Forex Trading in The UAE – Top Brands to Trade With

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The foreign exchange market is the largest and the most actively traded financial market on the globe. Although a complicated endeavour, the very first thing a trader should always do when starting to trade FX, is choose a trustworthy forex broker. Looking for the best forex broker includes several key characteristics that every investor should know in order to generate substantial benefits in the future. Among them are commission fees, trading platforms (including software, web-based, mobile, charting, and third-party platforms), customer support, trading education as well as currency research, and reputation.

If you are a UAE citizen, there are several trading platforms that might be the best for you in order to start Forex trading in UAE. It is important to know that the Forex brokers are not required to get the license from the financial regulatory institution Securities and Commodities Authority (SCA) in order to accept the traders of the United Arab Emirates. So the “research” part of brokers gets a bit tricky. This guide is dedicated to navigating your way through UAE brokers, learning about the regulation that the country has, and what protects you from potential harm.

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UAE Forex Trading Regulations

Although the UAE regulated the FX trading industry similar to every other country, there are some minor details sprinkled in due to the country being predominantly Muslim. For those who don’t know, speculation is more or less frowned upon in the Quran, which is why Trading companies in UAE have to adjust in a very specific way.

UAE forex brokersBut before we get to those specifics, let’s learn about the agencies and organizations responsible for regulating this sector in the country. The main regulatory body is UAE’s central bank. On top of that, there are institutions like the SCA (Security and Commodities Authority). So if the Forex brokers want to be regulated in the UAE they are required to follow the rules of the mentioned regulatory bodies.

Now let’s talk about some of the specifics that UAE-regulated Forex brokers need to follow without question. The brokerage company must be owned by a local citizen in order to be able to be regulated by the central bank. All documents must be written in the local language before submitting them for review to the local governing agencies. Other than that, firms must have at least $8 million in capital as well as a deposit of around $6 million. The required deposit needs to be in a UAE bank, while the capital can be dispersed.

All brokers in the country must have an Islamic Account if they want to offer services to the locals. As already mentioned, this is done due to the local religion. According to the Quran, Muslims cannot borrow or lend money expecting interest on it. And due to how leverage works in forex, regular accounts tend to pay interest to the brokers for “lending” out the funds to trade with. With Islamic accounts, the “interest” part of the account is simply not there, therefore making it halal.

So while trading Forex UAE you should know that in most cases you will come across swap-free accounts, which means that there are no interest rates so no profit can be made with the swaps. However, there is a special trading zone called the DIFC (Dubai Int’l Finance Centre) where such laws don’t apply. Brokers in this trading zone are usually authorized by foreign financial institutions such as the UK, Cyprus, and others. This is the main reason why Forex trading in Dubai is completely different from FX trading in the UAE. The laws are simply too different as well as the target market and scale of the companies.

How to Find a Good FX Broker in the UAE

In most cases, it is very hard to tell what is the major criteria for the best Forex broker company because it depends on the individual traders’ needs, requirements, and desires. However, there are some main features that almost every broker should have in order to be called one of the best in the field.

uae fx brokers listSuch types of characteristics include generous bonuses and promotions, licenses and authorization from regulatory authorities, lots of active traders, great feedback from loyal customers, good quality of customer service in Arabic, and so on.

This type of trading company in the UAE will help any trader reach great success in Forex trading and gain a substantial amount of money in the future.

Let’s try and describe the perfect FX broker in the UAE. Let’s call it XYZ. XYZ has very competitive spreads (maybe 1 pip), the leverage level is as high as 1:500, and has account types for both professional and novice traders. XYZ also holds numerous licenses from both the SCA and international regulators such as FCA (UK) and maybe CySEC (Cyprus).

The minimum deposit for XYZ ranges from 100 to 150 US dollars and mainly bases its trading operations on popular and trusted platforms such as MT4, MT5 or cTrader.

But why all of these formalities? Why can’t you just look at the broker and know it’s legit? Well, that’s because the UAE is full of large scale individual traders. This makes it a good target for scammers. Avoiding fraudulent brokers is exceptionally important due to how hard it is to retrieve any lost funds even for regulators. Therefore, a UAE-regulated forex broker is the safest option to go for, even if you think fees and commissions are a bit high. You at least get security and guarantees that your investments will be safe.

Forex Trading Platforms in the UAE

The United Arab Emirates has pretty much the same trading platforms as anywhere else in the world. The market is currently dominated by MetaTrader 4, MetaTrader 5 and occasionally cTrader.

The main reason behind this is that these platforms are tested and trusted. Almost every single FX broker in the world has or has once had this software. Furthermore, the developers behind these platforms personally vet and approve brokers they partner with. So, if a broker has any of the above-mentioned brands, it’s highly likely that they’re legit.

Pair that up with a license from a local regulator, and there’s pretty much nothing to fear from them. Now let’s take a look at the 2 most common platforms you will definitely encounter.

MetaTrader 4

MT4 is known for its analysis tools, trading order types, security, reliability, and much more. This software has a long history and has been operating in the Forex market for almost 16 years. It has millions of users around the world and the Forex UAE is also a big part of this. MetaTrader 4 ensures its customers’ safety all the way which means that it is a very reliable software and nobody should be afraid of potential crashes.

The only disadvantage we can think of for MT4 is probably its archaic design. Other than that it being designed for primarily FX trading could also potentially be counted as a disadvantage. But not too much.

MetaTrader 5

Another trading software that is considered to be one of the best platforms while talking about forex trading in the UAE is the MetaTrader 5. This is also a well-known platform in the country. MetaTrader 5 offers its customers advanced and important trading instruments and tools. Besides, it also gives traders access to not only desktop but also a mobile version of the trading platform. On top of that, MetaTrader 5 offers its users an opportunity to use Stop Loss and Take profit options which is a very beneficial tool in terms of trading in the foreign exchange market.

Moreover, it should also be noted that, unlike MT4, MT5 offers multiple trading options such as stocks, indices, commodities, and other securities.

Depositing into a Forex account in the United Arab Emirates

The most commonly used currency for Forex trading in Dubai and the United Arab Emirates, in general, is the AED or the USD. Here’s where we first encounter a major difference between western brokerages and UAE brokers. The minimum deposit in UAE can be up to 500 USD, while most brokers in the EU or even in Africa request as little as 50 USD. This is mainly due to the median income being much higher in the UAE.

But even 500 USD is a microscopic amount of money for FX trading as currencies sometimes move 1/1000th of a cent and not more. This is why Forex UAE and FX in general is done through leverage to maximize profits even on the smallest of movements.

But this tool is not a toy. It’s more like a double-edged sword. Use it correctly and it will bring you great success, but use it carelessly and you might cut yourself. Why? Because leverage is basically like borrowing money from the broker to trade with it. If the broker doesn’t have a “fail-safe” or “margin limit” for your account, you can end up losing more money than you actually have, thus leaving you indebted to the broker.

The Bottom Line

Forex trading in the UAE is completely legal but heavily regulated. But due to Islam being the dominant religion in the country, FX brokers need to adhere to different regulations than they might be used to. Trading companies in UAE are usually required to block their swap-free accounts to make sure that traders don’t receive or have to pay any interest on their investments.

The biggest regulator in the UAE is the Central Bank in combination with the SCA (Securities and Commodities Authority). Other UAE-specific guidelines include the brokerage being owned or co-owned by a local citizen as well as any legal documents being written in the Arabic language.

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