Over the past decade, Malaysia has produced a wave of highly enthusiastic FX traders. It is not that Malaysians possess some mystical advantage over other traders but merely that the local environment such as strong math education, good English skills, low-cost internet, and a cost of living where small profits count, has helped retail trading grow quickly. Walk into any kopitiam in Petaling Jaya and you will likely find someone nearby checking an MT4 chart on their phone. That is not an exaggeration anymore. Visit today The retail FX sector expanded rapidly after smartphones simplified access to trading platforms, and it is unlikely to decline in the near future.
The conduct of the ringgit is what Malaysian traders learn to either respect at first or pay until they do. The USD/MYR pair does not belong to the G10 currencies. It reacts strongly to Brent crude oil prices because Malaysia exports oil and relies heavily on petroleum revenue for its finances. It shifts on regional risk sentiment - in case of anything destabilizing occurring anywhere in Southeast Asia, the ringgit is likely to sense it. The history of intervention by Bank Negara Malaysia is another level of intervention; BNM has already intervened to deal with undue volatility on at least one occasion, and the threat of a repeat performance is ever in the background. Those traders who base their interpretation of MYR on these particular drivers, as opposed to using generic emerging market constructs, will read the pair much better than those that view it as a scaled-down replica of something bigger.
The issue of regulatory awareness is critical to FX participants in Malaysia, and one of the most misconceived issues in the local trading circles. Retail forex brokers are not licensed by BNM. Popular brokers among Malaysians include Pepperstone, IC Markets, XM, and FBS, which are regulated by foreign authorities like ASIC, FCA, or CySEC. These brokers trade major pairs and it is accepted. Issues appear when trading ringgit-denominated assets or speculating on MYR offshore, as BNM imposes restrictions under its forex regulations. However, most retail traders avoid this issue as they focus on instruments like EUR/USD or gold. Still, being aware of these boundaries can help traders avoid unnecessary problems.