Saudis are just mad about forex
This page looks at why online forex (this includes Bitcoin also) trading is one of the fastest growing investment avenues in the country. A recent survey has indicated well over 850,000 residents playing around with their luck in the ever-fluctuating currency markets. The average age of an investor living in Saudi Arabia is around 25 years old (very young compared to the rest of the world), with 82% holding a university degree, and 36% making more than 25,000 SAR per month.
You got two choices here. You could skip the long reading and simply join your peers at Olymp Trade which is quickly gaining the market share in the country, or you could read on as to why forex is such a trendy activity.
Oh, by the way, let's not forget the honorable mentions of Easy Forex (easyMarkets), eToro, iForex, IQ Option, ForexTime, XM Markets, FXCM, Forex.com, IG Markets, FXPro, ZuluTrade etc., but they are all old tried and tested horses that are dying a slow death. A new player in the business like Olymp Trade is stumping them left and right.
You're also free to go about scanning the internet for traditional review sites, that are filled up with banner ads and uninstallable cookies, push notification scripts that spam the hell out of your desktop and phone. Or, you could read out this simple, fast loading page that gives you an honest insight of the landscape of the online forex trading industry in the Kingdom of Saudi Arabia.
Saudis love forex more than stocks
There are plenty of articles on the internet that explain why Forex (or CFDs) is generally more approachable than traditional stock trading. For the perspective of the Saudi nation, there are many indigenous factors that come into play. Primary being the Saudi culture itself, which is based on tribal traditions. A brother helps another brother out, meaning if you are a big investor in the stock markets, and also making money, chances are the only other group making as much as you would be your own clan.
Big money movements in stocks are usually triggered when there is an inside news pushing the prices up or dragging them down. Investor groups with insider information usually get to make the doe, at the expense of the vulnerable participants. If one doesn't have the contacts, is not part of a special cabal, doesn't have a prime of prime brokerage account; forget it, you're not going to make it. This is not a conspiracy theory; it's a fact when it comes the Saudi investing environment.
Forex on other hand cannot be controlled by a single entity. There are trillions flowing in this market on a daily basis, all powered up by fundamental and technical pricing motives. Not even the large market making banks who take the other side of trade, can set any sustainable direction in their favor. Even the governments are broken down, when the currency goes haywire. So, if you lose, it's not because there is a secret member society sitting in some high-rise building in Riyadh working in tandem to throw your trade in the red.
"I don't make much money and am always looking to supplement my income. I got interested in trading forex a few years ago and slowly this has become a passion of mine. Someday I'll do this full-time," said Imran Bashir, who is a branch accountant at Danube Hypermarket at Panorama Mall in Riyadh.
Secondly, it's easier. With just three to four major currency pairs to trade say the Euro, Dollar, Aussie and the Yen; one can remain focused. And, now with Bitcoin and other cryptocurrencies in the mix, the excitement of online trading has taken on a new wave.
Saudi Arabia is filled up with brilliant people, be it the ultra smart and risk-taking local citizens, or the hard working immigrants from India, Pakistan, Bangladesh and the Philippines; nothing fizzles up their nerves more than the outcome of a good forex trade.
And, this is in addition to the billions of dollars expats remit out of the country, back to their home nations through foreign exchange companies and banks. All in all, the nation of Saudi Arabia is a regional hub of forex inflows and outflows; possibly the largest when it comes to people-to-people money movement.
In fact, Forex trading is such a rave, that majority of the European and Australian brokers specifically target the Middle-Eastern countries, with Saudi Arabia acting as the lead destination for acquiring new investors.
Everyday hundreds download apps on their smartphones or simply choose the desktop option; as long as they can get close to the live action in the markets. Saudis stand as the 4th largest downloaders of forex trading apps on Google Play and App Store.
It is similar to gambling
Yes, investing in the forex markets is quite similar to betting in a casino, but not entirely. This is also one the major reasons why people love it in the first place. Despite all the known-knowns, there's still a chance that something can go horribly wrong, or due to a stroke of luck, another thing can go drastically right, and make you an overnight millionaire.
"It's a very thin line. One day you think you are in control and the next day your bank account is empty; your wife and kids leave you and you are out on the streets," said Ibrahim Hazmi who is a psychologist and an addiction counselor at Maabar Social Consultancy in Jeddah. "Fast-paced trading and playing the slot machines are basically the two sides of the same coin."
But, come to think of it, isn't life all about a set of gambling moves? You go to a good university to become a doctor, but five years down the line are working in the construction industry. And, if we're going to delve into this deeper, then isn't stock trading also similar to gambling. Meaning; no amount of non-insider information can help you secure a guaranteed trade.
What does the religion say about such activities
When it comes to the Islamic point of view, the dispute exists. There are few fatwas against it, but there are many more that see Forex as like investing in any other financial market. For the ultra-sensitive, many brokers even offer Shariah-compliant, interest-free accounts.
One company sits on the throne
The most used boilerplate platform that also acts as a while-label provider for run-of-the-mill forex brokers is MetaTrader 4 - many companies offer MetaTrader 5 as well. This software was created by Russia and Cyprus based MetaQuotes Software Corp. nearly two decades ago. It basically acts as the backend company for hundreds of white-label brokers.
However in terms of the total number of traders, nothing beats the in-house software - for example brokers like Olymp Trade, eToro, IQ Option, 24Option, Plus500, AvaTrade etc., and other names that are talked about heavily on sites like Quora and Reddit, have their own highly customized platforms.
"We tried MetaTrader 4 and 5, but it seems as if our own software is what the customers really want. They are sick of the old downloadable bloated software that has no innovation or excitement," said Andreas A., the CEO of Olymp Trade, when we emailed him on this issue.
There is more to brokers than the platform
With so much marketing money spent on SEO in the past decade or so, most new investors have come to believe that Metatrader 4 is what defines a good trading platform. This cannot be futher from the truth. The fact is that there are over 50 million traders all around the world that trade forex on platforms other than MT4 and MT5 i.e., binary options.
But, in case you're still adamant on choosing the boring route; companies like FBS, InstaForex, Exness, Admiral Markets, FP Markets, HYCM, SwissFS etc., all come with the MetaQuotes product line.
Profits exist, just that they're mostly invisible
There are plenty of sellers of free and paid forex signals - this also includes private Whatsapp groups, usually operated by staff members of the forex brokers, or introducing brokers (IBs) themselves - seminars, expos that promote an unlimited supply of winning trades that can give you tons of cash, dream sports cars, massive mansions, and admiration of beautiful women. It's all a lie.
Investing in the financial markets is not at all easy. Even professional bankers working in the dealing rooms lose millions of dollars on daily basis. You definitely do not have more knowledge than them.
Most introducing brokers (IBs) and affiliates earn off commissions. It's their compulsion to write fake news stories, build made-up profit charts in Microsoft PowerPoint, and drum up unrealistic numbers just to force a newbie to open an account at their preferred broker.
"We as a company, and I as an individual having high moral standards have never encouraged unethical behavior. We want our partners to be forthright and completely honest when promoting our brand name," said Eugeniia Novikova, a Senior Affiliate Manager working at Olymp Trade.
Use common sense. Nothing in life is easy. One has to work hard to learn the ups and downs of the financial market system. If you're a technical person; focus on learning everything there is to know about technical indicators, price action movements, momentum driven trades and so on. If you are more into fundamentals, look for news reports and read what is going on around the world. One can even mix up both, and come up with a strategy that works consistently.
But, remember, even the best strategies are suppose to fail. This is why the market makers always end up happy - the house always wins.
In 2017, the Saudi Arabian Monetary Agency (SAMA) Regulations, issued by the Royal Decree No. 23 dated 23/5/1377 and the Capital Market Law issued by the Royal Decree No. (M / 30) dated 2/6/1424 AH started actionable work on raising awarness against Forex frauds advertised on various websites and social media.
The government is interested in taking it forward
Luckily, The Kingdom of Saudi Arabia is very advanced when it comes to regulation around investing in the markets. It's aiming to become the financial center of the Middle East and the entire South Asian region, and this is great news for both the investors and the operators (brokers).
The government is however, and rightfully so, worried about the persistent fraudulent activities funded by brokers located outside the country. Thousands of investors lose hundreds of millions of Riyals every year by falling victim to smart forex investment scams and ponzi schemes. Unfortunately, this issue is common with all the countries that have a large population base with considerable monetary interests in online trading. The damage can be minimized, but not completely eliminated.
Regulation around the financial markets is managed by the Capital Market Authority, the Saudi Arabian Monetary Agency (SAMA - Central Bank of the Kingdom of Saudi Arabia), and the Ministry of Commerce and Investment.
"His Royal Highness Prince Mohammed bin Salman bin Abdulaziz has always been at the forefront of making our great nation a global financial center," said Nouf AlSheikh who is an Investment Products Specialist at Capital Market Authority (CMA). "Financial Sector Development Program under the umbrella of Saudi Vision 2030 and the construction of King Abdullah Financial District are just one of the many projects the Kingdom has committed its heart and resources on.
"While I cannot comment on the current regulatory framework of the retail forex segment; we as an authority do understand the need for it. I can assure you that the Kingdom of Saudi Arabia has a very updated outlook on it and efforts are being made to create a sustainable model for all the parties involved, be it the investors, brokers or the government."
Fun Fact: Did you know that on April 25 2019, the Saudi Capital Market Authority issued its first ever local forex trading license to Riyad Capital (subsidiary of Riyad Bank), and this is just the start of a very promising future.
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