What is a brokerage account and how do you open one?
Embarking on an investment or trading journey will likely require that you open a brokerage account. Find out what a brokerage account is and how to open one with us.
Start trading today. Call +971 (0) 4 5592108 or email sales.ae@ig.com. Our sales team is available from 8:00am to 6:00pm (Dubai time), Monday to Friday.
Contact us: +971 (0) 4 5592108
Start trading today. Call +971 (0) 4 5592108 or email sales.ae@ig.com. Our sales team is available from 8:00am to 6:00pm (Dubai time), Monday to Friday.
Contact us: +971 (0) 4 5592108
What is a brokerage account?
A brokerage account is used to trade or invest in securities in the financial markets. Having an account with an online brokerage has become popular. A stock trading account will enable you to buy and own shares outright. On the other hand, a leveraged trading account, like a CFD trading account, will give you exposure to various markets that you can trade without taking ownership of the underlying assets.
Stock trading account
A stock trading enables you to buy and sell stocks and exchange traded funds (ETFs). You can also use it to re-invest any dividends you earn from company stocks that make for such a provision.
Learn more about stock trading
Leveraged trading account
When you trade on financial markets using leveraged trading accounts, you’ll be required to put down a deposit – called ‘margin’. When trading with leveraged products such as CFDs, your margin deposit is much less than your full position size.
When trading on the price movements of the underlying assets, you’ll get exposure to 17,000 markets. Some of the markets you can trade include:
How to pick a brokerage account
The type of account you open will depend on whether you want to trade or invest.
An investment account is more suited to someone who wants to buy and own shares for exposure in the long term.
A trading account, such as a CFD, would be suited to someone who wants to speculate on the short-term rise and fall of the market price movements.
So, if you want to buy and hold the assets and earn an income from dividends, then you’ll choose to invest. If, however, you prefer to have exposure to assets over the short term, then you’ll go with trading.
When choosing the best brokerage account for you, consider:
- Objectives and available period of activity
- Commitment time and energy
- Markets
- Experience
- Risk appetite and available capital
Types of brokerage accounts
With us, you’ll get to trade, invest or both in various financial markets. Below is a summary of our account offering, which is made up of two main categories – stock trading for investing and CFD trading:
Stock trading account (investment)
Stock trading account |
Invest in shares and ETFs |
You can use a stock trading account to buy and sell shares and ETFs. You’ll open this kind of account when your intention is to buy and hold stocks with hopes to sell once the stock’s price increases. When investing using a stock trading account, you can also earn dividends from the shares you own, provided the company makes for such a provision.
You can’t short a position on this type of account, meaning when stock prices fall, you won’t make a profit. So, if you’re looking for medium-to-long-term investment opportunities, then stock trading is more suited to you.
CFD trading account (leveraged trading)
CFD trading account |
Speculate on a wide variety of rising and falling markets such as forex, indices, shares, commodities, bonds and other asset classes. Profits can be balanced against losses as tax deductions1 |
Use your CFD trading account to go long or short on the price market movements and get exposure to the underlying assets.
Gains you make when trading CFDs can be used to offset losses you may incur. You also don’t pay stamp duty when trading CFDs because you won’t take ownership of the underlying assets.1
CFDs are a leveraged product, meaning you can open a position with an initial deposit – called margin – which is a fraction of the full value of your position. The profits and losses you make will still be based on the full size of your position, which can outweigh your margin. Trading with leverage has associated risks as compared to non-leveraged products like stock trading. Remember to manage your risk carefully.
With us, you can trade the spot price, futures and options of shares, ETFs, commodities, forex and indices markets and if you’d like to trade intra-day, then you’ll find a CFD trading account may be better suited for you.
CFD trading involves high risk. That’s because leverage can magnify both your profits and your losses as they’ll be based on the full exposure to the trade, not just the initial margin deposit required to open it. This means losses as well as profits could far outweigh your margin, so always ensure you’re trading within your means and take steps to manage your risk.
How to open a brokerage account in the UAE
1. Decide whether you want to trade or invest
Choose whether you’d like to trade or invest. If you’d like to trade, you‘ll have to open a CFD trading account. However, if you decide that you want to invest, then you’ll open a stock trading account. Trading is leveraged and investing is traditional, where you’ll buy and own the asset outright.
2. Understand the charges and risks
It’s important to understand the costs that come with trading with your online broker. With us, creating an account comes at no charge, but once you open or trade a position, there will be costs involved. Direct charges you’ll likely incur are the spread, which occurs when you trade.
Other costs are the commission rates, which you’ll incur when you’re stock trading. With us, you’ll get a competitive commission rates, some as low as $0 on US stocks.2
Also, remember that direct charges are payable on commissions when trading share CFDs.
CFDs are leveraged products, meaning you pay an initial margin that gives you increased exposure at a fraction of the full market value of the underlying asset. With leverage, your profits will be magnified when the market moves in your favour. But, if the market moves against you, you’ll make losses that might exceed your initial outlay. Make use of some of our risk management tools. Also ensure that you only invest an amount you’re comfortable losing.
3. Fill in an application form
Fill in an application form. We’ll then ask you a few questions to determine your trading or investing knowledge before proceeding with the next phase of the application.
4. Get verified
Once you’ve filled in your application form, it’ll need to be verified. This process usually takes a few days.
5. Fund your account
When your application has been approved, you can credit your account with funds and start trading or investing. You can fund your account using a debit card, PayPal or bank transfer. With us, you can also add or withdraw funds from your account – for free.
FAQs
What is an online broker?
An online broker is an independent company with a digital platform that helps organise and execute transactions on your behalf when you want to trade or invest in the financial markets. Online brokers, like traditional ones, usually charge a commission for brokering or executing the transaction on your behalf.
What is a brokerage account?
A brokerage account is a trading or investment tool you’ll use when you want to buy and sell securities in the financial markets.
Do I need a brokerage account to buy shares?
Yes, you’ll need to open a stock trading account when choosing to invest in company stocks with us. We’ll offer various stock trading options to suit your investment needs and risk appetite.
You can trade on share price movements without taking ownership of the share via a CFD trading account.
Whereas an investment account like stock trading allows you to buy and hold shares over the long term, CFDs enable you to trade on share prices in the short term.
What is a margin brokerage account?
A margin – or leveraged – brokerage account gives you access margin trading, which enables you to put down a deposit to open a position with a much larger market exposure. With this type of account, your broker can credit your trade for the full value of the underlying asset.
You trade on margin using CFDs.
What can I trade with a brokerage account?
Our brokerage accounts enable you to trade a host of assets on 17,000 financial markets.
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1 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
2 Trade in your stock trading account three or more times in the previous month to qualify for our best commission rates. Should you place over 50 trades on US shares, in a given month, IG reserves the right to charge you $5 per trade. Learn more about our stock trading account charges and fees.
3 Best Finance App, Best Multi-Platform Provider and Best Platform for the Active Trader as awarded at the ADVFN International Financial Awards 2024.
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