GCC Traders Thrive on Risk, Move with Oil’s Tide

The 2024 edition of financial services research firm Investment Trends’ UAE Leverage Trading Report highlighted the resilience of this market, referring to a notable increase in the number of reactivated and ongoing CFD/FX traders.

This is reflected in data from leading brokers such as Capital.com, which recently revealed that UAE traders posted a record $469 billion in volume last year. No wonder, Tarik Chebib, CEO Capital.com MENA describes the GCC as being of strategic importance to the business and one of its fastest-growing markets.

“Our research shows that GCC-based traders have a higher appetite for risk relative to traders across other markets,” he says. “Their preferred markets include commodities, US indices and cryptocurrencies, reflecting a strong interest in dynamic and high liquidity assets.”

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Reputation Trumps Fees

Traders in the GCC are typically well-educated, financially astute and comfortable navigating financial markets. According to Negin Sadat Negahdari, senior business development manager at Exness, there are two primary groups.

“Younger traders, often in their 20s and 30s, are tech-driven and gravitate toward online platforms, algorithmic trading and speculative strategies,” she explains. “Older traders, typically in their 40s and 50s, lean toward more traditional investments such as gold but remain active in forex and commodities, particularly during periods of market volatility. Traders in the region are comfortable making bold moves in fast-moving markets, provided they have access to robust risk management tools.”

Many come from professional backgrounds, including finance, real estate and the energy sector along with a growing number of business owners and sole traders. They have a keen interest in geopolitics and its impact on markets and are tech-savvy, preferring mobile trading platforms for convenience.

“Low trading costs are important factors in decision-making, while fast order execution and minimal slippage are particularly important for active traders,” says Ritu Singh, regional director StoneX. “GCC-based traders prefer brokers with a solid regulatory framework and a trusted reputation that provide security of funds.”

High Risk Tolerance

Chebib refers to a growing trend of asset class diversification, particularly among traders in the UAE who also demonstrated strong profitability last year with 62.5% of trades closing in profit – just above Qatar with 61%. In contrast, countries in West Africa and Northern Europe recorded lower profit rates, averaging 51-52%.

“We have observed how traders in the GCC region, particularly in the UAE, actively seek volatility and tend to trade more frequently when markets are turbulent,” he adds.

Ross Maxwell, global strategy and operations lead VT Markets agrees that GCC-based traders have a relatively high tolerance for risk and are attracted to high leverage trading in FX, equities and commodities.

“Due to their appetite for leveraged trading and a diversified portfolio, brokers that offer high leveraged trading with low spreads and a wide range of products - including access to crypto - have an advantage,” he says. “Strong regulatory oversight, shariah compliance and a localised presence with Arabic speaking support also play a major part in the decision making process.”

Due to their risk appetite and age range, tech stocks and cryptocurrencies are particularly popular with traders in the region. Gold is the most commonly traded commodity but with the region being home to some of the world’s largest oil producers, oil is also an extremely popular instrument.

“Since local currencies are pegged against the USD, a lot of traders will look to hedge their USD exposure using the financial markets,” says Maxwell. “Major currency pairs also are very popular due to liquidity and access to these markets.”

Short term trading is another key trend. Many traders - especially younger ones - engage in day trading and high frequency strategies due to the fast-moving nature of the market.

“The biggest differentiator is oil sensitivity,” suggests Negahdari. “GCC traders are highly reactive to fluctuations in oil prices, which influences their trading decisions more than in other markets. Gold continues to hold strong appeal as it is seen as a stable, long term store of value. These behavioural patterns shape the way brokers develop their offerings and risk management tools for the region.”

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Traders Want Higher Leverage Levels

The higher appetite for leverage can have traders looking for leverage of up to 1:500 compared to the 1:50 or 1:100 that US and European traders generally look for.

“There are other behaviours that are different,” adds Maxwell. “US and European traders tend to trade predominantly on their own time zones, whereas GCC traders will adjust their trading hours to focus on London or New York trading sessions to take advantage of the volatility these sessions offer. A key distinction is that GCC traders may prioritise trading that aligns with their religious principles, ensuring no interest is applied to overnight positions.”

Brokers that offer speculative accounts for traders who look to trade on higher leverage due to a higher appetite for risk can see higher turnover and lower retention rate as accounts have shorter lifespans. This is due to higher losses than those in the US and Europe, where leverage restrictions protect against capital losses.

Other factors GCC-based traders consider when selecting a broker include regulation, availability of swap-free accounts, competitive pricing, access to a wide range of financial instruments and advanced tools for market analysis.

“The ability to trade seamlessly across multiple markets and asset classes is key,” says James Bradie, senior executive officer Interactive Brokers (UK) (DIFC Branch). “Many traders in the region also appreciate the ability to hold accounts in multiple currencies, including dirham.”

As for market prospects for this year, George Naddaf, managing director MENA eToro refers to a survey conducted by his firm which found that 80% of UAE retail investors expect the domestic stock market to grow in 2025 with real estate and construction emerging as the most promising local investment sector, followed by technology and telecoms and banking and financial services.

“In 2024, our UAE-based users gravitated towards high growth and innovation-driven sectors, with AI, technology and healthcare emerging as the top performing investment themes on the platform,” he concludes.