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Day Trading in Malaysia

Written By

Christian Harris

Written By

Christian Harris

Christian is an active trader with over 5 years of experience across stocks, futures, forex, and crypto. A former tech journalist, he shifted to finance to pursue his passion for investing, eventually becoming an eToro Popular Investor. With real-world trading knowledge across multiple asset classes, he brings valuable, hands-on insights to the table.

» Christian Harris Profile Page

Edited By

James Barra

Edited By

James Barra

James is an investment writer with a background in financial services. As a former management consultant, he has worked on major operational transformation programmes at prominent European banks. James authors, edits and fact-checks content for a series of investing websites.

» James Barra Profile Page

Fact Checked By

Michael MacKenzie

Fact Checked By

Michael MacKenzie

Michael is a writer and editor with over a decade in journalism and publishing. His niche lies in editing and fact-checking content in the financial services sector, with a focus on online brokers and trading platforms. Michael previously reported on politics and economics in the Middle East and edits books for established publishers.

» Michael MacKenzie Profile Page

Updated

Sep 5, 2024

Day trading in Malaysia has gained significant traction. With the nation’s expanding economy, short-term trading presents a lucrative opportunity to capitalize on market fluctuations.

Malaysia boasts a diverse economy with a GDP of over $450 billion, supported by robust manufacturing, services, and commodities sectors, including crude oil which the country is a net exporter of.

Are you ready to start day trading in Malaysia? This guide will get you going.

Quick Introduction

• The Securities Commission Malaysia (SC) is the main regulator overseeing Malaysia’s financial markets. It enforces laws related to securities, derivatives, and other investment products and sits in the ‘yellow tier’ of DayTrading.com’s Regulation & Trust Rating.
• Malaysia’s chief stock exchange, Bursa Malaysia, offers a platform for trading various instruments, including equities, derivatives, bonds, and exchange-traded funds (ETFs).
• If your day trading is regular and systematic, your profits may be considered business income. Then you must report your trading profits as part of your overall income, which will be taxed according to Malaysia’s income tax rates ranging from 1% to 30%.

All Day Trading Platforms In Malaysia

What Is Day Trading?

Day trading involves buying and selling financial instruments such as Malaysian stocks, indices like FTSE Bursa Malaysia KLCI, and currency pairs like US dollar (USD)/Malaysian ringgit (MYR), within the same day. Derivatives like CFD trading in Malaysia are also permitted.

Active traders typically use real-time data, indicators, and strategies like scalping trading, momentum trading, and technical analysis to profit from short-term market fluctuations. Unlike long-term investors, day traders close all positions before the market closes.

Leverage amplifies gains and losses and is a standard tool among day traders. While it allows traders to control larger positions with less capital, sometimes upwards of 10x on Malaysian trading platforms, it also increases the risk of substantial losses.

While highly speculative and carrying significant risks, day trading offers the potential for substantial returns.

However, I recommend beginners start with a demo account and prioritize risk management.

Christian Harris

Author

Is Day Trading Legal In Malaysia?

Day trading is legal in Malaysia, however adhering to specific regulations is crucial.

The SC oversees online trading activities, ensuring compliance with rules against market manipulation, insider trading, and required disclosures. This responsibility is part and parcel of the day trading journey.

To legally engage in short-term trading, you should use licensed brokerages approved by the SC. These platforms provide market access and ensure adherence to legal frameworks.

How Is Day Trading Taxed In Malaysia?

Day trading in Malaysia is taxed based on how the Inland Revenue Board of Malaysia (IRBM) classifies the income generated from your trading activities.

If you trade frequently and systematically, your profits could be classified as business income. In this case, your income may be subject to Malaysia’s individual income tax rates, which range from 1% to 30%.

Under normal circumstances, Malaysia does not impose a capital gains tax on selling stocks or other financial instruments. However, this exemption typically applies to long-term investments rather than the short-term buying and selling activities associated with day trading.

As such, day trading profits are less likely to be classified as capital gains and more likely to be taxed as business income.

Getting Started

If you’re ready to explore the world of short-term trading in Malaysia, here’s a simple three-step guide to get you started:

1. Choose a broker. When selecting a broker in Malaysia, consider factors like low fees, a reliable charting platform, strong regulatory compliance, timely support, educational resources to enhance your skills, competitive margin requirements, reasonable account minimums if you’re new to online trading, and access to your preferred markets (Malaysian stocks and currency pairs containing MYR are less widely supported in our experience).
2. Set up your account. To start trading in Malaysia, you will need to complete an online application and provide personal and financial details. To verify your identity, submit the required documents, such as a government-issued ID like Malaysia’s MyKad and proof of address. Finally, agree to the broker’s terms and conditions to begin trading.
3. Deposit Malaysian ringgits. Once your trading account is approved, fund it using your preferred payment method, such as a debit card, bank wire transfer, or digital wallet. To reduce costs and simplify your trading experience, consider using your local currency for your trading account, in this case, MYR. That said, MYR trading accounts are rare from our investigations, with Exness standing out as a leading exception.

A Day Trade In Action

Let’s explore a hypothetical scenario where I day trade Maybank, a Malaysian universal bank listed on Bursa Malaysia with significant operations in Malaysia, Singapore, and Indonesia.

Event Background

I watched Maybank’s stock price action as the company was set to release its quarterly earnings report.

Analysts highly anticipated strong results due to Maybank’s robust loan growth and cost management strategies.

I analyzed the stock’s recent price movements, noting that it had been trading within a narrow range, suggesting a potential breakout. I also reviewed trading volumes, which had been increasing slightly, indicating that traders were positioning themselves ahead of the earnings announcement.

When the report was released, it exceeded expectations. Maybank said its profit attributable to owners grew to 2.49 billion ringgit (MYR) in the first quarter from 2.27 billion ringgit a year earlier.

This confirmed my analysis that the stock would likely rise in response to the positive news.

Trade Entry & Exit

As soon as the market opened on Bursa Malaysia, I noticed a sharp uptick in Maybank’s stock price, which was supported by higher-than-usual trading volumes.

I entered a position early in the day, buying shares at MYR 9.98 as the momentum increased. I also set a stop-loss at MYR 9.94 (-0.40%) to protect myself from an unexpected reversal.

Throughout the day, I closely watched the stock’s movement, using a combination of technical indicators, including moving averages and RSI, to gauge the strength of the uptrend.

By midday, the stock had risen to MYR 10.00, where I considered taking profits but decided to hold on as the buying pressure remained strong.

By the afternoon, the stock reached MYR 10.02, and I noticed a slight decrease in volume, suggesting that the momentum might be slowing down. At this point, I exited the trade, selling all shares and locking in a 0.40% profit.

In this day trade, I leveraged Maybank’s positive earnings report to capitalize on the stock’s upward momentum. My data analysis indicated a strong possibility of a price increase, which materialized as expected.

I could maximize profits while minimizing risks by carefully timing my entry and exit. This trade reinforced the importance of thorough analysis and disciplined execution in day trading.

Bottom Line

Day trading in Malaysia is allowed and regulated by the SC and Bursa Malaysia. You must use licensed platforms and adhere to strict rules against market manipulation and insider trading.

While profits from day trading may be classified as business income and taxed according to personal income tax rates, Malaysia generally does not impose capital gains tax.

To get started in Malaysia, use DayTrading.com’s selection of the best brokers for day trading.

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