Forex trading, or foreign exchange currency transactions, are an up and coming method of building wealth. Many distinguished gentlemen the world over are discovering this for themselves. And what better way to try this new investment possibility than with a micro account in Malaysia?
Forex Micro Accounts in Malaysia
Many traders talk about this account type, but what is exactly a micro account? Well, a micro account is an account that can be opened with a low minimum deposit (usually less than $50), and offers multiple features to make trading with low amounts of money easier. In fact, most trading brokerages that do not offer this account type, require a minimum deposit of at least $200.
If you’re a Malaysian trader, and you do not have enough experience trading in the forex market, but you feel you’re ready to open a real account, well… A Forex Micro Account offered by a Malaysian Brokerage is the right choice to make.
The reason is that the demo account is great to get started for free, however you have to remember that every opened and closed position is purely virtual, thus it does not influence or reflect the real market. In reality it can happen that your order gets a requote (when the position is opened with a different price than the order) due to lack of liquidity in the market. This of course can’t happen in a simulated environment, but does happen with a real Forex Micro Account.
The other reason why this is a great choice, is the low minimum deposit. In fact it allows you to get started with less than $50, and still have the flexibility to trade in any market you wish, yet risking less money than the average trader who trades since a lifetime.
How you should manage your Micro Account as a Malaysian Trader
The Securities Commision of Malaysia permits citizens to invest in forex transactions through a registered brokerage. Do a little research before you decide which banker is a good fit for you, as they will become your true partner in every step of this process. A reputable broker will give you thorough market analysis with each transaction, basing their recommendations on a combination of functional analysis, sentiment analysis, and technical analysis that was obtained by machine learning of marketplace trends and patterns.
Basing their technical analysis on the Non Farm Payroll (NFP) indicator of US market strength published by the Fed at the first Friday of each month, your advisor will be able to give you solid recommendations on their prediction of how other global economies will respond. Once you have selected your first currency to buy, simply create your forex micro account Malaysia, and make your initial deposit. All deposits will be valued in USD, and your broker should thoroughly explain the risks and benefits of doing so.
While a micro account trades at 1/100th of a cent valuation initially, investors MUST be apprised that these transactions are conducted on the principles of leverage and margin. When a purchase of forex securities is made from a micro account, the investor (you) may be responsible to guarantee the loss of the entire value of the trade. So, for example, you selected a $2USD trade buying 160JAP yen. Should your trade go as predicted, your ROI (return on investment) will arrive at 80:1. However, if the valuation of the yen does not rise as predicted due to an unforeseen market event? You will be liable to pay the loss at that same 80:1 odds.
The SCM oversees the licensed brokerage registry to ensure its citizens are receiving competent and quality advice. In order to determine if your broker is a partnering firm, simply visit the Commission website and search their name at their website Securities Comission Malaysia. Investors are also welcome to follow the Commission on their Twitter account, username @SecComMy.
Due to the inherent risks of forex transactions, most brokers recommend that they begin exploring investment opportunities in these micro accounts. While there is not as exponentially large a capital gain, neither is the potential loss amplified. Once you have familiarized yourself with forex micro account Malaysia and the intricacies associated with it? Consider opening a standard account with your broker. Standard accounts utilize the same market analysis, but have a higher margin associated with them. Instead of cent lots, standard accounts trade at 1 lot per USD. (a $2USD investment would potentially return up to a valuation of $2000USD). For this reason, the maximum number of purchased lots on a standard account is 100.
Micro, or cent, accounts may purchase up to 200 cent lots. This additional purchasing power allows investors to become comfortable with the process of market analysis, and ensures that they will be able to cover the entire transaction’s potential loss in such an event.
Let’s explore the Non Farm Payroll a little more thoroughly so that you may better understand its importance on the valuation of a US dollar. Non Farm Payroll is the economic indicator that discloses the amount of newly created American jobs within the previous 30 days that are not related to farming. It also discloses the unemployment rate in the United States, the average hourly earnings for these non-agricultural jobs, and the participation rate. The Federal Reserve will then adjust the gold standard valuation of the dollar up for inflation, or down for deflation.
These adjustments affect the global economy in a variety of ways. Based on the market indicators for non-agricultural demand, commodities like crude oil will either rise in valuation or fall. While US consumption of these commodities does not change, the cost of these transactions will accommodate the altered valuations. Economists can therefore predict that if the US is using 1M barrels of crude oil, let’s set a fictional price of $50 a barrel, that they will need to spend $50M on the purchase of this resource.
Traders dealing with commodities that require crude oil to function, such as gasoline refineries, can now determine that the $50M spent will incur their investment additional costs to process the oil, distribute it, and sell it to consumers. Therefore, the company valuation of gas utility companies will fluctuate accordingly. At the gas pump, consumers will be asked to pay either higher or lower gas prices to offset these adjustments.
Where is this applicable to forex trading directly? These concepts are essential to appreciate because when you are buying into a nation’s currency, you are taking into account the cost of living for their citizens. If that $50M purchase the month prior directly affected the manufacturing sector, and the American factories were not producing as much to export? Then the market is looking at a downward trend, because the cost of living rose and that 1 USD is not buying as much as it did the month before. Conversely, if the $50M purchase allowed for more manufacturing to occur? The unemployment rate drops, the participation rate rises, and the average hourly earnings increase. This means that Americans are able to buy more with less dollar, and the valuation will increase on your forex trade.
Understanding exactly how the US dollar operates is required to successfully manage a forex micro account Malaysia. And relying solely on your broker to grasp these principles would be foolish. With their expert guidance, you too can begin to unravel the complexities of a globalized marketplace. As well as earning a modest ROI while you acclimate to the interesting field of securities trading.