The sheer size of the foreign exchange market, and the nature of trading currencies, means that almost every country in the world has an interest in the way everything operates. The network of governments and central banks form a relatively decentralised system that supports a significant volume of electronic trading via various financial firms and brokerage houses.
As one of the most fast-moving financial markets, foreign exchange (also known as forex or FX) has been made massively more widely available by the proliferation of the internet. Where once the business of buying and selling currency in any large sums was the sole preserve of the bigger banks and other large institutions, now traders can open online accounts and trade currencies all over the world at the touch of a button.
Currency trading takes the form of exchange rate pairs, expressed as one currency against another (e.g. the euro against the dollar is described as EUR/USD) showing which of the pair is gaining or losing value. The forex market offers traders the opportunity to trade in a variety of ways, including:
- Cash markets (also known as ‘spot’ markets)
- Currency swaps
- Derivative markets
- Forwards
- Futures
- Options
Traders can use a wealth of information about the global economic environment to make predictions about which country’s currencies are likely to perform well, and which will lose value. Almost anything can have an impact on the way currencies perform against one another, so it’s important to know your market before starting to trade.
Forex Trading in Dubai
There are some countries in which forex trading is against the law, usually because of the perceived problems in regulating the practices involved. However, the United Arab Emirates allows forex trading, partly to facilitate the large numbers of ex-pat workers there are in the area who need to be able to send money home to their families.
Not only is there a thriving forex market in Dubai, but there are also substantial forex regulations in Dubai that maintain high standards of security when it comes to keeping all parties safe. It is important to understand how the forex business is regulated in Dubai before considering trading to minimise your exposure to risk.
One of the most important things to know about the Dubai forex market is that anyone trading must have a license to do so before they can conduct any business within Dubai. Many investors choose to establish a company to trade through. This often means setting up a company, which can be done in the Dubai International Financial Centre (known as the DIFC) offering independent jurisdiction and the option to select a mainland region in which to base your trading company.
Where to Start When Forex Trading in Dubai
As with any market, research is one of the most important elements of trading success, so traders should ensure that they understand the market in which they are hoping to succeed. There is a wealth of information available to anyone that is interested, with everything from videos and blog posts to official statements to use as reference material when learning.
Some traders choose to use a forex broker to help them establish themselves in the market and those that do often gain valuable insight from them. However, it is not vital to engage the services of a broker and many traders choose to do their own, targeted research.
It is also important to be clear about what you are hoping to achieve from your forex trading activities, whether that’s a high return over a short period of time, or longer-term goals that can be incorporated into a trading strategy that aims to capitalise on trends rather than fluctuations.
Many brokers and online trading platforms offer new clients dummy trading accounts to allow them to see how their picks would perform over a set time period. These can be a great introduction to trading without the pressure of risking real cash, but it is important to ensure that you use a broker that is licensed in Dubai before finalising your choice.
The government is particularly strict when it comes to stamping out fraudulent activity, so it’s important to ensure that your broker is operating within the legal framework that exists in Dubai. Once you have established this, you will need to apply to the DFSA (Dubai Financial Service Authority) to be allowed to trade forex.
Once you have all those elements in place, you can establish your trading plan and being trading. Whatever you want to trade in, from traditional stocks to cryptocurrencies, a license grants you the power to do so in Dubai.
The Benefits of Forex Trading in Dubai
Once you have fulfilled the conditions of the regulatory system in Dubai, you will be able to make a success of your forex trading business with little more than an internet connection. No matter what the market conditions, there are gains to be made in forex, allowing investors to capitalise on any economic conditions, so long as they understand the market well enough.
This is good news for traders based in Dubai as they offer a near-zero tax rate for those operating there in order to encourage growth and allow traders to invest more and turn higher profits. So, whether you are new to the world of online forex trading or have some experience of investing from elsewhere in the world, the Dubai market is one that is definitely worth considering for your next move.
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