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.
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
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.
