back bonus make it one of the best in the industry.
In addition, XTB boasts world-class regulation and Islamic accounts are available on its award-winning xStation platform, though MT4 is also available for those who prefer it.
Swissquote is part of a large banking group specialising in the provision of online financial and trading services. This broker targets experienced traders, or serious beginners, as minimum deposits are much higher than with other similar brokers; however, the trading conditions reflect what clients should expect from a professional brokerage.
Supporting both award-winning proprietary software, as well as the MetaTrader suite, and offering premium analytical tools to clients for free, Swissquote is a broker for those who take trading seriously.
With 50+ Forex pairs available, tight spreads and fast execution, Plus500 is a popular broker with both its new and long-standing customers. Award-winning customer service is available 24/7 and the Plus500 platform is web-based with no need for any downloads or setup, making this a good provider for those starting out who want to keep it simple.
Plus500 has one account with a 100 USD minimum deposit requirement and keeps simplicity at the core of its business.
With a huge range of account types, a good micro account and leverage up to 1:1000, IronFX has something for everyone. A globally-recognised Forex broker with award-winning education and market analysis, IronFX has recently introduced market execution accounts with ultra-low spreads.
For beginners who want to learn to trade on either the MT4 or MT5 platform, and experienced traders looking for strong international regulation, IronFX is an excellent choice in a broker.
IQ Option focuses on making both Forex and Options trading accessible and exciting for traders. With an award-winning browser-based platform and connected apps; IQ Option's simple to use software changed the way options trading is done online. Tournaments are regularly run for all traders with cash prizes for the winners.
With 10 USD minimum deposits, video education material, and 24/7 customer service, any trader who is interested in trading binary options and Forex on the same account give IQ Option some consideration.
The world's number one broker, and our highest-ranked broker, IG Markets have a very impressive product offering. A market-maker broker, IG Markets only offers the single account for Forex trading (also available as an Islamic account), but spreads are tight and educational and analytical materials are excellent. A wide choice of platform - including MT4 - is also available and customer service is world-class.
With regulation from the FCA and ASIC, and winner of the Broker of the Year 2018 (UK Forex Awards) and Best CFD Provider 2017 (Investment and Wealth Management Awards), IG Markets is an easy choice for both beginner and experienced traders.
IC Markets is one of the few ECN brokers that is truly good for beginner traders; trader education and customer service are both top-notch and with free access to Trading Central - an excellent third-party analytics provider - new traders will feel very welcome indeed. IC Markets runs frequent bonus schemes, some especially for Islamic traders, with commission-free trading on Islamic accounts during Ramadan.
IC Markets also offers support for all three leading trading platforms so experienced traders looking for a good ECN broker with the best trading conditions and fast execution should be tempted too.
FXPro is one of the largest and most trusted brokers in the industry and, as such, are an excellent choice for new traders. Education for beginners is best-in-class and all three account types are available as Islamic accounts.
With MT4, MT5, cTrader and a browser-based platform, a reasonable 100 USD opening deposit and outstanding customer service, FxPro offer competitive spreads to match profitability with security.
Trade.com is a well-regulated, multi-asset, market maker with MT4 support and a range of account types. Trading conditions are good, though many new traders may find themselves outpriced of the accounts with tighter spreads. The Micro Account is cheap but offers very little in the way of assistance and dedicated customer support is reserved for those with higher minimum deposits.
Regulated by CySEC and the FSCA, Trade.com has committed to a secure system for managing client funds and protecting the brokerage from illegal activity.
For a minimum deposit of 500 USD, you can try the new and innovative CrowdTrading trading platform built by Trade360.
The CrowdTrading algorithm constantly examines Trade360 client activity, spots changes in price action and highlights these changes to help traders make better decisions. A market-maker broker regulated by CySEC in Europe, Trade360 lets clients try out this inventive new way to trade on a broad range of asset choices, not just Forex.
GO Markets was founded in 2006 and is well-known for its innovative yet simple approach to Forex trading. Though GO Markets only offers two account options, one commission-based with tight spreads and the other commission-free with wider spreads, both are competitive. With a 20% deposit bonus (up to $25,000) for new traders and regular analysis, GO Markets are a good choice for new traders.
GO Markets really shines with its suite of trading tools including a free VPS service, Autochartist and Trading Central. A technological innovator, GO Markets works hard to keep low-latency trading, reliable customer service and stable platforms at the core of their offering.
With accounts starting at just 50 USD, FCXM is not just excellent value, it also excels in platform choice, quality of educational material, and customer support. For traders looking for a big international brand with good regulation and Malaysian educational resources, FXCM is your choice in a broker.
FCXM doesn't run a normal bonus program, but any unused trading funds made will automatically earn 5% interest, an approach we have not seen before.
FP Markets is a great Australian broker with simple account options and an exciting set of tools for traders with higher minimum deposits. Bonus schemes, including deposit and no-deposit bonuses, are frequently available and Islamic accounts are available on both the MT4 and MT5 platforms.
Spreads are tight, even on the Standard Account, and the lack of dealing desk intervention for all accounts removes any concern over conflict of interest.
CMC Markets is a large, well-respected and well-regulated market maker broker operating globally from headquarters in London. An excellent education section and deep and insightful market analysis are only bettered by the well-crafted and intuitive New Generation trading platform and the 200 USD welcome bonus for new traders.
Spreads are very tight on the cheaper accounts and leverage is on par with other market makers - CMC Markets was ranked third on our latest State of the Forex Market report and we recommend its services to experienced and beginner traders alike.
Founded in 1983, City Index is a traditional market maker now owned by the NYSE listed financial group, GAIN Capital. It has tight spreads for a market maker broker and a varied platform choice, including MT4 and AT Pro; an advanced automated trading platform allowing for full customisation with powerful back-testing.
City Index' education section is perfect at beginners who want to get up to speed quickly and customer service is open 24/5. Overall, a good market maker broker and competitive with traditional brokers of its size and type.
Capital Index was founded in 2014 by industry veterans to meet the needs of serious traders. It quickly started winning awards, including STP/ECN broker of the year and has grown its client base substantially over the last six years. It offers three different bonuses for new traders, including a 50% rebate on losses, and no fees are charged for deposits or withdrawals via credit card.
Regulated by the FCA and with good, simple trading conditions across four account types - including a good value copytrading account - Capital Index is an ideal brokerage for traders looking for a simple approach and MT4 support.
BDSwiss is a highly-rated broker, popular with both beginner and experienced traders. A wide range of account types is available, including a new subscription-based Raw Spread Account, which offers very tight spreads and no commission in return for a monthly payment.
All accounts are available as Islamic accounts and experienced traders will also like with the Black Account, which includes free AutoChartist and one-on-one support. MT4 and MT5 are both supported and educational and analytical material are both excellent. Overall, BDSwiss is a good choice for all kinds of Forex traders and we are curious to see if the subscription model catches on.
AxiTrader is an Australian ECN broker with tight spreads, no minimum deposit and a focus on creating a comfortable environment for serious traders. Axitrader has received strong industry recognition for their professional setup including Best MT4 Broker 2018 (Compare Forex Brokers Australia) and Best MT4 Provider 2018 (UK Forex Awards).
An Islamic option is available on both trading accounts, as is free AutoChartist; and a free VPS service once you hit a minimum trading volume.
Amana Capital is a very well-regulated broker with a strong focus on new traders; beginners will find a helpful and well-structured education section and relatively tight spreads on its cheapest account - though trading conditions do improve substantially on the more expensive accounts.
We also like that both MT4 and MT5 are supported and that traders have free access to both AutoChartist and Trade Captain - two excellent third-party analysis applications.
Founded in 2001, Admiral Markets offers reliability, market leadership and modern trading. Most Admiral Markets customers have free access to Trading Central - providing independent market insight and technical analysis - and the company has one of the best cryptocurrency offerings on the market; additionally, the Islamic MT5 Account is one of the best swap-free accounts available.
A global presence, a large international client base, flexible trading accounts and competitive trading conditions have attracted both beginner and experienced traders to the brand.
24Option started life as a binary options provider but now also offers CFDs for Forex, Commodities, Stock and Indices.
With a 50% bonus for new traders, an award-winning trading platform - alongside the industry-standard MT4 - and leverage of 1:500 on all accounts, beginners will find 24option an easy place to start trading.
A popular broker all across Asia, Alpari has some great trading conditions on its two standard accounts and its two great value ECN accounts, which are all available as Islamic accounts.
With a tiny minimum deposit on the Micro Account and an excellent ECN Pro account for professionals, most traders will find something appropriate for their style and experience - this inclusive approach is further emphasised by responsive 24/7 customer service and support for the industry-leading MT4 and MT5 platforms. Finally, Alpari always has a deposit bonus scheme running for new clients as well as a cash-back program for current traders.
InstaForex is an award-winning and well-regulated broker offering a wide variety of account types with good trading conditions and a copy-trading service. With three market execution accounts, one of which is specifically built for scalping, and two instant execution accounts with no minimum deposit (both of which are available as Islamic accounts), InstaForex will appeal to a wide range of traders.
The market analysis and education sections feature regularly updated content for traders of all experience levels and MT4 is fully supported via download and webtrader.
Exness was established as a Forex broker in 2008. Since Exness started it has grown from strength to strength and is one of the fastest-growing Forex brokerage companies in the world. It’s been described as a rare breed of online Forex broker due to the fact that it practices transparency in its business operation. Exness do quarterly independent audits by Deloitte to support their transparency claim.
CM Trading is a market-maker with competitive spreads on its Islamic account and an interesting selection of trading tools, including the Guardian Angel system which provides automated feedback on your trading style.
A good choice for new traders due to the great educational material and the CopyKat copy-trading system and with MetaTrader 4 and Sirix Webtrader platforms both supported, there is some platform flexibility.
IKOFX your simple and well-regulated broker. With simple account options, one-click trade execution, and optional swap-free Islamic accounts, this broker makes it to our list of favourites. Intermediate and advanced traders will enjoy the updates to the MetaTrader 4 platform that IKOFX have built by themselves and can take advantage of hedging and scalping which is not offered by all brokers as standard.
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Forex trading in Malaysia is increasingly popular but many people are still concerned about the regulatory environment and the legality of the industry.
As far as regulation of Forex brokers is concerned, the Malaysian regulatory setup is in its infancy and hampered by decades of paranoia over the strength of the Ringgit. There is still some confusion over who is the actual regulatory authority for Forex brokers: The Bank Negara Malaysia is responsible for the Ringgit, while the Securities Commission of Malaysia oversees and licenses financial companies – but neither company holds responsibility for regulating Forex brokers.
To add further confusion, many Forex brokers operating in Malaysia are regulated by the Labuan Financial Services Authority (LFSA), the regulatory body for the Labuan International Business and Financial Centre (LIBFC). The LIBFC, based on the island of Labuan off the Borneo coast, was created in 1990 by the Malaysian government as a free trade zone and financial centre. Labuan is widely seen as a business-friendly environment, anchored by a simple and attractive tax system and the LFSA has a robust, modern and internationally recognised legal framework.
In reality, most Forex brokers operating in Malaysia remain regulated offshore. It is easier to comply with local regulations by saying that retail Forex trading with an offshore brokerage is considered foreign investment. Since most Forex trading in Malaysia does not involve the Ringgit, the regulatory agencies tend to ignore the vast majority of Forex brokers and traders in the country.
As long as you are not physically exchanging the Ringgit for foreign currency, or asking others to do the same through your business, the Malaysian regulatory agencies will not get involved.
This lack of local regulatory oversight leads to another problem though: there are many Forex brokers operating in Malaysia that are poorly regulated, or not regulated at all, and many of these are fraudulent. Therefore, it is important to make sure that any broker you choose to work with is regulated by one of the major international regulatory bodies (such as ASIC, CySec or the FCA).
Choosing a Forex Broker in Malaysia
You should always choose a Forex broker carefully to ensure that you get one that suits you best. We are going to look at the various factors you need to consider before choosing a broker, these are:
Regulation
Type of Broker
Trading Accounts
Demo Account
Spreads
Leverage
Trading Tools
Customer Service
Bonuses
Regulation
As mentioned previously, regulation is critical and the first thing to look for when choosing a broker is how well-regulated they are; this will determine how well protected you are as a customer. Before you start trading make sure that your broker is well regulated and considered safe by the wider Forex trading community. We never review a broker that we consider unsafe or untrustworthy and will always highlight where and how they are regulated.
Types of Forex Brokers
There are two distinct business models for Forex brokers, and they mean a very different trading experience for customers.
Brokers can generally be separated into two major categories:
Dealing Desk Brokers (DD) or Market Makers;
Non-Dealing Desk Brokers (NDD) which can be divided into two categories:
Electronic Communication Network (ECN);
Electronic Communication Network/Straight Through Processing (ECN/STP);
Different Types of Forex Brokers
Dealing Desk Brokers
Dealing Desk Brokers, also called market makers, are brokers who set their own price rates for currency transactions. In essence, a dealing desk broker will always be the counterparty to your trade. This means that all dealing desk brokers trade against their own client base.
In a Dealing Desk environment, there is an obvious conflict of interest because the Forex broker makes money not only from charging you on the spread, but they also profit from your losing trades. However, the main advantage of choosing a Dealing Desk Broker is that they generally have lower minimum deposit requirements and will not charge commission.
Non-Dealing Desk Brokers
TThe Non-Dealing Desk market environment is designed to give traders true market pricing and execution with no price re-quotes. Unlike dealing desk brokers, a non-dealing desk broker will not act as counterparty to your trade and will post your trade directly to the market. The main disadvantage of non-dealing desk brokers is that the required minimum deposit is usually higher, and commission is charged on trades.
ECN Brokers
ECN (Electronic Communication Network) brokers are so-called because they rely on a network of market participants (usually large lenders such as banks) to serve as counterparties to Forex trades. When you post a trade with an ECN they will find a third-party to take the other side of your trade, removing the conflict of interest present with a market maker.
ECN brokers will have tight spreads (and will charge commission on trades) but if there is not enough liquidity to execute your order, you’ll often get re-quotes.
ECN/STP Brokers
STP is short for Straight Through Processing – with STP your order is sent directly to the counterparty through the Financial Information Exchange (FIX) protocol. The FIX protocol decreases trade execution time, reduces slippage and ensures that traders get the best available pricing.
An ECN/STP Forex broker operates the same way as an ECN broker does but with less chance of getting requoted on your trade. Some STP brokers will also act as a market maker if your order cannot be executed by the interbank market.
The main disadvantage of an STP Forex Broker is that you’ll receive dynamic (varying) spreads depending on market volatility and available liquidity.
Trading Accounts
Brokers will often have different tiers of accounts for you to select from. The more capital you intend to deposit with the broker, the tighter spreads you will receive and the higher leverage you will get. You will also have more access to account managers, data and signals.
Some basic trading accounts have a required minimum deposit of only 5 USD (20 MYR) but generally, most will be between 100 USD (4000 MYR) and 500 USD (20,000 MYR). I would always recommend that you only deposit money that you are comfortable losing because while trading can be very profitable, it is a high-risk venture.
Demo Accounts
Forex brokers will also have demo accounts, which are free accounts where you can practice your strategies and trading.
Demo accounts are important for beginners as well as for experienced traders who want to test different trading strategies. Some demo accounts are time-limited and after the demo period expires you will be encouraged to sign up for a funded account. Most brokers will allow you to keep your demo account once you have opened a live account.
Spreads
The spread is the difference between the buying price and the selling price of a currency. This difference is where a broker makes their money. As discussed above, direct market access brokers will charge a commission and have tighter spreads whereas market maker brokers will have no commission and wider spreads. Spreads will also change depending on a broker’s deal with their liquidity provider. We will go into more detail on spreads and commission and the bottom of this page.
Leverage
Leverage is additional capital borrowed from a liquidity provider and enables traders to open larger positions than would be possible with their existing account balance. It is presented as a ratio (such as 50:1 or 200:1)
Leverage is used because the movements in the currency markets are very small, so if retail traders did not use leverage their gains would be tiny. Brokers usually offer leverage anywhere from 100:1 to 1000:1, the exact amount you receive will depend on which liquidity provider your broker uses and your experience as a trader.
Leverage is dangerous because it not only maximises your profits, but it also maximises your losses. It’s advisable for retail traders with little experience to start with lower leverage because the risk exposure at higher levels can be significant. As you gain more experience and your broker sees that you are trading successfully, they may offer you increased leverage on your account.
Trading Tools at Forex Brokers
Brokers usually offer forex tools like calculators, economic calendars as well as trading signals so that you have easy access to as much information as possible. When you sign up with a broker, ask your account manager what tools you will have access to for free, and what they will charge you for. This is often posted on their website but having this discussion with the broker before you have made your first deposit will often get you more free tools than is standard.
Customer Service
It is important that you choose a broker that has excellent customer service. All brokers offer customer service 5 days a week, but it is only a select few that will give you access to a dedicated account manager and weekend assistance. For some brokers this will require a larger minimum deposit and access to the higher levels of account tiers. Make sure your broker offers customer support in your preferred method of communication – whether that’s chat, email or telephone. eToro, for instance, no longer offers live customer support and operates a ticket system for all queries and problems.
Signup Bonuses
There is controversy over whether giving bonuses to first-time traders should be allowed. European regulators have recently banned the practice, and it looks like the Australian regulator will soon follow suit, while others around the world still allow it. Some brokers offer bonuses based on the amount that you deposit in your account, and others give you offers or run tournaments. Some offer no deposit bonuses to get you started.
Important note: Do not rely on bonuses because they are often come with fine print and are used as a mechanism to drive in new customers. You will often not be able to withdraw them without trading with a broker for many months.
FAQs
I am a beginner trader, what should I look for in a broker?
As a beginner trader, choose a broker with an unlimited demo account, as this will give you the opportunity to practice before making a deposit. Limited demo accounts usually expire after 1-3 weeks, which is not enough time to learn how to profit from CFD trading.
Beginner traders also need structured and comprehensive educational support, and each broker varies significantly in what material they provide. The minimum you should accept is some general videos and articles, but some brokers have invested in creating small trading universities that include video material as well as live webinars hosted by experts and one-on-one support in some cases.
Each of our reviews has a section on the educational content to help beginner traders decide the best path forward.
How do I know I can trust a Forex broker?
Four things should be considered when determining if a broker may be trusted – regulation, trade execution method, client funds management, and industry recognition of their achievements.
The more major regulators the broker group is regulated by, the more oversight the group has. The number of regulators overseeing their processes gives a strong indication of the level of trust the government regulatory agencies have in them.
It is more of a concern if fewer major regulators regulate a market maker. Therefore, a heavily regulated market maker is considered more reputable than one with lesser regulation. It is noteworthy that some market makers have strong reputations and lots of client resources.
The execution method of trades is another component because if the broker profits from your loss – as is the case with market maker brokers – this can be seen as making the broker less trustworthy.
Most regulators require strict processes to keep client funds safe. This process includes placing client funds in segregated accounts at major banks in the local jurisdiction. Segregated bank accounts that are audited every evening means that client funds are protected against any bankruptcy.
Industry awards are given to brokers from journalists, financial watchdog organisations and their peers. While it can be argued that these award ceremonies are biased, they remain the best gauge industry recognition.
Do brokers trade against you?
If the broker is a market maker, then they are the market and will be trading against you by being the counterparty to your trade to create the liquidity you need. Since a vast majority of trades by retail traders are lost, a market maker is making money in most client trades. Direct Market Access (DMA) brokers do not have any conflict of interest and do not trade against you.
How do brokers make money?
Market Makers will make money only from the spread – the difference between the buying and selling price of the currency pair. Since a Market Maker will become the counterparty to any trade, they will also make money when clients lose trades.
DMA brokers will make money from a tight spread and a commission, which is calculated on a per lot amount.
How to deposit with a broker?
Each broker is going to have different deposit methods, but all will have a deposit by credit/debit card and bank transfer option alongside various online wallet methods (i.e. Skrillex, Neteller, etc.) On occasion, brokers will accept Bitcoin deposits in additional to traditional currency.
Which broker should I choose?
Traders have different requirements of Forex brokers, and thus there is no single best choice. This is how we compare them, and we offer insight into your choices. At the top of this article, there is a list of those that we believe are the best brokers for traders based on their reputation, platform, trading conditions and resources available to beginners.
How can I report scam brokers?
If you believe you have been scammed by your broker, the first thing to do is follow the steps on the Bank Negara Malaysia’s complaints checklist. We have a report a scam broker form which we use to gather information so that we get the word out. If you have been scammed, please complete the form.
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Trading Forex and CFDs is not suitable for all investors and comes with a high risk of losing money rapidly due to leverage. 75-90% of retail investors lose money trading these products. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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