Trading currency, or currency futures, is one of the most significant investment industries globally.
Making a gain on currency market fluctuation can be done in several ways, including trading currency pairs directly and trading CFDs (Contracts For Difference).
This article will explore both strategies for Dubai traders looking to get involved in these markets from an Emirati Dirham perspective.
In terms of direct currency pair trading among all the options available across the globe, one particular currency pair stands out as potentially being the best choice for UAE-based day traders: The Australian Dollar to US Dollar cross.
It is because it has by far the most liquidity of any comparable option. It offers greater scope for taking advantage of small movements using various short-term trading strategies.
CFDs
The most popular way to trade this pair is through a CFD broker, which provides leverage on the transaction, allowing traders to effectively use more significant sums of money than they have in their account when opening a position.
This approach allows professional day traders easy access to fast profits from even relatively small movements in rates between the two currencies involved.
It’s simply necessary to fill out an application form and wait for approval. Usually, that takes only a few minutes.
Then you can start trading immediately, meaning that access to these markets can be achieved within just half an hour or so from setting up your account, which is incredibly quick.
Once your account is opened, it’s simply a matter of choosing an appropriate expiry time for the CFDs you wish to open – this will vary depending on your preferred level of risk-taking and return expectations.
You next open the position in your broker’s trading platform, which you can do by purchasing or selling at one of several possible ‘stops,’ which are intended to limit any undue downside risk while still allowing access to substantial potential profits.
There are two main ways that Dubai traders use their CFD accounts to take advantage of trading Australian Dollars against US Dollars: Short term day trading strategies, more often associated with Forex markets, where small gains are made throughout the working day as fluctuations occur, and longer-term ‘swing’ trading, focusing more on holding positions for hours or even days at a time.
The choice of strategy will depend entirely upon your requirements for the amount of risk you are prepared to take with any given position.
For many professional day traders, the best approach is to use both methods to increase their chances of achieving consistent growth in their accounts.
Investors who are only interested in making long-term profits without needing regular access to their account may be better not to trade CFDs but acquire actual currency pairs on an exchange instead.
Nonetheless, trading directly in this market has one significant drawback: there is no actual central exchange, meaning that prices can vary considerably between different sources.
It means it’s essential to keep a close eye on how particular rates move if you want to get the best possible price when buying or selling currency pairs.
Why should I choose Dubai for trading CFDs?
Dubai is quickly becoming a central hub for investment opportunities in forex and commodities markets. If traders can find an agency willing to accept their business, they can enjoy some of the lowest spreads on global markets available today.
It means that when traders invest USD 1000 into CFD trading accounts here, they will be able to purchase $10001 worth of gold or oil or any other commodity (and not just through legendary companies like AvaTrade).
Plus, thanks to its position along major trade routes like the Suez Canal, Dubai represents one of the safest destinations in the Middle East for investing, with a relatively low risk of political upheaval or other events which might damage the value of an investor’s holdings.
In conclusion
It’s worth saying again just how accessible it is now for anyone in Dubai to open an account with a reputable broker offering leverage services to start trading Australian Dollars against US Dollars through the use of CFDs.
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