Ask a Malaysian forex trader concerning his/her largest beginner error and you may anticipate tales of awful entries or missed signals. Instead, to their surprise, many of them will refer to yet another thing–the wrong broker. It is one of the lessons that can be learnt the hard way and still, new traders are falling into the trap of ignoring it as they are falling over each other to enter the market. Go here!

All the attention is usually given to trading strategies. However, this is usually not the case in reality because much of the heavy lifting is done by brokers.

Consider it in the following way: the best trading strategy will not be effective when it is carried out by an incompetent broker. It is as though you employ a great cook and provide him with a faulty stove. The ability is present, the ingredients have been prepared–but the result is not satisfactory.

The initial step in the process of selecting a broker is regulation-and it is not merely a mere formality. Bank Negara Malaysia and securities commission Malaysia are the regulators of financial markets in Malaysia. Respected regulators such as the FCA, ASIC and CySEC around the world can impose fines, suspend or even close down brokers who are guilty of breaking rules. This equates to actual security of your money. The unregulated broker on the other hand is one that acts without responsibility. When you can not be sure of the licensing information or have a hard time finding it, then it is time to move on.

Next, consider spreads. These are, in fact, the price of all trades. Although the 0.3 pips and the 1.5 pips may not sound much different, it makes a big difference in the long-term- especially to the active traders. What may seem as a free trading account may even turn out to be much more expensive than an account with clear charges. This can be experienced most by Malaysian traders who trade regularly especially when trading in peak hours and during these times, spreads can expand.

Another significant pointer of reliability of a broker is the mode of payment. The brokers facilitating Ringgit transactions, such as DuitNow, domestic bank transfers and e-wallets, facilitate easier and more cost-effective trading. In the absence of these choices, traders will have to resort to currency conversion and international transfers, which will add additional charges and delays. All these costs might appear small on a case by case basis but accumulate.

Theory is met by reality in platform performance. Markets are fast during high-impact events, including the release of unexpected economic data, or central bank announcements. Weak platforms can freeze, slow down or perform poorly during trades under pressure. This is the reason why it is necessary to test a broker in turbulent times before putting in real money.