Retail investors trade 10% of global spot forex market
The foreign exchange market is the largest in the world with an average daily turnover of $4 trillion (R28 trillion). While most of the trade is conducted by institutions, there is high growth worldwide among retail investors who now make up 8-10% ($125billion – 150 billion [R875 billion – R1.05 trillion]) of spot forex turnover daily, according to the Bank for International Settlements in a December 2010 report.
The forex market had shown 20% growth over the past three years and thrived despite the financial crisis thanks to an electronic revolution that is allowing individuals to trade from home, according to the BIS.
Michael Konnaris, CEO of easy-forex, a pioneer online forex trading company, said that although currency trading has traditionally been the preserve of large institutions, anyone with a computer can trade forex. “Currency can be a useful and cost-effective way of diversifying an investment portfolio and investors will benefit from some knowledge of forex fundamentals,” he said.
“However, investors need to know that forex trading is high risk and may not be suitable for everyone. It is essential to get proper education and training before you start to trade and to adopt a moderate, responsible approach.”
Mr Konnaris described 2011 global economic conditions as conducive to a further rise in retail forex trading. The world’s most traded currency pairs are the euro/US dollar (EUR/USD), the US dollar/yen (USD/JPY), the US dollar/swiss franc (USD/CHF), British pound/US dollar (GBP/USD) and the Australian dollar/US dollar (AUD/USD). All are expected to be highly volatile in 2011 as global economic uncertainty is elevated.
