The year 2023 has marked a notable growth in the retail leverage trader population in the United Arab Emirates (UAE). According to a recent report by Investment Trends, there has been an increase of 9% in the number of foreign exchange (FX) and contracts for difference (CFDs) traders, with 18,500 traders initiating their first trade in the last year.

The Rising Tide of UAE's Leverage Trader Population

The UAE's leverage trader population now stands at 49,000, surpassing the figures from Spain, Singapore, and France. The surge in new traders was primarily driven by the appeal of starting trades with smaller amounts and the desire to acquire new skills.

"New traders continue to be attracted by an ability to trade with small amounts and their desire to learn a new skill. Market volatility has also been a more effective prompt this year," Lorenzo Vignati, the Associate Research Director at Investment Trends, commented.

Moreover, the reactivation of dormant traders has nearly doubled to 7,000, which is up from 4,000 in 2022, further contributing to the market's growth.

The Number of Traders Declines Globally, Growing in UAE

According to Investment Trends, the UAE stands out as the only market showing growth among those surveyed in the leverage trading industry in 2023. Although the UAE market is not the largest, it has only shown positive growth over the past 12 months. The number of traders increased 9% to 49,000.

At the same time, it was down 25% to 205,000 in the UK, 24% to 175,000 in the US, and 19% to 81,000 in Australia. On top of that, the survey by Investment Trends included Singapore and France, which FX/CFD market Finance Magnates analyzed last year.

"Across each region we have surveyed so far in 2023 – in the leverage trading industry – the UAE is the only market growing," Vignati added.

A separate Finance Magnates report published in May 2022 shows that UAE traders are the most likely to open accounts and spend the most amount of money. The average monthly deposit in 2021 was nearly $13,000, with the first average deposit of $2,300. Also, UAE is attracting traders, brokers worldwide, and a growing number of cryptocurrency companies. The country wants to become a financial hub, cutting off its economy's dependence on oil.

Increased Competition and Shifts in Market Concentration

The report highlighted a decrease in market concentration as new entrants and smaller players strive for a larger market share. As of 2023, the top three providers control 37% of primary relationships, which is a decrease from 45% in May 2022.

As the competition heats up, traders are placing more emphasis on convenience when selecting their primary provider. Vignati emphasized that brokers have a significant opportunity to address what factors matter most to traders and build a proposition that caters to their needs.

The report also sheds light on how traders gather information when making investment decisions. The report revealed that 53% of traders rely on online searches, followed by 37% who use social media. Word-of-mouth recommendations remain an effective way of prompting account opening with the current provider. Furthermore, English emerged as the preferred language for receiving educational content among 86% of traders.