Forex Trading in the United Arab Emirates

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Contributor, Benzinga
March 22, 2024

If you’re interested in getting started with forex trading in the United Arab Emirates but aren’t sure where to start, this guide covers everything you need to know. 

The United Arab Emirates has become a hub for forex trading, attracting both seasoned traders and beginners looking to capitalize on the opportunities in the market. With the right knowledge and strategies, forex trading can be a profitable venture for individuals in the UAE.

To learn about forex trading in the United Arab Emirates, including the regulations, best practices and tips for success in this competitive market, keep reading.

Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Get Started with Forex in the United Arab Emirates

Getting started with a forex broker in the United Arab Emirates is exceptionally easy. Here are the basic steps you’ll go through when you open an account and start trading.

  • Stabilize your internet connection: A stable internet connection is the most important tool a forex trader can have at their disposal. Before you open a trading account, run a speed test on your computer or smartphone and be sure that your connection is secure and private.
  • Choose a broker: To operate in the United Arab Emirates, every broker must meet strict standards set by the Securities and Commodities Authority (SCA). This means that you can be sure that both foreign and domestic brokers licensed in the UAE have the capital to maintain your investment. Check and make sure that your broker is licensed with both the SCA before you open an account.
  • Choose your trading platform: Though some brokers offer traders the ability to use their own proprietary platforms, you may need to download additional charting software like MetaTrader 4 or 5. Be sure that your broker supports your platform of choice before you download.
  • Fund your account: Once your account has been opened in full, it’s time to deposit funds into your trading account. Most brokers operating in the UAE allow traders to deposit funds with a bank transfer, credit card or even PayPal.
  • Make your first trade: After your funds have cleared your account, you can officially trade forex online. 

United Arab Emirates Forex Trading Strategies

Most traders who trade with the dirham as their primary currency use a technical analysis strategy to capitalize on short-term price fluctuations. Technical analysis involves the use of price charts and past data to predict how a currency will move in the future. By charting signals and price movements, you can make a prediction on whether the currency you’re trading will rise or drop in value.

Below you can explore some of the most common technical analysis signals and strategies traders use to decide which currencies to buy and sell. Though these signals aren’t a foolproof guarantee that you’ll make money trading forex, they can provide a helpful starting point to cultivate your own trading strategy. 

Reversal Candlesticks

A reversal candlestick is an indication that a trend will change and the value of a currency will switch directions in its movement. For example, a reversal candlestick that is triggered when the USD is increasing in value may act as a sell signal. There are multiple types of reversal candlesticks, and they may be bullish or bearish depending on their placement and type.  

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Breakout Strategy

The breakout trading strategy is a popular strategy for newer traders because it doesn’t involve any complex math and is relatively consistent in terms of profits. Traders using the breakout strategy calculate a resistance or support level and monitor how prices of a currency are moving. This strategy works best when markets are moving sideways. A “breakout” candle occurs when the resistance or support level is broken, which may indicate a buy or sell signal.   

United Arab Emirates Dirham (AED) and the U.S. Dollar

The AED is pegged to the US Dollar. The peg was established in 1997 at a rate of 3.6725 AED to 1 USD and has remained fixed since then. This peg provides stability and predictability for businesses and investors in the UAE.

Forex Trading Example

Let's say you're a forex trader and you believe that the Euro (EUR) will strengthen against the US Dollar (USD). You decide to execute a forex trade.

  1. Currency Pair: You choose the EUR/USD currency pair. In this pair, EUR is the base currency, and USD is the quote currency. It means you're buying Euros and selling US Dollars.
  2. Trade Size: You decide to buy 10,000 Euros (EUR) with the current exchange rate of 1 EUR = 1.20 USD.
  3. Calculating Investment: To determine how much you're investing in USD, you multiply the amount of EUR you're buying by the exchange rate:
    10,000 EUR * 1.20 USD/EUR = 12,000 USD So, you're effectively investing $12,000.
  4. Opening the Trade: You place a buy order for 10,000 EUR at the current exchange rate.
  5. Monitoring the Trade: After some time, let's say the exchange rate moves in your favor, and now 1 EUR = 1.25 USD.
  6. Closing the Trade: You decide to close your position. To calculate your profit:
    10,000 EUR * 1.25 USD/EUR = 12,500 USD You originally invested $12,000, but now you have $12,500. So, your profit is:
    $12,500 - $12,000 = $500 You've made a $500 profit from this trade.
  7. Closing the Position: You close your position by selling the 10,000 EUR at the new exchange rate of 1.25 USD/EUR, thereby converting it back into US Dollars.

This is a simplified example. In actual trading, you would also consider factors like leverage, spreads, trading fees and risk management strategies. Additionally, forex trading involves significant risk, and it's essential to have a solid understanding of the market before engaging in trading activities.

Making Money with Forex in the United Arab Emirates

Making money by trading forex in the UAE is safe and legal. Unlike some other countries, there are no legal limitations to the amount of money that you can earn from forex trading or that you can deposit into your brokerage account as a resident or traveler in the UAE.

However, this doesn’t mean that you’re guaranteed to make money when you trade forex. Be sure to take these steps to protect your investment when you first begin your trading journey.

  • Only work through a licensed broker: Though the UAE has a regulated forex system, forex scams are still present. To protect your investment, search for your broker through the Dubai Financial Services Authority or the SEC before you open an account. If a broker isn’t registered, move onto other options.
  • Cultivate your trading strategy: Many brokers in the UAE offer demo accounts that allow you to simulate the forex trading experience without risking any of your own capital. Create your trading strategy and master your buy and sell signals with a demo account before you risk any of your money trading for real.
  • Limit your leverage usage: Depending on the amount of money you deposit into your brokerage account, your broker might offer you leverage to enhance your trading. Using leverage can multiply your profits — but it can also cause you to eliminate all of your profits with a single bad trade. Limit the amount of leverage you use, and always be sure you can meet your broker’s margin calls before you commit to a trade using leverage. 

Best Online Forex Brokers in the United Arab Emirates

There are a wide range of domestic and international forex brokers licensed to accommodate traders in the United Arab Emirates. The broker you choose to work with will determine the currencies you have access to, the platforms you can use and your fees — so be sure to do your research before you open an account.

Not sure where to begin? Consider a few of the top forex brokers in the UAE below. 

  • Axi
    Best For:
    MT4 Traders
    securely through Axi's website

    Over-the-counter derivatives are leveraged products that carry a high level of risk to your capital. Trading is not suitable for everyone and may result in you losing substantially more than your initial investment. You do not own, or have any rights to, the underlying assets. You should only trade with money you can afford to lose.

  • BlackBull Markets
    Best For:
    Lightning Fast Execution Speed
    securely through BlackBull Markets's website
  • Capital.com
    Best For:
    Market-Leading Spreads
    Disclaimer: 84% of retail CFD accounts lose money.

    CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.84% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

  • Forex.com NON US
    Best For:
    Forex Trading in and Outside the U.S.
    securely through Forex.com NON US's website

    CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

    The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account

  • AvaTrade
    Best For:
    Non U.S. Forex & CFD Traders
    securely through AvaTrade's website
  • eToro Forex
    Best For:
    Copy Trading
    securely through eToro Forex's website

    CFD trading is not available to U.S. users. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Forex Terminology

As a forex trader It can be easy to become overwhelmed by the amount of “forex lingo” brokers and other traders use when discussing trades and fees. Familiarize yourself with the following terms before you trade:

  • Pip: the smallest denomination of any currency, usually rounded to the 4th decimal place. For example, if the USD moves from 1.0000 to 1.0010 in relation to a certain currency, traders will say that the USD moved by 10 pips.
  • Lot size: the total number of units of currency you are buying or selling. It doesn’t matter if you sell 1,000 USD or 1,000 AED — in both cases, your lot size is 1,000.
  • Orders: a set of instructions you give to your broker that lets them know which currency you want to buy or sell, your lot size and the price you want to execute the order at. Orders are crucial in forex trading because you cannot buy or sell currencies directly.
  • Call: a major risk of using leverage. If the value of your lot goes down after using leverage, your broker may subject you to a margin call. When you receive a margin call, you’ll be required to deposit more capital into your account to maintain your position. This can quickly wipe out any profits you’ve made previously — or even put you into debt in extreme cases. 

Trade Forex in the UAE

Compared to other countries, forex trading in the UAE is well-regulated and safe. However, this doesn’t mean that forex trading in this country is risk-free. You should still be wary of potential scams and continuously monitor the forex market before you decide to invest — this will help you preserve your trading funds and earn more money over time. 

Frequently Asked Questions

Q

Is forex trading allowed in UAE?

A

Forex trading is allowed and legal in the UAE, it is regulated by the Securities and Commodities Authority (SCA). The SCA regulates all financial products and services provided in the local market, including forex trading. In order to legally trade forex in the UAE, investors must open an account with a broker that is licensed by the SCA.

Q

How can I trade forex in UAE?

A

Trading forex in the United Arab Emirates (UAE) is permissible for both local and foreign investors. The UAE has a strong focus on attracting international investment, and as such, it has created a well-regulated environment that allows investors to safely and securely trade online. You must trade with a regulated forex broker.

Q

How much do forex traders make in the UAE?

A

The average forex trader in the UAE can make anywhere from a few hundred to a few thousand dollars per month, depending on their experience, skills and the amount they invest. However, it’s important to note that trading forex is highly speculative and carries a high level of risk, so income can vary greatly.

Get a Forex Pro on Your Side

FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets with low pricing and fast, quality execution on every trade. 

You can also tap into:

  • EUR/USD as low as 0.2 with fixed $5 commissions per 100,000
  • Powerful, purpose-built currency trading platforms
  • Monthly cash rebates of up to $9 per million dollars traded with FOREX.com’s Active Trader Program

Learn more about FOREX.com’s low pricing and how you can get started trading with FOREX.com.

About Sarah Horvath

Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.