Forex Trading in the UAE

People trade on the forex market for a wide range of reasons. The foreign exchange markets are the largest and most liquid financial instruments in the world, making them immensely popular. Forex trading soared in popularity because of its leverage, continual trading opportunities, high liquidity, and low entry costs.

After the 1970s, when the United States dropped the Bretton Woods agreement regarding the USD convertibility in gold, the forex market grew dramatically. It was initially only available to institutional players, due to high transaction costs and difficulty of access. That all changed with the emergence of the internet and online trading. Forex brokers made it possible for the retail trader to join the largest financial market in the world.
A forex broker provides a link between the trader and the market, offering quotes via its various liquidity providers, while its trading platform reflects the best possible conditions available to its customers. For this service, a forex broker charges a fee or a commission and its interests align with those of the trader.

Forex brokers can be categorised as either a dealing desk (also known as market makers) or a non-dealing desk. A dealing desk creates a market by mirroring the quotation from the interbank market and deals the prices to its clients. In non-dealing desks, forex brokers route their clients’ orders to the liquidity provider, and the best quote is offered to retail clients from the liquidity pool.

Brokers organised like non-dealing houses often offer ECN or STP (Straight-Through Protocol) execution. However, there are some forex brokers that mix dealing with non-dealing conditions and operate as hybrid entities.

Depending on the type of the brokerage house, different account types exist. ECN accounts and STP accounts are just a couple of examples.

Because the market is made up of currencies from across the globe, predicting forex exchange rates is difficult as there are a number of factors that can have an impact on prices. The main driving influences for these moves are central banks, news reports and market sentiments. Understanding how each of these operate will help you on your journey when forex trading in the UAE.

It’s also important to remember that prices move up and down based on supply and demand, just like any other financial market. As a trader, you’re likely to either put your money into an economy that has strong growth potential or a short market.

No matter how experienced you are, defining your success will help you on your journey. Think about what you want to achieve from forex trading in the UAE and how you plan to reach those goals.

These objectives should be easy to measure while it’s recommended to set targets over a longer timeframe – for example annually as opposed to monthly. Once you’ve established these parameters, you’ll be able to put your plan into action.

It’s important to always manage your expectations throughout the forex trading process and control your emotions. To become a successful trader, you must understand the mechanics of the forex market, trust your analysis and stick to your strategy.