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A Guide to Online Trading in the UAE

posted on: Aug 6, 2023

Trading is an uncertain arena. No one can know for sure what the impact of a trade they make can be. Although one can take an educated guess, it should also be based on experience, one’s own, and that of professional traders. The most basic tenet is to read widely and to do some research on markets before making a trade. 

Trading can be done very easily online. With just a laptop and access to the internet, you can begin trading today. However, it is wise to first learn as much as you can, unless you have money you do not mind losing. 

There is no shortage of choices of markets for traders. You can start in any market from trading commodities to cryptocurrency, stocks, forex, or indices. We provide a simple guide on trading for those that are just starting out or considering getting into trading.

Basic Terminology

There are several terms you need to understand before you start trading. The most important terms you need are:

  • Risk. With every trade, you take a risk. You can either win or lose. Be careful about putting all your eggs into one basket and only trade the amount of money you can lose. This should not include your rent money.
  • Volatility. The market can move in either direction – up or down. The speed at which it does this is called volatility. The risk is greater when the volatility is high, for example, if you make a trade in a volatile market, it can move suddenly in the wrong direction where you lose money.
  • Contracts for Difference (CFDs). CFDs pay out the difference between two prices – the opening and closing prices.
  • Going short. This means that you are selling. You sell when the market price seems likely to drop.
  • Going long. This is when you are buying. You will buy when you think the market value is going to increase.
  • Margin trading. Your margin is your collateral. This is held by the exchange or your broker to enable you to trade. You are loaned the balance.

Starter Markets 

Which are the best markets for beginners? There are a few you can choose from. We list the best ones below:

  • Forex. This is trading in currencies. It is a volatile market.
  • Commodities. This is the market for natural goods trading. Examples are gold, oil, and grain.
  • Indices. Indices combine different asset groups under one product. This is a trickier market because you have to predict how each index will move and the net result.
  • Bonds. You can trade government or municipal bonds. This is a fairly secure investment.
  • Shares. One can purchase shares in a company. Buying is best when share values are set to increase. Selling should happen when share prices are about to drop.

Learn from Professional Traders 

A professional trader is a good source of guidance for online traders. Look for books written by experts like James Cordier to learn what to do or not do in different states of the market. 

Why UAE Citizens Trade in Large Numbers

The age group containing the most citizens is the 30-34 demographic. This is also the age at which most risks are taken. Expats are also inclined to take risks and have a large disposable income. DIY investing is a new fad in the UAE that is encouraging people to invest without a broker.

This guide was created to help you to understand the fundamentals of online trading in the UAE.

Please note that this post was written by a third-party and does not necessarily reflect the views of Arab America or its employees. These posts help allow Arab America to produce our wonderful original content, thanks for your understanding.

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