Success stories of top investors like Warren Buffett, Peter Lynch, and Ray Dalio have continued to be a source of inspiration to many investors in the UAE who want to also profit from the stock market. However, in learning how to buy stocks in the UAE, there are three important things you must know before getting started.
Choose the stock exchange that aligns with your investment goals
A stock exchange is where stocks are bought and sold. Every stock exchange has a list of stocks that can be bought or sold on it. Consequently, if a stock is not listed on an exchange, you cannot buy it.
In the UAE, there are three stock exchanges: Dubai Financial Market (DFM), Abu Dhabi Securities Exchange(ADX), and NASDAQ Dubai. These stock exchanges currently list 170, 73, and 146 securities, respectively. ADX focuses majorly on UAE securities, DFM includes securities from Kuwait, Oman, Bahrain, and Sudan, while NASDAQ Dubai includes securities from North Africa, India, and Turkey, in addition to the GCC.
So, what then would you do if you desire to buy shares of Amazon, Tesla, Netflix, and any of the other securities that have made much money for successful investors? Since these stocks are not listed on any stock exchange in the UAE, you will need to choose an investment broker or platform that can give you access to the New York Stock Exchange (NYSE) and NASDAQ where these securities are listed.
If you are in the UAE and you wish to maximise your investment results with globally relevant stocks, you must participate in the stock exchanges that offer those opportunities.
Choose a stock trading platform that provides the best value
There are many stock brokers and trading platforms that offer you access to the NYSE and NASDAQ. How do you choose among the different options? Consider the following factors:
- Security: This should be the first on the list. A good stock trading platform must provide quality bank-level SSL (secure sockets layer) encryption to protect your data and money from hackers.
- Fees/commission: The lower the fees a stock trading platform charges, the better. Look for platforms that charge lower fees, compared to others.
- No minimum balance requirements: If you are just starting to learn how to buy stocks, you might want to start with a little amount. Also, even if you are experienced, you might not have much money to invest. Therefore, it’s important to look for trading platforms that don’t require you to have a certain amount in your account before you can trade.
- Fractional trading: Similarly, a good trading platform will allow you to purchase a fraction of a share. For example, a share of Amazon is $3,518 (at time of writing) and you may not be able to buy a single share. With such platforms, you can buy just 0.1 (or any other fraction) of the share for $351.8.
Create a documented monthly investment plan
Once you have chosen the trading platform that offers access to the stock exchanges you need and offers better value than others, you can start buying stocks.
However, before you place an order, ensure you have an investment plan. None of the successful investors and traders made money by just drifting into the market; they all have a playbook. Create your playbook based on your financial goals, and stick to it.
A platform like Sarwa Trade allows UAE residents to buy and sell stocks listed on the NYSE and NASDAQ.
Sarwa Trade is a commission-free (zero fees) trading platform that uses bank-level SSL security to protect the data and money of users. In addition, Sarwa Trade has no minimum balance requirement and it offers fractional trading as well as an interactive and user-friendly dashboard.
Once you have your trading plan and are ready to start buying stocks, Sarwa Trade is a good option to consider.