How to Start Forex Trading in Malta

Ready to dive into forex trading but unsure where to begin? If you're in Malta, you’re perfectly positioned to explore this dynamic global market. Interest in forex trading has surged across Malta, attracting both seasoned investors and newcomers looking to explore new financial opportunities. While the forex market offers substantial potential, stepping in unprepared can be risky.

To help you start strong, this guide breaks down each crucial step of the forex trading process in Malta—from selecting a trustworthy broker to mastering essential trading principles. With the right approach, you can navigate the forex market effectively and confidently begin your trading journey in Malta. Let’s get started!

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Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% to 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account

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Malta, a member of the EU since 2004, is also seen by many brokers as the gateway to the larger European market. This is because MiFID allows companies to “passport” their forex services to other EU countries as long as they are licensed in an EU country. Malta’s well-regulated and flexible forex market provides the perfect home base for forex companies looking to stake their claim across Europe. 

Get Started with Forex in Malta

Prior to jumping into forex trading, you will want to make sure your financial infrastructure is set up correctly. 

1. Connect to the Web: The internet is your lifeline to the forex market. Therefore, you must make sure you get a fast and reliable internet connection. This need only increases if you plan on using an offshore broker.
2. Get a Fully Regulated Broker: To place forex trades in Malta, your broker must be regulated through the Markets in Financial Instruments Directive (MiFID) or the MFSA.
3. Connect Your Bank: Making sure your bank or financial institution can seamlessly sync with your broker is a necessity. If you plan to be a successful forex trader, your bank must be able to make timely deposits and withdrawals. 
4. Fund Your Account: Funding your account should be a seamless process. Reputable brokers will accept funding through traditional (like bank accounts and debit cards) and more innovative tools (fintech apps).
5. Choose Your Trading Tool: Given today’s technology and innovations in fintech, your trading platform should allow you to access the forex market and make trades through your common tech devices, like a computer, smartphone and tablet.
6. Invest in the Market: Now that you have confirmed your financial infrastructure is ready, you can take the leap and start investing.

Malta Forex Trading Strategies

Good traders are always looking for ways to optimize their trading. One way to do this is by understanding which forex trading strategy best fits your personality. 

Day Trading

The day trader aims to capture small profits across a large number of trades in one day. Day traders generally take their profits as soon as they can get them. Doing this allows these traders to exit a position before the market moves against them. This could mean holding a position in a financial asset for only a few minutes or even a few seconds. To maximize their ability to trade frequently, many day traders leverage automated trading tools that quickly identify buy and sell opportunities. Trying to stay a step ahead of the market also means having to accept the loss of potential profits that would come with holding a position for just a bit longer.

Swing Trading

If a swing trader can find a trading pattern in the forex market, they can usually turn that into profits. Unlike the day trader, the swing trader needs to be a bit more patient because trends may not appear immediately. While these traders may find an opportunity to profitably exit a position within a few hours, it is not uncommon for swing traders to maintain a currency position for a few weeks. Knowing how to distinguish between a range and a directional move is a necessary skill set for the swing trader. 

Positional Investing

Positional investors focus on how to leverage macro events to make money in the forex markets. These traders have a deep understanding of how political and economic events affect currencies. However, the effects these macro events have on the currency market may not manifest immediately in the forex market. Therefore, the positional investor, like the swing trader, needs to be patient waiting for the opportune moment to reap larger gains due to massive changes in the position of a currency pair. This means potentially having to maintain a position for weeks, even months.

Forex Trading Example in Malta

Imagine that the bid/ask price is 1.1400/1.1600 for EUR/USD. You are ready to enter an order for €5,000. To purchase €5,000 you will need $5,750. With a margin account that offers an interest rate of 3.5%, you could make the purchase at only $201.25.

After 1 hour, the EUR/USD bid/ask is 1.1700/1.1800. This 100-basis point increase generates a total profit on the investment (€5,000 x 1.1700) – (€5,000 x 1.1600), or $50.

Making Money with Forex in Malta

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After you have become comfortable with the basics of forex trading, you can begin to move to more complex trading techniques:

• Short selling: Also referred to as “shorting,” this is when a trader believes that a currency will decrease in value against another currency. They borrow that currency pair, sell it at market price and then buy it back later at a reduced price, using that currency to repay the loan. The trader profits by maximizing the difference between the market price and the buyback.
• CFDs: Contracts for differences are agreements between a buyer and a seller, which stipulates that the buyer, at a specified future date, will pay the seller the value of a financial asset. 
• Binary options: This is a type of trade that requires the trader to make a simple yes or no bet on whether the price of a financial asset will be higher or lower than its current market price. If the trader chooses correctly, they receive the contracted payout. If the trader answers incorrectly, they lose a significant portion of the investment.

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Forex Terminology

Understanding key forex terms will help you progress in your trading.

• Pip: Refers to a “percentage in point,” or a basis point — $0.0001
• Lot size: The measure of a quantity of a financial asset considered suitable for buying and selling, with a standard size of 100,000 units of currency
• Orders: The way in which a trader buys or sells a currency
• Calls: A contract that gives a trader the right to purchase a currency at a given price (the strike price) within a time frame. If the currency price fails to reach the strike price by the contracted expiry date, the call option loses value. The trader who purchases the call is not obligated to exercise it. 

More Enchanting than the Maltese Falcon

Malta looks to be an ideal landing spot for brokers and forex companies looking to enter the European market. A well-regulated but flexible forex market that is bolstered by a strong currency, the euro and the strength of the EU, Malta is a thriving financial hub that acts as the gateway to even greater foreign exchange business.

Frequently Asked Questions