Forex market is gaining popularity in Dubai. Ease to trade a variety of Currency pairs such as EUR/USD, USD/INR, GBP/JPY, and many more, makes Dubai a highly sought-after destination for currency traders. Know More!
New to Forex Trading in Dubai? What You Must Know
Forex trading, like stock trading and CFD trading, is quite lucrative. If you are looking to trade foreign currencies in Dubai, then some of the basic yet crucial details about the same are discussed in this post.
The tax-free nature of online trading in Dubai makes it an ideal destination for traders. While stock trading is very popular in the UAE, there is a rising interest among locals and expats to trade foreign currencies.
Forex (or Foreign Exchange) is a highly rewarding market with lower volatility than stock markets. In fact, the major currency pairs have only moved around 30% in the last decade. But just like any other market, beginners need to get the basics right before starting with forex trading. Here are some of the most important things you should know-
What is Forex Trading?
The forex or currency market is the largest financial market globally. It is a truly decentralized market with no physical location anywhere in the world. The market allows traders to trade in currency pairs 24×7.
The prices of these currencies fluctuate as per the country’s economic condition, financial and trade flows, and geopolitical risk and instability. For forex trading in Dubai, traders analyze these factors before placing an order.
What are Currency Pairs?
Foreign currencies are traded in pairs, like EUR/USD, GBP/USD, etc. For instance, when you buy EUR/USD, you expect the price of the Euro to rise against US Dollar. Similarly, when you sell EUR/USD, you expect the price of the Euro to fall against US Dollar.
While the forex market is the largest in terms of turnover, only a few pairs are responsible for most of the activity and volume. USD (US Dollar), EUR (Euro), GBP (British Pound), CAD (Canadian Dollar), JPY (Japanese Yen), Swiss Franc (CHF), and AUD (Australian Dollar) are commonly used for online trading in Dubai.
What are Pips in Forex Trading?
Percentage in point or pip is the smallest possible movement in the price of any currency pair. In forex trading, the currencies are priced with up to four decimal places. A change in pip occurs in the fourth decimal point. Thus, technically, a pip is equal to 1/100th of one basis point or 1%.
For instance, if the price of EUR/USD pair moves by one pip, then it is actually moving by one basis point or $0.0001.
How to Trade Forex in Dubai?
To start trading forex in Dubai, you will first need a trading account. You can choose from a wide range of markets and assets, including forex, stocks, commodities, CFDs, ETFs, and more. This will allow you to experiment with different markets and choose one that best matches your expertise.
Fundamental and technical analysis is used for forex trading. Beginners should try to learn more about fundamental factors that affect currency prices and know at least a few popular trading strategies and indicators. Some of the companies in Dubai also offer demo accounts for the practice.
Trading Foreign Currencies in the UAE
While forex pairs are not known to be very volatile, exceptional trading skills are required to make consistent profits. As someone new to trading currency pairs, it would be wise to start small after practising at least for a few months in a demo account.
Choose a reputed broker that offers an advanced trading platform, along with learning resources that can help you master the basics of currency trading.