Cyber security risks have increased more than ever with the exponentially rising popularity of forex trading worldwide. There has been an increase in the opportunity for cybercriminals like hackers and scammers, which has led to multiple malicious attacks in the financial industry. This has resulted in more stringent financial regulations on a global level, requiring brokers and traders to be vigilant while offering and using trading services, respectively. Both traders and brokers can, directly and indirectly, be a victim of cybercrimes.
Cybercriminals can target forex traders by accessing their trading accounts using their passwords and transferring funds or simply targeting the forex broker. Brokerage platforms have client records concerning their personal and financial information, which presents significant concerns. There is practically no broker that can fully guarantee Indonesian traders that they will never fall victim to cyber-attacks. However, several measures have been taken to add protection while trading foreign currencies in Indonesia.
Phonics on foreign exchange is the world’s largest and most attractive financial market, open 24 hours a day, five days a week, with more than $6 trillion traded daily. Forex trading involves exchanging foreign currencies driven by the goal of the profit motive of Indonesian traders.
This article will deal with various forms of cyber threats in forex trading and give valuable insights into Indonesia’s different cyber security measures and regulations. This article will also discuss the advantages and risks of forex trading.
Cyber Threats in Forex Trading
Cyber threats to forex trading in Indonesia can be of different types that traders must be aware of –
- Malware – Malware is malicious software or code inserted into a system that compromises data integrity, availability, or confidentiality. It can secretly affect data, operating systems, or applications used while trading foreign currencies.
- Ransomware – Ransomware limits or prevents users from accessing their systems through malware. This type of cyber threat asks the users to pay a ransom using their choice of payment methods to gain access to their data or system. Online payment methods offered by forex brokers in Indonesia usually include fiat and virtual currencies that can be stolen using ransomware.
- DDoS – Distributed Denial of Service (DDoS) attacks make online services provided by forex brokers unavailable by introducing excessive traffic from various sources and locations to the platform.
- Phishing and Spamming – Phishing is a type of social engineering that includes attempts to obtain sensitive information. This is a common form of cyber threat, the attempts of which appear to be from a reliable and trustworthy business or person. Spamming involves unsolicited, undesirable, and unwanted emails or messages that ask the users to do something, usually including asking for sensitive information.
Cybersecurity Measures for Forex Trading
Financial service providers such as forex brokers have become the most attractive targets for hackers. Around 45% of all providers admit to facing different forms of cybercrimes or cyber attacks during their operations. The best forex broker in Indonesia has developed several security precautions and measures, such as the 256-bit SSL (secure sockets layer) encryption protocol. Several forex brokers hold client funds in segregated bank accounts to provide an additional layer of security and ensure that the funds are not used for business purposes.
Furthermore, forex brokers in Indonesia also ensure that all personal and financial information their clients provides is decentralized. This means that no central authorities like the government, banks, and other financial institutions can gain access to sensitive information. With this, there is no mean system to target. Even if hackers can find any vulnerable point in the design, nothing can be done with the information they receive.
The best forex brokers in Indonesia can avoid cyber threats, fishing attacks, hacking, and data breaches by using robust security measures to protect forex trading accounts, such as regular system and software updates, encryption technologies, and multi-factor authentication. They must also educate employees and traders on the best data security practices and monitor their software systems regularly for unauthorized access or potential breaches.
Cybersecurity Regulations in Indonesia
Electronic Information and Transactions Law (EIT Law) performs cyber security regulation in Indonesia. It covers many offenses like distributing illegal content, data, breaches, unauthorized and unlawful access, and interception of electronic systems. It protects Indonesian traders illegally and contains strong provisions to protect personal data and website authentication to avoid fraudulent, fake, and scam websites.
It also emphasizes the urgent need for the government authorities to prevent cyber theft and misuse of electronic information and transactions on forex trading platforms, along with the need to create a national cyber security measure or strategy. To deal with cyber security problems on a national level, the Ministry of Defence Regulation provides guidelines for cyber defense. Overall, there have been many attempts to pass cyber security bills in the country to keep up with technological advancements and rising threats.
Forex traders found it convenient to provide financial services to Indonesian traders. They were relatively safe from any intrusion of government bodies due to the absence of regulatory guidelines monitoring the operations of forex brokers. However, the government started to initiate a movement concentrating on eradicating the increasing number of malpractices and forex scams, resulting in massive losses for traders. The best forex broker in Indonesia is now required to provide detailed information about any broker complaints and scams lodged against the companies through the TRUST+ website to allow traders to become more aware of such fraudulent practices prevalent in the forex industry. Forex brokers now have to match the quality and sophistication of services generally provided by global brokers to comply with the relevant regulatory authorities’ terms and conditions.
Advantages of Secure Forex Trading in Indonesia
Here are the top advantages of secure forex trading in Indonesia –
- World’s largest financial market – Since forex is the largest market in the world, there is no way it will cede this title anytime soon. Around $5 trillion to $6 trillion on average is traded daily.
- High liquidity and volume – Forex trading involves deep liquidity. Given the massive volumes of trades made per second, traders do not have to wait to get their money back under normal market conditions. With a simple buy or sell click, they can place a trade or get back their money whenever they want.
- 24-hour market – Forex trading can be done 24 hours a day, five days a week, without waiting for the opening or closing bell. Traders can be as active/passive as they want and trade on their schedule.
- Low transaction costs – The difference between the bid and asking prices is the spread, which is the transaction cost traders pay. Indonesia’s best forex broker offers competitive spaces that minimize trading costs and maximize profits.
- Leverage – With leverage, traders can easily borrow from brokers to place their trades above their deposited funds. This powerful tool gives increased purchasing power and more significant gains. However, note that it also carries a loss risk, as explained in the section below.
Risks of Insecure Forex Trading in Indonesia
There are many risks of insecure forex trading in Indonesia, including –
- Leverage risk – Forex trading leverage involves a small initial deposit called the margin necessary for placing forex trades due to price volatility that may be fluctuations in the currency prices, leading to margin calls, where Indonesian traders have to pay more than their deposits as margin. Using leverage aggressively during a volatile market may lead to substantial losses.
- Difficult to determine market price – The exchange rate of any currency pair is influenced by an array of elements like central banks, global politics, and other economic factors that can be difficult to conclude and obtain a meaningful result. Since forex trading is based on fundamental and technical analysis, incorrectly interpreting such information or misreading a chart can lead to negative trades.
- Highly volatile – The forex market is extremely volatile, which can be used to make money but can also lead to losses without any control over macroeconomic and geopolitical developments. This volatile nature of currency pairs makes it difficult for traders to monitor the market 24×5 and, therefore, suffer from losses.
Cyber security is an essential part of the forex industry in the world we are living in today. Choosing a regulated forex broker with a reliable trading platform that uses top-notch security measures can help traders make secure forex trades and reduce the likelihood of witnessing a cybercrime. Best practices for staying safe while forex trading includes deploying firewalls and malware with advanced protection capabilities against data breaches and malicious exploits.
In addition, Indonesian traders must always take necessary precautions to secure their trading accounts and information, such as using a strong and unique password or setting up two- or multi-factor authentication.