Although there are selected numbers of legit local brokers like Riyadh Capital, many international brokerage firms now offer trading services in the country. Some brokers for Saudi Arabia have regional offices in different cities, including Riyadh, Dammam, Jeddah, etc.
This piece discusses how to choose the best forex brokers in Saudi Arabia. A brief discussion on factors you must consider before investing your hard-earned money to stay safe will also be a part of the article.
Forex Trading in Saudi Arabia
Forex trading is a relatively new concept in Saudi Arabia. For years the oil and petroleum exports have driven the country’s economy. However, as new competitors entered the market, the government realised the importance of diversity. The country now seems to be moving toward global investment markets, such as Foreign Exchange. Still, most Saudi Arabian investors have not dabbled into forex trading. Given the low levels of computer proficiency and awareness, the numbers of individuals trading forex are considerably low. The controversy of forex trading being a permissible investment has also been one of the reasons why people have refrained from indulging in it.
However, things have changed now. In Saudi Arabia, the introduction of Islamic Forex Trading accounts by some of the industry’s top brokers has significantly contributed to the growth of the foreign exchange market. Moreover, the country’s rapidly expanding tech sector has attracted new investors interested in forex trading in Saudi Arabia.
Factors to Consider When Choosing a Forex Broker in Saudi Arabia
Considering the country’s low literacy of the forex market, let us enlist a few crucial factors you must check before signing up with a forex broker in Saudi Arabia.
Financial intermediaries deal in substantial financial transactions and custody of clients’ funds. Therefore, authorities felt it necessary to introduce a set of rules and regulations to prevent financial abuse and bound brokers to act in the best interest of investors. While global regulators (FCA, ASIC, CySEC, etc.) keep an eye on the forex brokers in their respective jurisdictions, the Saudi regulator Capital Market Authority (CMA) oversees the financial intermediaries operating inside the country to ensure economic stability. Besides requiring brokers to keep clients’ funds in segregated bank accounts, regulations also mandate brokers to employ advanced security measures and transparent trading conditions. Therefore, If you plan on engaging in forex trading, you must select a broker licensed to do so by the appropriate authorities in your country, like the CMA in Saudi Arabia.
Typically, brokers offer a comprehensive range of trading instruments across multiple financial markets to trade as CFDs. However, things might not be the same when you trade in Saudi Arabia. Although foreign exchange is widely accepted as halal, Saudi investors might refrain from engaging brokers that allow CFD trading for CFD trading due to religious obligations. Hence, the product selection becomes limited. Therefore, you must check the availability of your required trading instruments before opening an account with a broker.
Connecting to the market and making transactions is made possible through trading platforms. It’s not enough for a trading platform to offer a wide variety of indicators and tools; it also needs to be intuitive and straightforward to use. Trading your preferred tradable assets can be a breeze with a user-friendly platform, but the opposite is true for one with a complicated user interface. Forex brokers provide a selection of trading platforms to cater to their client’s varying needs and experience levels. Therefore, you must check if your broker has various alternatives available, or you will have to depend upon the confined selection of trading terminals.
Fees and Commission
When looking for a forex broker, you’ll want to know about its forex commission and fees in Saudi Arabia. Any online trading broker you trade with will charge you both trading fees (spreads, commission, overnight charges) and non-trading fees (account inactivity fee, currency conversion fee). However, you selected forex broker commission and fees should be comparable to the industry. While deposits are most likely to be available for free, you may incur charges on withdrawals. Therefore, make a list of trusted forex brokers and compare them. The forex brokers comparison helps you filter out the intermediaries with the best features and services and cheap pricing structure.
Clients usually prefer brokers with tight spreads. However, low-spread brokers are not always ideal for opening an account. It could be possible that a broker with lower spreads comes with associated high commissions. Furthermore, you must also ensure that the spreads are fixed or fluctuating. That is important because brokers advertising low spreads often widen them during high market volatility.
Leverage refers to margin-based trading using borrowed funds. Brokers offer different leverage levels, allowing clients to open large positions with fractional investment. Undoubtedly, leverage enhances your market exposure. However, it also magnifies the risk of loss. Since forex trading in Saudi Arabia is in its evolutionary phase and authorities haven’t defined the maximum leverage forex brokers could offer, some brokers even offer a leverage of up to 1:1000 in Saudi Arabia.
Meanwhile, countries with stringent regulatory setups restrict brokers to provide a maximum leverage of up to 1:30 owing to the risk element involved in leveraged trading. Therefore, you must check how much leverage your selected broker offers to trade your preferred financial instrument. Remember, high leverage can instantly liquidate your account, and the brokers with excessive leverage options are less likely to be legitimate.
Usually, brokers support multiple payment methods to fund your account and withdraw funds, i-e, Debit cards, Credit cards, Skrill, Paypal, Neteller, Wire transfers, Web money, etc. However, some brokers might have limited options available. So you might want to check whether the available payment options suit you or not. It could also be the case that the broker doesn’t support your prefered payment method or the transaction cost associated with your desired payment options is too high. For example, finding a broker that supports SAR as an accounts base currency is hard. Therefore, you will have to bear the conversion fee whenever you add funds to your account or initiate a withdrawal request.
Customer support is an integral part of a broker’s success. Top forex brokers pay special attention to facilitating their clients, preferably in their local language. You must also check whether your selected broker assists in Arabic. In addition, the response time is also crucial. Essentially, a broker unable to address your queries and concerns on time is more likely to become a source of inconvenience with the rest of affairs.
Pros and Cons of Trading with Forex Brokers in Saudi Arabia
Saudi Arabia forex brokers have their pros and cons, and here are some of them:
- Limited Regulatory Restrictions
- Islamic Accounts
- Wide Range of Tradable Assets
- Low Deposit Requirements
- Negative Balance Protection
- No Limit on Leverage
- No SAR Deposits
- No Funds Compensation Schemes
Benefits of Trading with Forex Brokers in Saudi Arabia
Investors can trade their prefered financial markets without going against their religious beliefs. Essentially, you can’t expect a broker operating within an Islamic country not to be offering interest-free Islamic accounts.
Brokers in the juvenile market tend to have low deposit requirements to encourage investors to open an account with them. For example, some brokers even allow clients to start as low as $50. However, the minimum deposit to register with a Saudi-based Riyadh Capital is $2000. It is amongst the few brokers regulated by the CMA.
Wide Range of Financial Instruments
Fewer regulatory restrictions allow brokers to provide clients with a large selection of financial instruments. Currently, the regulator hasn’t stipulated a list of impermissible tradable assets. Therefore, clients can explore multiple markets well suited to their trading preferences.
Negative Balance Protection
Most brokers offer negative balance protection by default. In Saudi Arabia, brokers tend to become more cautious in protecting clients’ accounts against negative balances to demonstrate their reliability to prospective customers.
How to Start Trading with a Forex Broker in Saudi Arabia?
Choosing a broker is time-consuming, but once you’ve filtered out the best broker accepting Saudi clients, the rest is easy. Let us walk you through the signup process from start to finish. We’ll use the eToro trading platform for illustration purposes.
Step 1: Open an Account and Verify your identity.
Go to the broker’s website, then select the “get started” or “start investing” button to start the application. After that, fill up your contact information, choose a password and check-mark the terms and conditions box before clicking the signup button. You can also use your existing Google or Facebook login information to access the control panel without creating a new account. You will receive a link on your registered email ID, which you need to access to complete the registration. Please be informed that the broker requires you to verify your identity before you can add or withdraw funds and initiate trades. You can use the following documents to complete the KYC process.
- Copy of your National ID Card / Driving Licence / Passport
- Copy of Bank Statement / Utility bill
Step 2: Deposit Funds
Navigate to the dashboard and click the blue highlighted “Deposit Funds” button. Select your preferred payment method from the drop-down menu of the available options, such as Debit cards, Credit cards, Neteller, Skrill, Paypal, Wire transfers, BPay, Bank transfers and cryptocurrencies. Enter your desired deposit amount and authenticate transaction details to complete funds transfers. All payments are processed immediately except for the bank transfers which may take between 3-5 business days to reach your account.
Step 3: Browse Supported Trading Instruments and Place a Trade
Now that you’ve got some money in the account, you may begin making trades. To see the available asset classes, click the “Discover” button. By selecting your desired criteria, you can access your preferred financial instrument. Alternatively, you can use a search bar to locate specific tradable assets like EUR/USD, etc.
Entering “EUR” into the search bar will display all currency pairs that include the Euro, from which you can select “EUR/USD” for your currency exchange. Adjust trade settings to your liking, including the amount, stop loss, order type, etc., and press the sell or buy button to open a position.
Trading Instruments Available on the Best Forex Brokers in Saudi Arabia
The term “trading instruments” is used for tradable markets. Currencies, metals, commodities, equities, and many more are all examples of tradable financial instruments. You will find most of them available on the best Saudi forex brokers.
Forex is an abbreviation of the term “Foreign Exchange” which refers to trading currencies against one another at an exchange rate. The exchange rate keeps floating all the time and offers ample opportunities for clients to speculate. At the moment, there are 180 recognised currencies in use around the globe. However, the US Dollar (USD), British Pound (GBP), Japanese Yen (JPY) and Euro (EUR) are the most traded currencies in international forex exchanges. Investors can trade currencies in pairs. EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, and USD/CHF are the major currency pairs and probably the favourite ones in the forex market. Saudi clients can also trade them and many more after signing up with a forex broker.
Stock trading refers to buying and selling shares of a company. Several brokers allow clients to either buy real shares or trade them as CFDs in Saudi Arabia. Investment in actual shares involves a large sum of money, while you can trade CFDs with a fractional amount. Some local brokers even provide first-rate stock trading services for clients in the GCC markets, such as Abu Dhabi Securities Exchange, Dubai Financial Market, Bahrain Bourse, Muscat Securities Market, and Kuwait Stock Exchange.
Commodity trading involves investment in tangible assets like gold, silver, oil, or agricultural products. Clients will find many brokers dealing in commodity trading in Saudi Arabia.
Market participants engage in index trading in an effort to speculate on the fluctuations in index prices. Traders can choose from a wide variety of stock market indices that track the growth or decline of a wide range of economies, industries, and commodities.
Clients can either speculate on the price movements of cryptocurrencies through CFDs or buy and sell underlying coins on a crypto exchange. Brokers typically deal in crypto CFDs only. Popular cryptocurrencies include Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), DodgeCoin (Dodge), Solana (SOL), etc.
The Different Account Types Forex Brokers Offer in Saudi Arabia
Considering the needs of individual traders, forex brokers offer multiple account types, such as Standard, Raw spread, and Islamic accounts.
Clients generally sign up for a standard account unless specifically looking for some unique trading conditions. The standard account comes with a nominal deposit requirement, sometimes starting at $100 or equivalent. While the spread charge is likely to be higher, most brokers do not charge a commission from clients using the standard account. You can expect all the basic features available required for a purposeful trading experience.
Raw Spread Account
Experienced traders looking for ultra-low, steady spreads might consider opening a Raw Spread account with forex brokers in Saudi Arabia. Its fixed-rate commission structure sets it apart from other types of accounts.
Having no spread is the primary benefit of a Zero Spread account. Clients open a zero spread to get a more accurate estimation of their trading outcomes. Despite the absence of spread, clients can incur high trading costs due to increased commission charges. Essentially, brokers receive compensation for their services anyway.
Islamic account is also referred to as a swap-free account. Brokers do not charge clients interest on overnight positions. Therefore, clients with Islamic accounts can trade their preferred financial markets without going against the sharia laws. You can expect every broker serving the client in Saudi Arabia to offer interest-free Islamic accounts.
A virtually funded demo account is also part of forex brokers’ offerings. Clients can use a demo account to learn and practise different trading and money management skills without compromising their real funds.
Trading Platforms Available on Forex Brokers in Saudi Arabia
Forex brokers offer different trading platforms to enable clients to connect to the market and place trades. While some firms host in-house trading apps, others prefer to provide clients with third-party trading platforms like MT4, MT5 and cTrader. Notably, selected brokers may have both options available for clients looking for a diverse range of trading terminals. These trading platforms are also accessible via mobile phones and tablets.
Desktop Trading Platform
Clients who prefer trading from the comfort of their desktops can download the trading apps on their PC. Popular desktop trading platforms like MT4 and MT5 come with sufficient trading tools and features.
For example, MetaTrader 4 (MT4) brokers have a robust trading platform that facilitates the use of sophisticated trading methods. Besides access to instant trade execution, you can use a variety of trading tools, and charting options. The platform also supports several order types, including pending orders, stop orders, and trailing stops. It also allows clients to view their trading history to learn from their mistakes and devise a better trading plan moving forward.
Similarly, MT5 is an advanced version of the MT4 trading platform powered by MetaQuotes. In addition to supporting multi-terminal trading, the platform provides cutting-edge resources for extensive price analysis, automated trading (through trading robots or Expert Advisors), and copy trading.
Traders no longer need to rely solely on computer-based trading platforms. Instead, they may use their mobile phones to gain access to currency and stock markets via the industry’s most renowned mobile trading apps, like MT4, MT5, and cTrader. Those with Android or iOS-based smartphones can now effectively manage their investment portfolios seamlessly.
Trading on a mobile device is identical to trading from a desktop computer in every way except for the mobile small screen limitation. However, the convenience of mobility while exercising full control over your account via single-click trading is certainly applaudable.
In addition to basic features like real-time prices and charts, mobile trading platforms may come with premium services like streaming news and data, as well as access to exclusive research and learning materials.
Payment Methods Accepted by Forex Brokers in Saudi Arabia
Forex brokers support various payment methods and multiple currencies for deposits and withdrawals. Since the forex market is yet to be well established in Saudi Arabia, it becomes hard to find a broker accepting deposits in Saudi Arabian Riyal (SAR).
Popular payment methods available in Saudi Arabia forex brokers include Debit Cards, Credit Cards, Skrill, Neteller, Paypal, and Wire transfers. Most of the time, you will find brokers supporting USD, GBP, AUD and other major currencies as one of their accounts’ base currencies.
Therefore, even if there is no fee on deposits or withdrawals, clients depositing funds in Saudi Riyal will incur currency conversion charges on each transaction made amid deposit and withdrawal.
Forex Trading Regulation in Saudi Arabia
The Capital Markets Authority (CMA) is the prime regulator overseeing financial intermediaries dealing in currency and stock markets in Saudi Arabia. There is also a government agency called the Saudi Arabian Monetary Authority (SAMA) that keeps tabs on the foreign exchange market and brokers in Saudi Arabia. Besides working in collaboration with CMA for defining rules and regulations for the foreign exchange markets’ participants, it is also responsible for issuing and overseeing the country’s official currency (SAR).
Both international and local brokerage firms need to obtain a licence from the CMA before rendering their services in the country. However, clients in Saudi Arabia can also take advantage of the services of a number of forex brokers with offices in the Gulf Cooperation Council (GCC) area.
Brokers operating in Gulf countries also fall under the regulations of the Dubai Financial Services Authority (DFSA). The DFSA follows the same worldwide regulatory standards used by advanced economies such as the United States and the United Kingdom. However, the DFSA imposes regulations on the financial industry that are consistent with the country’s religious values. These regulations include higher minimum margin requirements (from 2% to 5%), which effectively reduces leverage to 1:10 (1:20 for Islamic traders), and swap-free accounts for shariah practising traders.
Is Forex Trading Legal in Saudi Arabia?
Yes! It is legal to trade forex in Saudi Arabia as long as you trade using an authorised brokerage firm. It’s worth noting that several brokers are setting up their regional offices in Saudi Arabia, so they may more easily comply with local regulations and Islamic ethics. If you wish to open a swap-free account, you must specify this to your account manager. You can also request the company to convert your account from conventional to Islamic.
Saudi regulators keep cautioning investors to remain vigilant and avoid signing up with unregulated entities. For example, the Saudi Arabian Monetary Agency (SAMA), along with the Capital Market Authority (CMA), and the Ministry of Commerce and Investment launched a public education campaign in 2017 to alert investors to the dangers of engaging in foreign exchange trading through unlicensed brokers.
Are Saudi Forex Brokers Safe?
Forex trading with authorised forex brokers is seen as a secure endeavour in Saudi Arabia. Brokers employ different safety precautions and risk management features, such as SSL encryption, two-step authentication, and negative balance protection. However, due to the limited numbers of brokers serving in the country and infant regulatory setup, it is hard to find a broker providing funds compensation schemes to Saudi clients in case a firm becomes insolvent.
What Reddit & Quora Say About Saudi Forex Brokers
While seeking public view on trading with forex brokers in Saudi Arabia, we only found a selected number of threads. People seemed curious about knowing the legality of forex trading in the country. Some members on Reddit wrote that forex trading is absolutely legal in the country as long as you sign-up with a regulated forex broker and comply with the country’s rules and regulations concerning speculative markets. Moreover, clients wanted to know which bank allows forex trading in Saudi Arabia. People have suggested different intermediaries facilitate forex trading in Saudi Arabia as shown in the image below.
We also noticed people were more interested in knowing about the stock brokers. Some clients even suggested a few firms suitable for trading stocks besides exploring other financial markets, like forex, commodities, cryptocurrencies etc.
Like Reddit, the Quora community also seemed sceptical about trading forex in the country. Moreover, people were also concerned about whether or not forex trading is permissible as per shariah laws. While people had different opinions about it being allowed or not, everyone seemed to be on a single page endorsing the legal status of forex trading in Saudi Arabia.
Clients who believe forex trading isn’t permissible according to shariah practices even don’t recommend opening a swap-free account. Those who think CFD trading is a non-permissible trading activity deem Islamic accounts with no leverage to be a practical way to trade forex in Saudi Arabia.
While the Saudi economy continues to seek diversity, the country’s youthful and technologically sophisticated population is drawn to forex trading as a way to supplement or replace their income. Compared to countries with a robust regulatory framework, forex regulations are far less stringent in Saudi Arabia. Ranging from the scope and regulations of forex trading in the country to the pros and cons of forex brokers and factors crucial for brokers’ selection, we tried to cover everything in detail. Besides debriefing available financial instruments, account types, and trading platforms, we also discussed how to open an account with a forex broker in Saudi Arabia following a statement on the legality of forex trading in the country. In conclusion, we also shared public opinion followed by a dedicated FAQs section about signing up and trading with forex brokers in Saudi Arabia.
Q & A
While the number of domestic brokers is just limited in the country, clients may want to opt for international brokerage firms. eToro being a multi-regulated broker with the provision of an Islamic account appears to be a solid choice for clients residing in Saudi Arabia. You can also make a forex brokers list and filter out the best option based on their services and features that you find more appealing to your trading taste.
Yes! You can trade stocks on forex brokers for Saudi Arabia. You can choose between a high-commission local broker and a discount broker available online to engage in stock trading.
People hold a diverse opinion about forex trading being haram or halal, with some arguing that it is permitted while others insisting that it is not. Some investors consider it a forbidden activity according to shariah principles debating that it involves margin-based trading that includes an interest element, while others say it’s fine as long as it’s done via swap-free accounts and under regulation.
Yes! eToro does offer an Islamic account. Clients looking for a swap-free account can request the company via email or connecting with customer support.
No! Forex trading is not free in Saudi Arabia. You must pay spread and commission besides incurring non-trading fees just like you do while trading forex in any other country.
Brokers charge different fees and commissions in Saudi Arabia. While some brokers charge high spreads, others may have high commission costs. It also depends on the account type and selected financial instrument.
Yes! Forex trading is regulated in Saudi Arabia. The Capital Market Authority (CMA) and the Saudi Arabian Monetary Authority (SAMA) jointly regulate forex trading activities and financial intermediaries operating within the country.
Multiple brokers offer forex and crypto trading in Saudi Arabia, including eToro, Pepperstone, FP Markets, AvaTrade, Legacy FX, etc.
Brokers have a different minimum deposit requirement in Saudi Arabia. While some international brokers like Pepperstone allow clients to start with a deposit of $10, others ask for a higher initial deposit. For example, a local broker in Saudi Arabia called Riyadh Capital requires clients to deposit a minimum of $2000 to get started.