While the
number of retail FX/CFD traders is declining in other parts of the world, the
United Arab Emirates (UAE) continues to experience a positive trend. This
growth is influenced by two key factors: the thriving cryptocurrency market and
the significant impact of recommendations from family and friends. According to
a recent survey, nearly one in two respondents claim that they decided to try
their hand at trading in this market due to the encouragement of their relatives.

UAE Trading Market
Demonstrates Resilience amidst Global Headwinds

The UAE
retail leverage trading market has shown resilience and stability, according to
the latest findings from the 3rd edition of the 2024 UAE Leverage Trading
Report by financial services research firm Investment Trends.

Despite a
6% decline in active traders over the past year, primarily due to a drop in
new-to-market traders, the UAE market has witnessed a notable increase in the
number of reactivated and ongoing FX/CFD traders. This trend reflects the
market’s strength and the confidence of existing traders in the UAE’s trading
environment.

For
comparison, according to a similar report from April concerning
Hong Kong, the investor base there had significantly contracted.

“The
dedication of existing FX/CFD traders reflects the UAE’s stable and robust
trading environment, and the confidence traders have in it,” said Lorenzo
Vignati, Associate Research Director at Investment Trends. “The increase
in reactivated traders suggests a renewed interest and optimism in the market’s
future potential.”

Investment Trends last published a report on the FX/CFD space in the UAE almost a year ago. At that time, the study indicated that the number of retail
traders in this space had
reached a record high of 49,000, surpassing countries such as Spain,
Singapore, and
France.

One in Four Traders Enters
CFD Market through Crypto

The report
also highlights the crucial role of digital assets in FX/CFD trading in the
UAE. Despite the impact of last year’s “crypto winter” on new trader
acquisition, cryptocurrency remains an important gateway to CFD trading, with
24% of new traders starting their investment journey with crypto.

“The
UAE’s crypto-friendly environment continues to attract leading players and
support market growth,” Vignati noted. “CFD/FX traders are leveraging
these assets to diversify and enhance their trading strategies, highlighting
the forward-thinking nature of the UAE trading community.”

The latest
data also show that not only retail investors are keen on crypto CFDs, but
institutional investors are as well. Due to the growing interest in this space,
Wintermute Asia, the digital asset trading division of the algorithmic trading
firm Wintermute Group, launched
crypto CFDs in February as part of its existing OTC derivatives suite.

The Power of Word-of-Mouth
in the UAE

One of the report’s most striking findings is the uniquely powerful influence of
word-of-mouth recommendations in driving client signups in the UAE’s retail FX/CFD
market.

Personal
recommendations account for 42% of new account openings, significantly higher
than in other regions, particularly Europe. Additionally, advocacy levels in
the UAE are exceptionally high, with 83% of traders recommending their provider
to others, compared to just 48% in France and 42% in Germany.

“Personal
recommendations are a cornerstone of client acquisition in the UAE’s CFD/FX
trading market, showcasing an influence that is unmatched globally,”
Vignati emphasized. “Providers who focus on enhancing customer experience
and satisfaction will continue to drive brand loyalty and benefit from this
powerful referral dynamic.”

This study
is particularly interesting because it contrasts with the findings of a study
conducted by the British FCA in the UK. According
to that survey, retail investors in the UK market tend to trust internet
personas, including financial influencers, more than their family and friends
when making investment decisions.