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Forex Trading Industry Statistics and Facts 2020

Forex Trading Industry Statistics and Facts 2020

 
 
As a trader, it’s essential that you know forex industry stats to make your
trading more effective. By keeping track of the nitty-gritty stats, you can
get more involves in the industry, eventually becoming a pro trader.
 

 

In this guide, we will dig deeper into forex industry stats and facts. We’ll divide the article into sections, each explaining key stats and facts about the forex market. All the discussion data is taken from first-hand sources, so you don’t have to worry about it.

 

Daily Turnover

As described earlier, the forex market is the largest financial market globally, larger than the stock, bond, or commodity markets. The Forex market is 35 times bigger than the stock market. Forex market daily turnover increased from $1.2 trillion in 2001 to $6.6 trillion in 2019. At present, the forex market is worth $2.4 quadrillion. Forex is the only financial market that operates round the clock, 24 hours a day (except for weekends and holidays).


Major players of the forex market

The forex market involves various participants, maintaining a hierarchy. The most important players are financial institutions like commercial banks, central banks, hedge funds, investment managers, and multinational corporations. They move the market with their significant volumes. We, as a retail trader, make only 5.5% of the entire forex market.


Forex currencies and pairs

The forex market compromises of over 170 global currencies. The USD is the most traded currency in the world and makes about 73% of global trades.
• The EUR is the second most traded currency, making about 39.7% of global trades.
• The Japanese Yen (JPY) comes at number three and makes 25.7% of trades.
• The British Pound (GBP) is the fourth most traded currency, having 20.7% of global trades.
• The Australian Dollar (AUD) comes at number five, followed by the Canadian Dollar (CAD), Swiss Francs (CHF), and New Zealand Dollar (NZD).

Fun fact: Swiss Francs is considered the most stable currency with safe-haven characteristics.


Currency pairs

More than 70% of forex market transactions happen in 7 currency pairs. They are known as major pairs. They are EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, USD/CHF, and NZD/USD.

EUR/USD

USD is the most dominant currency in the world. On the other hand, the EUR is the second-most powerful currency. When two powers combine, the pair is bound to be strong. It is the most traded currency pair in the forex market.

USD/JPY

The second most popular pair is USD/JPY. The reason for this is the conjunction of two stable economies.

GBP/USD

The GBP/USD comes at number three, and as one can expect, the pair has strong characteristics due to the dependence of both countries on each other.

AUD/USD

The AUD/USD is the fourth most popular due to the good relationship between the countries.

USD/CAD

The neighboring countries having formidable economies is what you get from USD/CAD.

USD/CHF

It seems like whatever the Swiss Francs touch turns into gold. In this case, the USD/CHF is often mentioned as a lower-risk pair.

NZD/USD

The last major pair is NZD/USD. Both countries have great economies and strong monetary policies.


Demographics

The majority of forex traders are men, with women only making about 12%.

Fun fact: In a study carried by Warwick Business School, women are better traders than men. They outperform their male counterparts by taking fewer risks and devising long-term strategies. When talking about age groups, 43.5% of traders are aged between 34-45. The generation Y, a.k.a. millennials, make about 5% of forex traders. People over the age of 45 are 15% of retail forex traders.


Top forex brokers

This is the most important stat, as choosing a broker can make or break your trading dreams. So, in the world of forex, IC Markets is the largest broker. Several financial authorities regulate it like ASIC (Australian Securities and Investments Commission), the FSA (The Seychelles Financial Services Authority), and CySEC (Cyprus Securities Exchange Commission). Pepperstone is the second largest with licenses from ASIC, the FCA (Financial Conduct Authority). The largest forex broker in the U.S. is XM with certifications from CySEC, while in Europe, the largest forex brokers are XM and Saxo Bank. The above-mentioned brokers are based on their popularity among the clients and licenses from various regulatory bodies.


Trading Platforms

MetaTrader 4 or MT4 is the most popular trading platform in the forex market. Fun fact: In 2018, it was found that 54% of all retail forex traders were using MT4 and MT5. Forex traders tend to prefer windows with 85% of investors using windows operating system. The platforms (depending on the broker) provide key features of technical and fundamental analysis. It has been recorded that applying technical and fundamental analysis can increase your trading chances by 10-30%.


Mobile Trading

Mobile trading has become a significant thing in the forex market. Today, forex traders want quick access to their forex brokers and trading platforms. 35% of traders prefer to choose mobile for account opening, with android being the most popular OS.


Key Takeaways

• Forex markets have a daily turnover of over $6 trillion.
• The total value of the forex industry is $2.4 quadrillion.
• Forex is the only financial market in the world that operates 24 hours a day.
• The forex market compromises of 170 different currencies.
• The United States Dollar (USD) makes about 88% of all forex trades.
• Seven major currency pairs make up to 70% of global trades.
• Female forex traders tend to perform better than males, although they make about 12% of overall traders.
• 54% of retail traders use MT4 and MT5.
• IC Markets is the largest forex broker.


Conclusion

Having a good trading strategy and proper risk-assessment is what profitable forex trading is all about. With all these stats and facts, you got a refreshing view of your trading industry. And we are certain that these market analyses were helpful to you.

 

Sources
Wealth and Value
Warwick Business School
Triennial Central Bank Survey
Forex Trading Stats

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions. Any data and information is provided 'as is' solely for informational purposes, and is not intended for trading purposes or advice.