If you are a novice leveraged trader or just discovering the stock market for the first time, you will probably ask, "What is a CFD?" A CFD is a type of financial instrument where you do not buy the underlying asset. Instead, you buy or sell units of the underlying instrument depending on whether the price of the underlying asset will rise or fall. A CFD is a contract between a trader and a broker that agrees to exchange the difference in the value of the underlying security between the beginning and the end of the contract. 

The CFD was invented by British brokers, who decided to interest their clients in trading stocks without paying a special tax. Formally, execution of CFD transaction was not a transaction with the share, and was not liable to tax. Then the CFD became an ideal instrument for those, who did not have the possibility to enter the market, for example due to lack of money.

How do I trade with CFDs?

Trading platform capabilities for trading CFDs in the United Arab Emirates 

To begin investing, you need a CFD trading platform. This is a suite of software and hardware, designed for internet trading, which enables interaction between the trader and the broker. You can install a CFD trading platform on your device (PC) from which you will be trading. There are also mobile applications that run on smartphones, tablets and other portable devices. This way you can have full access to all services 24 hours a day, 7 days a week. 

The CFD trading platform in the UAE provides free account opening, whether it is a demo or live trading account. 

The CFD trading platform in the UAE has several important functions

The CFD trading platform provides real time quote information. This information is organized and grouped for display as a chart. You can choose the time frame over which the information is grouped. This periodicity is called timeframe. 

A quote is the value of a financial instrument at a particular point in time. It is influenced by both the seller and the buyer, so it is not fixed, but is constantly changing. Besides, the division according to the peculiarities of formation is used. Direct - amount of foreign currency which can be given for a unit of national currency. Indirect - the amount of national currency that corresponds to a unit of foreign currency.

The CFD trading platform has tools for technical analysis and, thanks to built-in indicators and charts, provides an opportunity to enter into transactions in automatic mode. Almost all indicators are based on moving averages and have different settings and information display.

  • The moving average is the simplest indicator available. The way to trade with this indicator is simple: if the price is above the moving average, then only buy should be considered. If the price is below the moving average, then only sells should be considered. It is also possible when traders use two moving averages together. One with a smaller interval, and the other with a higher one. For example 50 and 100. When a short moving average crosses over a long one, a trade should be opened in the direction of the crossover.
  • RSI Relative Strength Index. It is very popular among traders, because of its versatility and simplicity. The key features when using it are oversold and overbought levels, as well as the average value. Bought or sold trades can be opened based on crossovers of these lines. The indicator is also perfect for trading on divergences.
  • MACD indicator. The indicator consists of two moving averages and a histogram with zero level. It combines the possibility of trend trading like moving averages, and the possibility of divergence trading like RSI. The method of trade is not different from similar indicators described above, it only combines their best features.
  • ADX Indicator. It looks like three lines (+DI, -DI, ADX), oscillating between 0 and 100 in a separate window, typical of all oscillators. ADX has one important parameter - the period.
Choose your investment strategy
Choose your investment strategy

One of the main technical analysis tools of the CFD platform is the charts. It is on them that we observe price movements and make predictions. 

There are three types of charts for price movements: candlestick chart; line chart; and bars

Candlestick chart. A candlestick is a very effective indicator, which shows a selected period of time, during which the price moved. Both candlesticks of a certain form and their combinations are used. It is based on Japanese candlesticks.

A line chart is a graph of price, oddly enough, represented by a line. It is drawn on points - each point indicates the price level, where the price stopped at the last second of the current time period (Time Frame). The chart itself contains a minimum of information - it shows only the most important information, not paying attention to the necessary details. This is used to track whether assets are rising or falling in value, but it is not possible to make a decision without examining the additional information. Optimal timeframes are from one day to a quarter. 

Bars. This is a chart consisting of vertical lines, sometimes also called bar charts. It is an informative visual variant where the main indicators of interest are marked - the minimum and the maximum price level for the chosen period of time, the closing and opening prices. Bars are very similar to Japanese candlesticks, or rather thinning Japanese candlesticks. Each bar, like a Japanese candlestick, has: an opening price, a maximum, a minimum, and a closing price. A bar chart is much better at showing all price movements than a line chart. It simply carries more important information. As a beginner, a bar chart will not be very meaningful to traders, especially if all of the bars are colored the same.

The question of how to correctly read the charts on the CFD platform becomes almost the most relevant for a beginner. This skill allows to evaluate the general trend and reliability of the chosen instrument, as well as to confirm the correctness of the fundamental analysis conclusions.

The best CFD trading platform has several tools, the main purpose of which is to facilitate the trading process for the trader. 

The best platform for online trading
The best platform for online trading

The main advantage of the CFD trading platform is the reduced requirement for trading capital. This is accomplished due to the fact that there is no need to pay taxes and commissions for the delivery of goods, to be included in the register of shareholders, as well as other fees that are paid for trading in stocks. In addition, CFD trading allows the use of leverage. By trading with financial leverage, you can significantly increase your initial capital, but such trading involves a lot of risk.

How to make money trading CFDs in the United Arab Emirates?

The topic of trading is quite broad and there is a lot to talk about. Let's look at the four main types of trading on the best CFD platform in the UAE, which are time-tested. 

  • Scalping. This is a type of trading where a trader makes a lot of quick trades to buy/sell an asset. One order usually lasts from 1 to several seconds after which it is instantly closed with profit or loss.  The trader is interested in very small changes of the price of an asset, and the profit is earned through a large number of such transactions during the trading session (sometimes, for example, about 300 transactions a day).

Advantages of scalping: You do not have to watch news events happening in the world etc., it is enough to learn this type of trading because trading is mainly mechanical and consists of quick placing buy/sell orders without thinking of the reasons of upcoming price movements. You can earn on any price movement, either rising or falling.

Disadvantages of scalping: It is quite difficult physically, it requires a lot of time in front of the monitor. Speed of decision making. In fact, in the market you have very little time to make an accurate decision, and you must remember that the decision must be really precise.

  • Intraday trading (intraday, day trading) is a type of trading whereby the purchase/sale of an asset is carried out during one trading session (day), without moving overnight to the next trading session. Such trades last from a few seconds to several hours. Intraday traders make many times fewer deals than scalpers, and profit is made by holding a position longer.

Advantages of Intraday: there is no need to monitor the market, you just need to identify places of possible entries and wait, wait, wait for your moment, stay calm and professional. Disadvantages: high time consumption and constant concentration on the process. You need to make quick decisions. 

  • Mid-term trading is similar to intraday trading, but with an overnight rollover of open positions. Positions in the medium term are held from 1 day to several days or even weeks.

Advantages: even less time is spent on trading in front of the computer, you can open a position, set a stop-loss and forget about it for a long time. Every once in a while you look on the monitor or even on the phone and mind your own business. Cons: Various news, geopolitical events etc. have a big influence on this type of trading. More trading capital is required than what would be enough for intraday trading.

All types of trading on the best CFD trading platform in the UAE: scalping, intraday trading, medium-term trading - have their advantages and disadvantages. No one style is better than the other. You need to tailor your trading style to suit your personal temperament, circumstances and experience. A trader does not need to have as much patience as is necessary in long term trading, because here the results do not take long to come.

Commodity trading
Commodity trading

Short-term trading on the CFD platform is suitable for stressed traders who can think fast and make quick decisions, who are able to pursue their goals without reacting to short-term setbacks. It requires focus and concentration. Try it and it will work out for you!

If a trader is inclined to one style of trading - then his results in another style will be much worse, up to negative. It is important for a beginner trader to know his or her niche on the market, and act in "his or her own style". Then the synergy will work and the trading efficiency will go up.

How to start CFD trading in the United Arab Emirates?

CFD asset trading is now a popular feature on many CFD trading platforms. The most popular and affordable way for every trader to start investing is to open a trading account on an online platform. Fill out your account user profile before uploading verification documents such as name, email address.

Registrating on the investing platform
Registrating on the investing platform

Once you have registered and confirmed your account details, you can proceed to transfer funds to your approved trading account using one of the payment methods provided. This can be done by transferring money via bank card, bank transfer, e-wallet. Depending on the chosen method of payment, the money will take from 5 minutes to 5 days.

Deposit replenishment options
Deposit replenishment options

On the best CFD platform, you will be able to use a leveraged trading account. Leverage is the ratio of a trader's or investor's capital to the leverage they receive for trading on the financial markets (1:100, 1:1000). For example, if the ratio is 1:500, it means that a brokerage company lends an amount of money that is 500 times higher than the investor's deposit. The word "leverage" scares a lot of people, but in fact there is nothing wrong with it. Leverage is not a loan in the usual sense of the word, no interest is charged for its use. The funds are not deposited to the trader's account, they go straight into the deal.

Choose an account to trade in UAE
Choose an account to trade in UAE

The CFD in the United Arab Emirates platform gives you the opportunity to try stock trading without worrying about your own savings. This is possible by opening a demo account on the trading platform. You do not have to turn down the opportunity to try your forces on the demo account.

Demo account gives you a chance to get priceless trading experience, learn the ins and outs of the trading platform, and learn to manage your emotions by experiencing unexpected spikes in the market and unpredictable events so that the next time a trader reacts less intensely. 

The CFD trading platform in the UAE allows a trader to profit on a bi-directional basis. Buyers can profit when they open long positions at lower prices and close trades at higher prices. Sellers profit when they short CFD assets at higher prices and close their trades at lower prices. We wish you a successful investment. Give it a try and you are sure to succeed!

Perfect money
The financial services provided by this website carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose