Mobile Ad-hoc Network (MANET) is a wireless network consisting of numerous nodes which are move every minute and are highly mobile. Basically, MANET is a self configuring network where nodes can enter the network and also leave the network in a random manner without prior notification to the network. This allows the malicious nodes to enter the network and attack other legitimate node. Hence, to ensure security in the network it is necessary to detect attacks or malicious nodes and notify the network. In this paper, we have proposed an Optimal Node Selection and Alarm Exchange Technique for Reducing the Security Cost and False Positives in MANET. This technique raises an alarm if any node detects its neighbour to be malicious and then it is validated to check for false alarm. In this way, network performance is enhanced by utilizing the nodes with lesser security costs for further traffic handling.