Sunday 14 July 2024
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How does stock trading work in Dubai?

How does stock trading work in Dubai?

Dubai’s stock trading is conducted through the Dubai Financial Market (DFM), a public joint-stock company. The DFM was established in 2000 and is regulated by the UAE Securities and Commodities Authority. It has 49 members, including banks, financial institutions, and brokerages.

When it comes to stock trading in Dubai, stock indices are one of the most important things to keep in mind. Stock indices are a vital part of the market and can provide valuable information. By understanding what stocks are and how they work, you can give yourself a significant advantage in making money in the stock market.

The two types of shares traded on the DFM

There are two types of shares traded on the DFM: ordinary shares and preference shares.

Ordinary shares

Ordinary shares represent ownership in a company and give shareholders the right to vote at shareholder meetings and receive dividends.

Preference shares

Preference shares are shares with no voting rights but may have a preferential claim on assets or earnings.

How to trade stocks on the DFM

To trade stocks on the DFM, investors must open an account with a broker who is a member of the exchange. You will need a minimum amount required to open an account, which is arround AED 100,000. Once an account is opened, investors can buy and sell shares through their broker.

There are ways to make money from stock trading. One way is to buy shares of a company that you believe will increase in value over time and then sell them when they have risen.

Another way is to buy shares of a company that pays dividends and then hold the shares for the long term to receive the payments. Finally, some people trade stocks actively, buying and selling frequently to make money from the short-term price movements.

Stock trading can be a risky investment, and losses can occur. It is essential to research a company before investing and diversify one’s portfolio to mitigate risk.

Benefits of trading on the DFM

There are many benefits to stock trading in Dubai.


First, the market is very liquid, so there is always a buyer or seller for your shares. Second, it’s a great place to diversify your portfolio. You can find stocks from all over the world on the Dubai stock exchange.

No capital gains tax

Another benefit of stock trading in Dubai is that taxes are low. You be pleased to learn that you do not have to pay any capital gains tax on stocks or mutual funds. It makes it a great place to invest for the long term.

Trading hours

Lastly, the Dubai stock market is open Sundays through Thursdays, which gives you more time to research and trade than in other markets.

Risks of trading on the DFM

When it comes to stock trading, there are several risks involved. It is especially true if you’re trading stocks in Dubai.

Market volatility

The first risk is the volatility of the markets. The Dubai stock market is notoriously volatile, making it challenging to trade stocks successfully. Several factors contribute to this volatility, including political instability and the reliance on oil exports.

Lack of regulation

Another risk is the lack of regulation in the Dubai stock market. It can make it challenging to protect your investments, as there are no guarantees that companies will adhere to financial reporting standards. This lack of regulation also makes it easier for fraudsters to operate in the market.

High tax on profits

Lastly, the taxes on profits from stock trading in Dubai can be pretty high. The Dubai government imposes several taxes on stocks and other financial instruments.

Bottom line

Despite these risks, many people still trade stocks in Dubai. It is because the potential rewards can be very high. If you’re considering stock trading in Dubai, it’s essential to be aware of its risks, but with in-depth research and careful planning, you can still make a profit in this volatile market.