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Day Trading in Kuwait

Written By

Paul Holmes

Written By

Paul Holmes

Paul has over 14 years experience in the trading industry, both as a full-time trader and working with leading brokers. He’s traded indices and forex, developed proprietary day trading techniques, and built his own MetaTrader algorithms. He excels at delivering simple-to-follow guides for beginners to experienced traders.  

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Edited By

James Barra

Edited By

James Barra

James is an investment writer with a background in financial services. As a former management consultant, he has worked on major operational transformation programmes at prominent European banks. James authors, edits and fact-checks content for a series of investing websites.

» James Barra Profile Page

Fact Checked By

Michael MacKenzie

Fact Checked By

Michael MacKenzie

Michael is a writer and editor with over a decade in journalism and publishing. His niche lies in editing and fact-checking content in the financial services sector, with a focus on online brokers and trading platforms. Michael previously reported on politics and economics in the Middle East and edits books for established publishers.

» Michael MacKenzie Profile Page

Updated

Nov 11, 2024

There’s a growing class of day traders in Kuwait, fueled by significant income levels, a relatively high GDP, efforts to diversify its economy away from oil, and faster, more advanced trading infrastructure.

Kuwait’s stock market has also seen serious growth, especially since being enhanced from frontier to emerging market status by MSCI in 2020, drawing active traders looking to profit from short-term market volatility.

Want to start day trading in Kuwait? This guide will get you going.

Quick Introduction

• Boursa Kuwait is among the largest stock markets in the Gulf Cooperation Council (GCC), with around 170 listed firms. It’s also one of the area’s first privately owned stock exchanges.
• Kuwait’s Capital Markets Authority (CMA) is a ‘yellow tier’ body as per DayTrading.com’s Regulation & Trust Rating, ensuring market participants foster a secure trading environment.
• Like other Middle Eastern countries, Kuwait has an attractive tax environment for active traders with no personal income tax or capital gains payable to the Ministry of Finance.

Day Trading Platforms in Kuwait

What Is Day Trading?

Day trading involves buying and selling instruments like stocks listed on the Boursa Kuwait, currencies like the Kuwaiti Dinar, or commodities like oil which represent around 95% of Kuwait’s exports, within a single day.

The goal is to profit from short-term market price fluctuations, with Kuwaiti day traders typically closing all their positions before the market closes, avoiding the risk of overnight price movements.

Short-term traders may use any number of strategies to capitalize on market movements, including:

• Scalping: Making many small daily trades to capture minor price movements.
• Momentum trading: Trading based on the strength of an asset’s momentum in a particular direction.
• Technical analysis: Using charts and indicators to make trading decisions based on historical price patterns and market data.

Skilled day traders apply strict risk management. They often use stop-loss orders to sell a security when it reaches a specific price, to limit potential losses on a trade. They’ll also use profit limit orders; the trade closes automatically if an active trade reaches a specific price target, allowing them to lock in profits.

Risk management is especially important if you’re CFD trading in Kuwait given the large losses that can accumulate if you’re using leverage and the markets move against you.

Is Day Trading Legal In Kuwait?

Day trading is a legal and recognized activity in Kuwait as long as traders follow the rules of Kuwait’s Capital Markets Authority (CMA).

Licensed brokers in Kuwait must follow strict guidelines set by the CMA to ensure that trading activities, including day trading, are conducted fairly and ethically.

These guidelines include rules on market conduct, reporting, plus price transparency and order execution, which are important for day traders looking to secure optimal prices in fast-moving markets. Like other regulators, the CMA also follows measures to prevent market manipulation and insider trading.

To engage in day trading in Kuwait, you should open an account with a licensed brokerage firm in line with Article 3 of CMA Law. This ensures that all trades are executed through a regulated entity that is compliant with local regulations.

I recommend checking whether any company you plan to do business with is an Authorised Market Institution.

Paul Holmes

Author

Is Day Trading Taxed In Kuwait?

Day trading profits are not taxed in Kuwait, which makes it an attractive environment for traders and can help enhance trading returns.

Kuwait does not impose personal income taxes on individuals, meaning any income earned from day trading or other investment activities is generally tax-free.

• No personal income tax: Kuwait has no personal income tax regime, so individuals do not pay taxes on their earnings, including profits from day trading.
• Capital gains tax: Individual investors do not pay capital gains tax in Kuwait. Hence, any profits from selling stocks or other securities are not subject to taxation.
• Corporate tax: While individuals are not taxed, foreign corporations operating in Kuwait may be subject to corporate income tax. However, this does not apply to individual day traders.

Getting Started

You can start day trading in Kuwait in three simple steps:

1. Select a broker: Choose a licensed brokerage firm in Kuwait for trading on Boursa Kuwait or an international broker if you plan to trade global instruments. Ensure the firm offers a reliable charting platform, fast execution, low fees, and potentially a halal account to comply with Islamic Finance principles.
2. Set up your account: To open a trading account in Kuwait, you must provide several documents and fulfil specific requirements set by brokerage firms and the CMA. The exact documentation may vary slightly, but generally, you need the following: A valid Kuwaiti Civil ID or a valid passport, residency permit, or visa (Iqama) if you are an expat. You might also need a certificate verifying your source of income.
3. Choose a market: If you’re interested in trading local stocks, Boursa Kuwait is your primary venue. It lists companies from various sectors, such as banking, telecommunications, and real estate. If you prefer trading international stocks such as US equities, commodities such as oil and gold, or forex trading in Kuwait through pairs like KWD/USD (though low volume and volatility make KWD less suitable for day trading), you can open an account with an online broker that provides access to global markets.

A Trade In Action

To help you understand how short-term trading in Kuwait actually works, let’s look at a firsthand example…

I’m concentrating on the National Bank of Kuwait (NBK) as an actively traded opportunity. When day trading specific stocks, it’s essential to pay close attention to the company’s fundamentals and the technical feedback we see on charts/timeframes.

The fundamentals will include data like market capitalization, 52-week highs and lows, when a dividend is due, changes in revenue, the next earnings data, EBITDA, P/E ratio, overall sentiment indices, and any top broker buy-sell recommendations. NBK stock was trading well below its 52-week high of 1004, and its P/E ratio was 17.8.

NBK fell sharply after the dividend and stock split were declared at an earlier point. Based on the fundamentals, it was set for a significant recovery, and judging by the state of the overall economy, the banking sector should be robust in Kuwait; the unemployment rate is around 2.5%, and according to World Bank, Kuwait is the 25th richest country regarding gross national income per capita,

Chart Analysis

From a technical analysis standpoint, I use candlesticks on 1-hour or 2-hour timeframes to gauge changes in overall, daily market sentiment.

I often look for evidence of bearish or bullish price action or indecision illustrated by the typical formations many rely on, such as bearish engulfing, bullish engulfing, hammers and doji patterns.

Occasionally, I’ll apply technical indicators to my charts that I’ve trusted to deliver reliable results over the years.

The Relative Strength Index RSI is one such indicator. It is a simple and easy-to-follow momentum indicator that measures the speed and magnitude of a security’s recent price changes to establish whether it’s overvalued or undervalued.

It can also indicate securities ready for a trend reversal or corrective pullback in price; it can signal when to buy and sell.

I always leave such indicators on their standard setting, in this case, 14 (14 days). An RSI reading of 70 or above indicates overbought, and a reading of 30 or below indicates oversold.

Trade Execution

Over recent sessions, I noticed the stock was overbought, as indicated by the full, bullish, green candle with no wick and, critically, the RSI reading of +70, a reading the indicator hadn’t generated for this stock for several weeks. This suggests that the overbought conditions were highly prominent.

I shorted the stock based on the indicator reading and the candlestick formation. I entered the trade at 890. My sell order ticket contained the following trade parameters:

• Order executed at 890.
• Stop loss order at 905 (equal to the recent high).
• Take profit limit order at 860 (equal to a 28-day low).

I never get fixated on “letting my winners run” and closing a trade too early. If the day trade meets my initial objectives, I’ll always be satisfied.

This sell order worked out exceptionally well based on two simple and practical technical analysis tools: the RSI and candlestick formations.

Bottom Line

Day trading in Kuwait can be rewarding for those who approach it with the right mindset, tools, and knowledge. Success lies in thorough preparation, continuous learning, disciplined execution, and effective risk management.

If you’re considering short-term trading in Kuwait, take the time to build a solid foundation, start small, and gradually increase your exposure as you gain experience and confidence.

Always be mindful of the risks (you could lose any Kuwaiti Dinars you invest), and ensure your day trading activities align with your financial goals and risk tolerance.

To get started, see DayTrading.com’s pick of the best brokers for day trading in Kuwait.

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