This guide explains how to trade with futures contracts in the United Arab Emirates. Futures contracts are legal agreements to buy or sell an asset at a certain price at a certain moment in the future. Trading with futures is popular in UAE as it allows to generate short-term capital gains by speculating on price movement of the underlaying asset and hedging agains price fluctuation.
In this guide, we will discuss how and where you can trade futures as UAE-based trader or investor.
Futures Trading Basics
The basics of futures trading are that anonymous buyers and sellers contractually agree on a price and future delivery date of an asset, usually a commodity or financial instrument. On online trading platforms, no physical delivery takes place, but you speculate on the underlying asset’s future price. You can trade futures on stocks, currencies, cryptocurrencies, interest rates, and commodities.
Traders and investors trade futures contracts on futures exchanges like the Chicago Board of Trade, The Dubai Gold and Commodities Exchange (DGCX), and the Dubai Mercantile Exchange (DME) that act as marketplaces between buyers and sellers. Buyers of futures contracts ‘’go long’’ whilst sellers ‘’go short’’ on the contract. It is possible to trade cryptocurrency futures on cryptocurrency exchanges like Binance.
What Are The Different Types of Futures Contracts Available in UAE
There are currency futures, stock market index futures, interest rate futures, and cryptocurrency perpetual futures.
- Currency futures – also called forex or FX futures, are contracts that state a currency will be traded for another currency at a certain time and date in the future at a fixed price.
- Interest futures – are derivative contracts with interest-bearing instruments or assets as underlying asset.
- Stock market futures – are contracts based on the value of a certain stock market index fund that are settled in cash.
- Cryptocurrency perpetual futures – also called perpetual swaps are agreements to buy or sell an asset at an unspecified time and date in the future. Because their is no specified time these are non-optionally and one party has to buy or sell from the other when the underlying asset reaches a certain price.
Futures Contract Specifications
Futures contracts have specifications like contract size, contract value, and tick size. The contract size specifies the number of underlying assets to be traded in the futures contract. The contract value multiplies the contract size by the current price to determine a total value. The tick size refers to the minimum price change required for the contract to increase or decrease in value. The tick size of futures contracts is measured in index points.
Futures Trading Strategies
You develop futures trading strategies by determining your desired risks and investment goals. Experienced traders often use technical analysis and tools like stop-loss limits to help them manage their risk and favorable trade entries.
What Are The Pros and Cons of Futures Trading?
Every investment strategy has its advantages and disadvantages. Below we break down what are the advantages and disadvantages of futures trading in UAE
- Advantages of futures trading: you can trade them during after-hours and with leverage, and use them to diversify and hedge your portfolio.
- Disadvantages of futures trading: they have expiry dates and that you can receive a margin call when the asset’s price moves in the wrong direction.
How To Choose The Right Futures Trading Broker in UAE
You choose the right futures trading platform in UAE by comparing trading platforms, the assets they offer futures trading on, fees they charge, and the risk management tools they offer. Experienced traders may want to use more advanced trading platforms and brokers that offer API integrations, multiple trading platforms, and a trading app.
Based on our testing, we recommend trading futures with eToro, AvaTrade, or Saxo Bank. You can find our full list of the best trading platforms for futures trading here along with all testing criteria and insights.
What Are The Key Takeaways for Futures Trading in UAE?
Futures trading in UAE is popular because it is tax-friendly. Oil and precious metals are the most traded futures. UAE-based traders use Virtual Private Networks and Remote Desktop Protocols to connect to exchange servers and data centers like the CME Group Aurora Data Centre. You can visit futures trading seminars held in Dubai to learn more about trading futures as UAE trader or investor.
Futures Copy Trading in UAE – How to Do It Right?
Copy trading futures is when you copy professional traders’ trades and open the same from your trading account. We recommend traders sign up at eToro to start with futures copy trading in the UAE. They offer over 2,300 assets to trade futures on, excellent support in Arabic and English, and charge low trading fees. You can also check our whole list of best copy trading platforms.
After analysing 65 online brokers that offer futures trading to UAE citizens and comparing them across 9 different categories, we consider eToro as the best online broker for trading futures in UAE. They offer access to over 2,300 different futures, easy to use futures trading tools and customer support in Arabic language.
What futures can I trade in the UAE?
You can trade stock, forex, crypto, interest rates, and commodity futures in the UAE.
Which futures should I trade in the UAE?
This is entirely up to you, but the most popular futures in the UAE are oil and precious metals futures.
How can I manage my risk when futures trading?
You manage your risk when futures trading by using risk management tools, diversifying your portfolio, and determining a healthy trade size each trade.
Where can I trade futures in the UAE?
You can trade futures on The Dubai Gold and Commodities Exchange (DGCX) and the Dubai Mercantile Exchange (DME) via online trading platforms like eToro, AvaTrade, and Saxo Bank.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% 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.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.