Page Summary
The forex market is the world’s largest financial market with 6,6 trillion dollars in daily turnover. Forex trading can be a highly lucrative investment that allows UAE traders to generate passive income over the long run. It also involves the risk of losing money, especially for inexperienced traders. Added to this, forex trading does not allow to predict exact income figures.
This guide helps users to learn how to build passive income with forex trading in the UAE. It explains the fundamentals of forex trading, how to get started, and tips to increase chances for successful trading.
What is Passive Income?
Passive income is income that does not requiring active involvement or effort on a regular basis. Passive income can provide financial stability and freedom as it allows individuals to earn money without actively working for it.
Which Forex Strategies Are Best Suited To Generate Passive Income?
Forex trading has two trading strategies based on the involvement of the trader: active trading (involves a hands-on approach from the trader who needs to be actively engaged in trading) passive trading (involves a hands-off approach where the trader relies on managers, automated systems, and algorithms.)
Passive forex trading strategies allow traders to generate a return on the investment without requiring full time engagement of the trader.
The most common forex trading strategies that help to generate passive income are listed below.
- Forex Copy Trading – allows users to copy the trades of professional traders on autopilot. It does not require full time engagement from the trader. Here are the most popular forex brokers for copy trading in UAE.
- Forex Signals – are trading recommendations sent out by brokers or third party providers that help users to automate their trading. Forex signals are sent to users in the form of notifications and relay on market analysis and predictions. Trading signals can also be used with Expert Advisors. These are software that automatically conduct trades based on provided trading signals.
- Carry Trading – Carry trading is a forex trading strategy that involves borrowing low-interest-rate currencies and investing them into high-interest-rate currencies. Traders profit from the difference in currency interest yields. Carry trading allows trade automatisation and is an attractive passive income strategy.
- PAMM/MAM Accounts – PAMM (Percentage Allocation Management Module) accounts are trading accounts that allow investors to allocate funds to professional traders (money manager) for them to trade on their behalf.
MAM accounts are similar to PAMM accounts, but MAM account managers have full authority over trading decisions on the account. Both accounts are suitable for investors seeking passive income, as they transfer forex trading decisions to professional account managers. Check the best PAMM forex brokers in UAE. - Automated Trading Systems – are forex trading softwares that manage trades on auto-pilot based on a pre-defined strategy. The most popular automated trading systems are Expert Advisors and Robo-Advisors. These systems are designed to help traders generate passive income without them having to actively monitor the forex markets. Automated trading systems require the correct settings of parameters in order to be successful.
What Are The Best Forex Brokers in UAE To Generate Passive Income?
Forex brokers have different trading features and allow different trading strategies. Choosing the right broker allows traders to use the right trading strategy and increases their chances for passive income. The best forex brokers in UAE for building passive income are listed below.
1. Avatrade – Best For Expert Advisors
Min Deposit: $100
Fees: 4.9
Assets available: 4.9
Total Fees: 0.9 pip
AvaTrade is an international forex and CFD brokerage firm, founded in 2006. AvaTrade allows the usage of Expert Advisors through MetaTrader 4 (MT4) and MetaTrader 5 (MT5). Experts advisors are softwares that uses mathematical algorithms to determine profitable entry and exit points and run automaticaly.
71% of retail CFD accounts lose money
2. IC Markets – Best For PAMM Accounts
Min Deposit: $200
Fees: 4.7
Assets available: 3.6
Total Fees:
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71,65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
IC Markets is an Australian forex and CFD broker with great PAMM account features. Their PAMM account has an intuitive (fully customisable) interface with real-time reporting (both performance and commissions). It is directly connected with MetaTrader 4 Equinix server, allowing quick trade execution.
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71,65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
3. Forex.com – Best For Trading Signals
Min Deposit: $100
Fees: 3.7
Assets available: 4.1
Total Fees:
Forex.com is an international forex broker with great forex trading signal features. Their trading platforms support two type of forex trading signals: in-house signals(are provided by the Forex.com experts team based on latest market news, analysis and experience) and signals from third party providers (Autochartist and Trading Central).
80% of retail CFD accounts lose money
How To Generate Passive Income With Forex Trading in UAE? – A Step by Step Guide
The steps to generate passive income with forex trading in UAE are listed and explained below.
Step 1. Select a Forex Broker
Forex trading in the UAE is only available through forex brokers. The most recommended brokers are listed in the previous section. When selecting a broker, traders should consider the following criteria: forex trading instruments, fees (spreads and commissions), accessibility (web, desktop, mobile app), availability of passive trading strategies, research & education, regulation, Islamic accounts availability and customer support.
Step 2. Choose a Passive Forex Trading Strategy
A passive forex trading strategy need to be selected based on the following factors: trading goals, knowledge level, risk tolerance, capital and experience. The most commonly used trading strategies to generate passive income with forex trading include copy trading, forex signals, PAMM & MAM accounts and automated trading systems.
Step 3. Test The Trading Strategy Using a Demo Account
Demo accounts allow traders to test their trading strategies with virtual money. In other words, they allow traders to trade the markets without risk of losing real money. Demo accounts also help traders to get familiar with the trading platform, features and tools and allow backtesting of trading strategies. The use of a demo account increases overall chances of trading success.
Step 4. Start Trading On a Live Trading Account
A live trading account should be used when the tested trading strategy proved to be profitable on the demo account. Live trading accounts should only be used with the same settings as tested on the demo version. Islamic traders need to check if their forex trading strategy is compliant with Sharia Law. As Sharia law prohibits earning or paying interest (Riba), forex traders should only trade using a Islamic swap-free accounts.
How Much Passive Income Can Be Generated With Forex Trading in UAE?
Forex trading is highly profitable but also involves a significant risk of losing money. The amount of income that can be generated with forex trading depends on several factors including trading strategy, the experience of the trader, leverage, risk tolerance, and the amount of capital invested. It is important to understand that passive forex trading strategy tend to generate less income that active trading strategies.
Based on the data provided by Avatrade, traders with adequate risk management and passive trading strategies earn an average of 12%/year with forex trading. It is important to understand that 80% of forex traders lose money.
The table below compares the hypothetical profits that can be generated with forex trading in UAE assuming a constant annual profit rate of 12%.
| Capital Investment | Annual Profit (12%) | Monthly Profit (1%) | Weekly Profit (0.23%) | Daily Profit (0.03%) |
|---|---|---|---|---|
| $1,000 | $120 | $10 | $2.30 | $0.30 |
| $5,000 | $600 | $50 | $11.50 | $1.50 |
| $10,000 | $1,200 | $100 | $23.08 | $3.00 |
| $50,000 | $6,000 | $500 | $115.38 | $15.00 |
| $100,000 | $12,000 | $1,000 | $230.77 | $30.00 |
| $500,000 | $60,000 | $5,000 | $1,153.85 | $150.00 |
| $1,000,000 | $120,000 | $10,000 | $2,307.69 | $300.00 |
What Is The Average Monthly Income in UAE?
The average monthly income in the UAE varies depending on several factors, such as the industry, job role, qualifications, and experience. According to the published data from the Central Bank of UAE, the average monthly salary for employees in the private sector was around AED 19,000 (5.173,51) in 2023. However, salaries in certain industries and job roles can be much higher. For instance, the average monthly salary for finance and accounting professionals in the UAE is around AED 41,000 (11.163,89), while the average salary for an Investment Fund Manager is around AED 32,000 AED (8.713,18).
The table below lists the average monthly income in UAE in different sectors.
| Industry | Average Monthly Income (AED) | Average Monthly Income (USD) |
|---|---|---|
| Oil & Gas | 34,000-38,000 | 9,265-10,342 |
| Banking & Finance | 25,000-35,000 | 6,807-9,524 |
| Construction | 15,000-20,000 | 4,081-5,445 |
| Healthcare | 12,000-15,000 | 3,266-4,081 |
| IT & Technology | 12,000-15,000 | 3,266-4,081 |
| Education | 10,000-15,000 | 2,722-4,081 |
| Retail | 7,000-10,000 | 1,906-2,722 |
| Hospitality & Tourism | 6,000-9,000 | 1,633-2,449 |
| Media & Communications | 6,000-9,000 | 1,633-2,449 |
| Sales | 5,000-8,000 | 1,361-2,180 |
| Administrative | 4,000-6,000 | 1,089-1,633 |
Is Income Made With Forex Trading in UAE Taxed?
The tax law in UAE has two subjects: UAE residents and non UAE residents.
Profits of UAE residents and companies registered in the UAE made through forex trading are subject to a 0% income tax.
Profits of non- UAE residents made through forex trading are subject to tax laws in the country of residency. However, profits of non-UAE residents are subject to a 15% withholding tax.
The exact taxation rates vary and depend on other factors like the residency status of the trader, the volume of trading activity, and the total profits made.
Can You Make Passive Income With Forex Trading While Traveling? Is Forex Trading Suitable as a Travel Job?
Forex trading allows traders to generate passive income while traveling. Traders can trade the forex markets from anywhere in the world. They only require a device (computer, mobile phone, or tablet) and a stable internet connection. In other words, forex trading strategies that allow to generate passive income can be used from anywhere in the world, also when traveling.
Forex trading characteristics that make it suitable for generating passive income while traveling are listed below.
- Mobile Trading Apps – Mobile trading apps allow traders to trade on the go. They allow access to most of the trading features and tools available on the desktop and web versions. Mobile apps only require the right software (Android, iOS) and a stable internet connection.
- Ability To Trade The Markets Globally – Forex trading only requires an active internet connection and a device from the trader in order to participate in the forex market. This makes forex trading available from anywhere in the world and makes it an attractive option to generate a passive income while traveling.
- 24/5 Trading Opportunities – The forex markets are open 24 hours a day, 5 days a week. As forex markets have different sessions across different time zones, it allows traders to participate regardless of their location. Every trading day, the first session starts in Asia, with the last trading session ending in the United States.
What Are The Pros Of Forex Trading To Generate Passive Income in UAE?
The pros of using forex trading to build passive income are listed below.
- Diversification – Forex trading allows traders and investors to diversify their investments.
- Low Activity Required – passive forex trading strategies allow traders to automate their trades.
- Potential for High Returns – Forex trading can generate high returns on investments because of the high leverage ratios available. Keep in mind that high returns also come with a high level of risk.
- Accessibility of Forex Trading – Forex trading only requires a stable internet connection and a device (a laptop, smartphone or tablet). Traders have access to the forex markets from anywhere in the world.
- Low Entry – Trading with forex requires low minimum deposits starting at $1.
Summary
This guide breaks down the different ways to build passive income in UAE with forex trading. It covers the most suitable forex trading strategies and forex brokers, how to get started, forex and how much passive income to expect.
Following our guide, it helps users to avoid losing money on common mistakes and increases their chances to generate passive income trading forex.
Stefan Grasic (Dipl.-Jur) is the owner of Business24-7 and has considerable experience in the financial and investment niche, but also enjoys writing articles for the general readership. Stefan is an active stock, CFD, crypto and general investment researcher, advising blockchain companies such as Blockbird, GoCrypto, Hive Terminal at their start up level. Stefan began trading in 2010 as a college student. Money was tight,…