Forex
trading is currently considered a global affair. Daily, the market sees
approximately $6.6 trillion volume across different countries. With such
figures and promises of financial security, it is only natural that more people
across the globe are trying to get into space. If you fall into this demography
of Singaporean investors looking to diversify into the forex market, this
article is for you. Here, you’ll learn what it takes to trade forex in your
country and the legal bindings and regulations attached to this financial
market.
Can You Trade Forex in Singapore?
Before we
dive into the specifics of being a professional forex investor in Singapore,
the first thing to consider is whether or not you’re legally allowed to venture
into currency trades in this region. The answer to this is quite direct. Forex
trading is legal in Singapore, and anyone can trade the markets as long they go
through an authorized and regulated broker.
The
Monetary Authority of Singapore (MAS), the country’s central bank and financial
regulatory authority, has strict rules protecting consumer rights in the
foreign exchange market. These rules are targeted towards brokerage approvals
and ensure that service to providers in the currency market is regulated. As
long as MAS regulates your brokerage platforms, all your transactions are
legal. MAS requirements for forex brokers are as follows:
● Brokers
must hold a Capital Markets Service (CMS) license.
● Brokers
must separate clients’ funds from personal holdings.
● There
should be clear and constant reporting to MAS. This report will include
financial statements, trading statistics, and complaints.
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On the
other hand, there are possibilities of exploring over-the-counter (OTC) forex
trading alternatives. The downside to this is that MAS has issued warnings that
such trades might be at risk of investors losing their funds. At the same time,
no instructions are issued against traders taking this route for their
transactions.
Both OTC
and brokerage systems can be used across several asset classes in the currency
market, including CFD trading, stocks,
commodities, and shares. While there is freedom to practice as an individual in
the currency exchange market, it might be different for institutions. Certain
restrictions apply to institutional trades,
banks, and other financial institutions. One is that financial employees of
these institutions must reveal their existing accounts to compliance
departments for monitoring upon joining such companies.
How To Trade Forex in Singapore
As the
universal market that it is, the process of buying and selling foreign
currencies is the same across countries. The only significant distinction is
the different regulatory bodies to which participants answer. Here is how to
get started as a forex trader in Singapore.
Find a MAS-Approved Brokerage Platform
Some
brokers have gone to the length of acquiring a MAS CMS license to operate
legally in Singapore. While hunting for brokers, this should be the first thing
on your mind. You can check if your trading platform or service provider is fit
to run operations by checking on the MAS official website.
The trading platform is also a considerable part of an investor’s overall
experience. Therefore, you should pay more attention to it. When choosing a
platform, look out for user-friendly interfaces, trading tools that would help
boost your successes, indicators, and advanced features for analysis. Lastly,
the commission fees differ for different brokers. Be clear on the terms of
commissions and transaction fees before proceeding.
Open Your Trading Account
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Your
trading account could be a live or demo account, depending on your level of
expertise. It is advisable to start with a demo account and test the waters
before diving fully into the market. Once you decide which to begin with, you
can fund your accounting using the broker’s payment method. Your trading
platform should be easy to navigate, even for a beginner. In most cases, your
broker would offer guidance in these stages.
Trade on the Go
Trade and
get better by constantly refining and reviewing your trading strategies. Once
you’ve perfected your methods, you can always upscale and enter bigger markets.
Also, look into diversifying your assets and trying CFDs. They are among the
safest alternatives for risk management and preventing losses.
Last Tips For Trading Forex in Singapore
The
Singapore stock and forex market is well known for its large audience, which
could be a huge positive to investors regarding liquidity. This also has added
advantages, like better stability and flexibility for traders. Some helpful
tips for maximizing these opportunities are to set your stops and limits,
monitor your position, and use leverage. The stop-loss is an automated order to
close or open your position when the market moves a few points for you or
against you. Leverage is an approach to starting with less capital than usual.
These tips are fundamentals of success in the market, and it’ll do you a lot of
good to get familiar with them.