One of the most popular financial instruments on the stock market is futures. Futures are often confused with options - these financial instruments are indeed similar, but there are still differences. For your futures trading to be successful, your trading platform must be equipped with certain trading tools as well as analysis tools.

In the current review, let's take a look at what futures are, what are the features of this financial instrument, and how to choose an online futures trading platform in Malaysia. 

Online futures trading platform in Malaysia
Online futures trading platform in Malaysia

Features of futures contracts

What is a futures contract? The essence of any futures contract is a deferred payment, i.e. today the parties to the transaction agree on the price at which in the future the seller will sell and the buyer will buy the asset underlying the futures.

In other words, what a futures contract is, is analogous to a dispute between two parties in a transaction over the price of the underlying asset in the future.

In trading, the most common underlying assets of futures are:

  • stocks;
  • commodities;
  • currency pairs;
  • indices;
  • сryptocurrencies.

Depending on which underlying asset you have chosen for your futures contract, futures are traded on the following exchanges:

  • Stock Exchange. Index, equity and bond futures are traded here;
  • Commodity: Futures on oil, precious and non-ferrous metals, agricultural products;
  • Monetary: currency contracts, interest rates.

In practice, we distinguish between the following types of futures contracts:

  • delivery futures;
  • cash-settled (non-deliverable) futures.

In a futures contract with physical delivery the buyer undertakes to buy and the seller undertakes to sell the underlying asset. Delivery is made at the settlement price quoted on the last trading date.

If this contract expires and the seller fails to deliver, the exchange imposes a penalty.

A cash-settled (non-deliverable) futures implies that only the difference between the contract price and the actual asset price on the contract date is settled in cash between the parties, without delivery of the underlying asset.

Settlement futures can be concluded for any asset, including indices, interest rates, anything that cannot be shipped or touched.

In essence, a futures is an ordinary exchange-traded instrument that can be sold at any time. That is, it is not necessary to wait until the futures deal is due. Most traders are simply looking to make money on futures, rather than to buy something in reality by delivery. Index and equity futures are of most interest to traders.

Like any other exchange-traded asset has its price, volatility, and the essence of making money for traders is to buy cheaper and sell dearer.

When the futures contract expires there may be several options.

The parties keep their money or one of the parties makes a profit.

If at the time of execution the price of the commodity increases, the profit is made by the buyer, because he purchased the contract at a lower price.

Correspondingly, if at the time of delivery the value of the commodity decreases, the seller receives a profit, since he sold the contract for a higher price, and the owner receives some loss, since the exchange pays a lower price than that for which he bought the futures contract.

Futures are similar to options in many ways, as both instruments may be used for buying and selling the underlying asset (securities, exchange rates, indices, commodities), have a limited duration and are used by participants to make money (up-trade and down-trade) or to hedge their risk in the event of market price movements.

What makes futures different, however, is that buying and selling is not a right, but an obligation of the parties. The exchange is the guarantor of their obligations. Thus, the futures are the obligations of both parties. Options are the obligations of one party and the rights of the other. 

The trading platform allows you to view futures quotes online
The trading platform allows you to view futures quotes online

Platform for online futures trading

Brokerages offer well-designed and technically advanced online platforms for trading futures. It can be difficult for the novice trader to choose the right online platform for trading. Where do you start? Choosing a broker.

A broker must be trustworthy and reliable as you entrust them with your funds. 

What does that mean? First of all, having a license and all documents that allow you to carry out intermediary activities in the brokerage market, as required by law. Thanks to specialised websites, you can easily check this information. Also, check the business reputation of this broker and how long it has been providing services, i.e. whether the broker has a positive track record. Inquire about commissions.

Online trading is very different from its offline version. In fact, the role of the broker, the live person you used to call to make a transaction, is replaced by an automated online platform. So, on the one hand, it gives you more freedom of action without tying you to the other person's work schedule and timetable. But on the other hand, you will be making all the transactions yourself, so choosing a practical, functional and intuitive platform is one of your main concerns when choosing a broker.

Online trading platforms allow you to trade online from anywhere. It offers a more convenient approach than traditional trading platforms, which use open auctions and telephone trading. Real-time market price streaming is a key feature of online trading platforms. Some platforms offer traders access to previously exclusive trading tools that only specialized trading firms use. Online trading platforms can also perform high frequency trading or trade specific strategies based on technical analysis automatically. Online trading platforms have also evolved to accommodate more modern operating systems. Many of them are mobile-friendly and available for Android, iOS and Windows platforms.

Technical analysis in futures trading

When trading futures, traders often use technical analysis to predict the behaviour of asset prices.

Choose trading platforms which are equipped with indicators for technical analysis. Below we will discuss the most popular indicators for trading in futures contracts.

MACD - short for Moving Average Convergence and Moving Average Divergence. 

The convergence/divergence moving average (MACD) is mostly used as a trend indicator, but it can also serve as an oscillator. The MACD helps to determine which direction price is likely to go, the potential strength of that movement, and the likelihood of a trend reversal.

This indicator allows you to enter a trade when a trend starts and exit before it ends.

Learn how to use the MACD indicator
Learn how to use the MACD indicator

The RSI (Relative Strength Index) indicator is a popular classic oscillator, used to assess trend strength and find correction/reversal points. 

The creator of the Relative Strength Index is famous theoretician J. Welles Wilder, who introduced the tool to the general public back in 1978.

The main advantage of indicator experts call simplicity of interpretation: only one curve is displayed on the chart, which is quite easy to navigate.

The RSI indicator compares the absolute value of growth and decline in the market over a certain time period. The index values can range from 0 to 100. The main and only parameter of the tool is the period. For example, if you need to eliminate false signals, the period size can be increased up to 21. When the market is calm, the length can be reduced to 7 in order to get more messages.

Using the RSI indicator
Using the RSI indicator

The ADX (directional indicator) works proactively and indicates the strength of the trend. 

It is a graph on which three curves are plotted: +DI, -DI and ADX. They oscillate between zero and a hundred. Movements of these lines give certain trading signals.

The +DI/-DI indicates the strength of the upward/downward trend within a certain time frame. If the plus curve is located at the top, the market is bullish. If it has a minus DI, the market is bearish.

The ADX curve is an exponential average of -DI and +DI. It informs us about the market mood - whether a trend is present at the moment (if yes, then how strong), or whether the price is "stuck" in a sideways movement (flat). A stable trend is indicated by rising ADX accompanied by divergence of +DI and -DI in opposite directions. The convergence of these lines signals the gradual fading of the movement.

ADX indicator
ADX indicator

How to start futures trading in Malaysia?

So, as mentioned above, to start trading futures in Malaysia, we should first choose an online broker that will provide us with a trading platform to make transactions. Then we need to register on the platform, open and fund the account and actually we can start trading directly.

Reliable trading platforms offer a demo account to learn the platform and hone your trading skills.

How to register on the platform, what is a demo account and how to activate a real account - read below. 


You will have no problem registering, as the registration process on most platforms is very simple and does not require any special technical knowledge or skills. Go to the broker's website, find the "registration" option, clicking on it will open a standard registration form. All you have to do is enter your username into the registration form and provide a valid email address, to which you will receive a link to confirm your registration. Confirm your email address as indicated and your profile is ready to use.

Choose platforms with easy registration
Choose platforms with easy registration

Demo account

A powerful tool to help investors test a new platform is a demo account.

Many, if not all, brokers have a demo account. A demo account is an exact replica of a real account, only it is designed for training operations. On a demo account you will see a certain amount of dummy funds - these are test funds, you can use them only for training operations.

A demo account is a tool that allows you to try trading on the platform of your choice, while investing with virtual fictional money. You won't be able to profit from it, but it will give you a good idea of how the platform works.

For more experienced investors, the demo can still be a useful tool for setting up and testing possible strategies in the market. With this account, you can try out as many features as possible and see for yourself if your strategy is profitable for you.

In addition, advanced trading platforms are equipped with a tutorial section where you can find video lessons on investing. We highly recommend that you study these lessons. By studying the lessons and validating the results with a demo account, you will get a good understanding of how the platform works and you will adapt to trading faster. 

Explore the platform using a demo account
Explore the platform using a demo account

Real account

Once you are familiar with the platform and know the risks and peculiarities of trading, you can make your first deposit. Most platforms cooperate with the most convenient and reliable payment systems. Bank cards (Visa or MasterCard) and electronic payment systems (WebMoney, AdvCash, Neteller, Skrill, Perfect money, etc.) are available. Modern programs allow us to quickly process and confirm the transaction so that the funds are credited to the deposit account within several minutes.

Withdrawals are made using the same tools as deposits.

Deposits and withdrawals
Deposits and withdrawals

The benefits of trading in futures

 Trading in futures offers many advantages to traders. For example:

  • Minimum investment amount. Futures trading allows even traders without a huge start-up capital to enter the market. When it comes to online trading, things are even simpler. Generally, you can get started in online futures trading with just a few dollars of start-up capital - check the minimum investment amount when choosing a futures trading platform;
  • Ability to use leverage.  The use of leverage, known as tradeable capital, gives you the ability to control large positions with minimal risk of capital. Please note: financial leverage can lead to losses in excess of initial margin, and traders should be aware of the risks associated with trading in futures;
  • 24 hours trading capability. Futures trading is available 24 hours a day, enabling you to choose the trading hours that are most convenient for you;
  • High liquidity.

Having chosen several sectors for trading, a trader has a possibility of wide diversification. Besides, futures are often used as a hedging instrument. To compensate for the risk, futures investors often trade on several markets at the same time. For example, derivatives such as crude oil futures are commonly used by traders both to hedge equity index risks and to diversify their portfolios.

And because they can be traded both long and short, futures offer increased flexibility, allowing seamless trading with both sides of the price action.

In order to trade futures successfully, it is important to choose the right trading platform. To do this, it is important to check that the size of limits and commissions are suitable for you, as well as the usability and functionality of the trading platform.

You should choose a trading platform for futures trading based on the following important points:

  • The platform is easy to register and has a user-friendly interface. It is important that you can easily find all the options you want;
  • Convenient clearing transactions and suitable transaction limits. Check what deposit and withdrawal methods the platform offers and what transaction limits are available. You should choose according to your own preferences and financial situation;
  • Make sure you have all the tools you need to analyse the market and trade. Check if the platform has the indicators you need, what leverage the platform offers and what trading tools are available.

As said before, a good feature of reliable platforms is the demo account, as well as a number of additional options and features that make your work more comfortable and productive. These are different information blocks, market analysis section, statistical data, news, educational section and so on.

The platform should definitely have a feedback option, which is available 24/7.

We hope our tips will help you choose the best futures trading platform in Malaysia. You can test the platform today by opening a free demo account! Register on the platform, test, trade and let your transactions be profitable!

RHB Bank
Hong Leong Bank
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