Forex Trading in Saudi Arabia

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Contributor, Benzinga
April 25, 2022

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Saudi Arabia has recently opened its forex market and allows regulated brokers to trade forex on behalf of customers. If you’re thinking about exploring your options as a forex trader in Saudi Arabia, be sure to read our comprehensive guide to laws and licensed brokers. 

Get Started with Forex in Saudi Arabia

No matter where you live, trading forex starts with a solid brokerage account from a licensed forex broker authorized to accept clients in your home country. Let’s take a look at a few of the basic steps you’ll go through when you open your 1st forex brokerage account.

  • Step 1: Test your internet connection. A fast, reliable internet connection is the most important tool you can have at your disposal when you trade forex. Run a speed test on your computer or mobile device to ensure that your connection is stable before you continue.  
  • Step 2: Choose a broker. The forex broker you work with will directly influence the fees you pay, the leverage you have access to and the currencies you can purchase. Look for a broker licensed by the Capital Market Authority (CMA), the governing body that regulates forex brokers in Saudi Arabia. Though brokers are not required to register with the CMA before accepting clients in Saudi Arabia, sticking with a licensed broker can help you avoid forex scams and fraud.
  • Step 3: Open an account. Once you choose a broker you want to work with, open an account through your broker’s process. You’ll need to provide a bit of personal information before you can open an account with most brokers.
  • Step 4: Download your trading platform. Though some brokers offer a proprietary platform, you might also need to download a 3rd-party trading platform like MetaTrader 4 or 5. Know which platforms are compatible with your brokerage firm before you download.
  • Step 5: Fund your account. After your account is opened, you’ll need to deposit funds into your trading account. Most traders in Saudi Arabia accomplish this by linking their bank account directly to a trading account.
  • Step 6: Make your 1st trade. When your deposit clears, you can officially make your 1st forex trade by placing an order through your broker. 

Saudi Arabia Forex Trading Strategies

There are 2 major trading strategies that forex traders use to determine if a currency will rise or fall in value: fundamental analysis and technical analysis. Let’s take a look at a few of the differences between the 2 major trading strategies and when each is most appropriate. 

Fundamental Analysis

Fundamental analysis relies on studying the underlying economies of the countries that use each currency and their financial situations. When deciding which currencies are likely to change in value, fundamental analysts may examine:

  • GDP reports
  • Consumer confidence indexes
  • Inflation rates
  • Interest rates
  • Trade balances
  • Manufacturing indexes

Most traders who use fundamental analysis as their primary trading strategy take a medium-term or long-term approach to trading. They often hold their currencies for months before converting back to their base currency.  

Technical Analysis

Traders who use technical analysis to determine which currencies to buy or sell rely almost entirely on charting patterns and movements that may signal how the currency will change in value based on previous patterns. Technical analysts usually don’t do much research into the underlying economic or political situation of the countries whose currencies they’re buying and instead search for:

  • Reversal candlesticks that may signal that a currency will reverse its price trend direction
  • “Breakout” candlesticks that indicate that a currency will move outside of a pattern of low volatility
  • Trendlines that indicate a mean price average that the currency is likely to return to

Most traders who use technical analysis as their primary trading strategy take a short-term or medium-term approach to trading. They may hold a currency for as little as a few minutes before selling it with the intention of capitalizing on quick price movements. 

Forex Trading Example in Saudi Arabia 

Let’s take a look at an example of how you might be able to make money trading forex by taking advantage of currency movements.

Imagine that you open your brokerage account and fund it with 10,000 SAR. Your broker offers you 10:1 leverage on your account. This leverage enables you to trade with the power of 100,000 SAR despite only having 10,000 SAR in your account.

You believe that the value of the riyal will fall in comparison to the euro, so you decide to convert your entire lot of SAR to EUR. At the time of conversion, 1 SAR is equal to €.2400 EUR. When your order is filled, you’re left with a total of €24,000 after using all of your capital and your leverage.

Soon you see that the value of the SAR is falling in comparison to the EUR. When 1 SAR equals €.2200 EUR, you decide to sell your entire lot. When you convert your entire lot of EUR back to SAR, you’re left with a total of 109,090 SAR. After accounting for your initial investment and the amount of money that you borrowed in leverage, your total profit on this trade is 9,090 SAR. 

Making Money with Forex in Saudi Arabia

Making money with forex trading is legal and safe in Saudi Arabia. Unlike some other countries, there are no legal limitations on the amount of profit you can take when forex trading. However, the forex industry is relatively new in Saudi Arabia, which means that there are fewer regulations than competing foreign countries. Protect yourself and your money by taking the following precautions.

  • Only work with a licensed broker. Not every broker in Saudi Arabia is licensed or subject to government oversight. Working with an unlicensed broker can greatly increase your chances of getting involved in a forex scam. Check the CMA’s website to ensure that your broker is licensed before you open an account.
  • Know your leverage. Using leverage to trade forex is legal in Saudi Arabia — your broker may offer you up to 1,000:1 leverage, and there is no government-instituted cap on leverage usage. This can amplify your profits if your trades are successful, but it can also quickly put you into debt with a single bad trade. If you decide to use leverage to trade, be sure to use as little as possible.
  • Work with a demo account 1st. Before you deposit any of your own money, you should practice your trading strategy with a demo account. Demo accounts allow you to trade with fake virtual money before investing your own funds. 

Best Online Forex Brokers in Saudi Arabia 

Working with a reputable, licensed broker is 1 of the best ways to avoid forex scams. If you aren’t sure where to get started, consider a few of our top choices for forex brokers in Saudi Arabia below.  

  • HYCM – Forex
    More Details
    Account Minimum
    $100 USD (or equivalent)
    Pairs Offered
    69
    securely through HYCM – Forex's website
    More Details
  • Forex.com
    More Details
    Account Minimum
    $100
    Pairs Offered
    80+
    securely through Forex.com's website
    More Details
  • eToro Forex
    More Details
    Account Minimum
    $50 USD
    Pairs Offered
    47
    securely through eToro Forex's website
    More Details

    eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.

  • AvaTrade
    More Details
    Account Minimum
    100 EURO
    Pairs Offered
    50+
    securely through AvaTrade's website
    More Details
  • IBKR International
    More Details
    Best For
    Sophisticated Investors
    Overall Rating
    Read Review
    securely through IBKR International's website
    More Details
  • Swissquote
    More Details
    Best For
    Contract for Difference (CFD) Traders
    Overall Rating
    securely through Swissquote's website
    More Details

Your hunt for a quality forex broker should bring you to the firm that offers the most options and extras. International Brokers is a stout choice because you get more than access to the markets. You also gain access to:

  • Low commissions
  • Tight spreads as low as 1:10
  • Deep liquidity
  • Over 100 currency pairs
  • Professional trading tools

Register for an account so that you can start trading today. Remember, no matter where you plan to manage your forex portfolio, you need options, service and extensive market access.

Forex Terminology

If this is your 1st time opening an account to trade forex, you might not be familiar with the unique forex terminology traders and brokers use when discussing the currency market. Let’s take a look at a few of the most common terms you’ll hear when you start forex trading.

Pip: a single pip is the smallest unit of any given currency, usually rounded to the 4th decimal place. If the value of the SAR moves from 1.0000 to 1.0010 in relation to a certain currency, forex traders might say that the value has moved by 10 pips.

Lot size: your lot size is the number of units of currency you’re buying or selling. For example, if you place an order to sell 100,000 SAR, your lot size is 100,000. Most forex traders consider 100,000 units of any currency to be a standard lot.

Orders: an order is a set of instructions you provide to your broker telling them which currency you want to buy or sell, your lot size and when they should execute the order. There are multiple types of orders, and you can use a variety of order types to limit your losses and maximize your profits automatically.

Calls: a call (sometimes called a “margin call”) is a major risk of using leverage to trade currencies. If you borrow money in leverage to trade and the value of your lot goes down, your broker might subject you to a call. 

After you receive a call, you must deposit more money into your brokerage account in order to maintain your position. A single margin call may wipe out a substantial amount of forex profits, so be very careful when using leverage to trade. 

Enter The Saudi Arabian Forex Market

The forex market of Saudi Arabia is relatively new compared to other countries in Europe, Asia and North America. This means there are fewer regulations and restrictions on brokers in Saudi Arabia than other countries. 

If you decide to trade forex as a traveler or resident of Saudi Arabia, be sure to do your research and thoroughly read all brokerage terms and conditions before opening an account.  

Frequently Asked Questions

Questions & Answers

Q
Can you trade forex under Islamic law?
A

Forex trading is allowed under Islam.

Q
Can you legally trade forex in Saudi Arabia?
A

Saudi Arabia allows forex trading to retail customers through approved brokers.

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