How to start trading ETFs like a pro in Malaysia?

ETFs are the hottest traded financial instrument in Malaysia today. They are derivatives of index funds that track major indices or sectors. For example, an ETF tracking the FBM KLCI will provide you with an easy way to get exposure to Malaysian stocks without having to buy individual shares. On top of that, ETFs have lower fees because they don’t require money managers or analysts on their payroll( check here).

However, trading these instruments can be difficult as a beginner due to their complex nature and lack of advice online. The purpose of this article is for us to discuss how you can start investing in ETFs like a pro.

Do you need this product?

First things first, always ask yourself, “Do I need this product?”

When it comes to investing, the answer to this question should always be “YES”.

You can start with many ways, but we will assume that you have decided which ETFs you would like to invest in for this article. If not, here’s a list of popular Malaysian ETFs.

Pick your instrument

Now that you know your investment objective (your goal), it is time to pick your instrument. We use an online trading account with CIMB Securities as an example because they provide free trade for all bank-initiated internet banking transfers made through Maybank2U or Public Bank Internet Banking.

The drawback is that they don’t allow cash withdrawal so if you want access to cash right away, other brokerages might be better suited for you. It is where you decide which broker is best for you based on how much money you plan to invest and whether or not you want access to cash.

Pick a platform

After account opening, the next thing is to pick a platform. We use CMC Markets to allow advanced trading like limit order and stop loss (for buying and selling, respectively). Of course, all these features are optional, but it does make your life easier when investing, especially if you know what you’re doing.

Fund your account

The final step would be to fund your account by transferring funds from your bank account into the brokerage’s bank account. It is essential because that’s how all transactions get processed, so a non-funded account can’t place any trades even if you have a trading platform ready! This step is easy to overlook, so don’t forget about it!

Place trades

The next step is actually to place trades. It can be done by using the trading platform or calling your broker and instructing them on what you want to execute. Both these options work fine, but we will look at how you can use the trading platform CMC Markets has to offer for this example.

First, we must select our ETFs from the drop-down menu (we chose ES3 and KLEM). Then we input an order size that meets our needs (we used 100 units each time). As mentioned earlier, limit orders allow you to specify both entry price and exit price and market orders that make no such guarantees; those who know how to read the market would understand that limit orders are more advantageous in this case. Lastly, we set our execution preference to immediate if available because why not?

After hitting the Buy button, it will bring you to this page to monitor your trades! It is useful when placing stop-losses because your trade will activate immediately upon reaching or passing by your chosen trigger price. You can also adjust your stop-loss prices manually, but it’s so easy with the platform that there’s no reason not to get used to using it right away!

Bottom line

That’s about it for now! You need to know many more things before investing, but follow what has been mentioned here, and you should be fine. All in all, ETFs can be a great way to start investing, so why not give it a shot?