by Justin Grossbard, co-founder and CEO of CompareForexBrokers
Foreign exchange is still the most popular market in the world. A global analysis of retail investors has revealed which countries have the highest turnover and which are emerging as contenders.
The United Kingdom is the country with the highest average daily turnover, at a whopping USD $1.6 trillion. This may not be surprising given the UK’s regulatory-friendly environment (despite recent FCA regulation changes), coupled with its status as a global financial hub.
What is surprising, however, is how the UK managed to comfortably top the USA (USD $580 billion), Hong Kong (USD $417 billion) and Singapore (USD $340 billion) – three of the most vibrant financial centres in the world.
Indeed, perhaps a significant reason behind this is that you can profit in a depreciating market and hedge against falling currencies. It has many parallels with cryptocurrency trading. This may be extremely appealing to UK investors at present, with issues such as Brexit, economic contraction and Covid-19 driving further market volatility and potentially larger returns in the near term.
In terms of forex awareness, Jamaica topped the list for showing the most interest in the foreign exchange market at 2290 Forex searches per 10,000 people, or 0.08% of the population. Interestingly, Jamaica isn’t the only developing country on the list. Cyprus, South Africa and the UAE (United Arab Emirates) all feature in the top five.
While difficult to pinpoint exactly why this is the case, one contributing factor could be that the forex industry has begun to develop in countries that were former colonies of European states. Thus, forex is currently popular in Southeast Asia – The Philippines, Indonesia, Singapore and some African countries like South Africa, Kenya and Ghana.
This, along with the growth of disposable incomes over time and technology accessibilities, has increased the financial capabilities of many citizens of developing nations, who have discovered and begun to trade forex.
There are lots of reasons why. But perhaps the main reason behind this increased investment activity and product awareness is the sheer size of the forex market. With a global annual value of an astronomical USD 2.409 quadrillion, trading has grown from a niche interest of a few private traders to a global retail investment phenomenon.
Another reason may be that the forex market is open 24/7. Just like cryptocurrency markets, it literally never closes. Having no time-zone barriers to entry gives the foreign exchange market a globalisation appeal like few other asset classes.
In recent years, there have also been a lot of technological innovations in trading tools available, giving forex trading an edge not only in terms of popularity and awareness but also in the sophisticated ability to analyse the market, especially from a fundamental and technical analysis point of view.
This is not to mention the increased execution methods too, such as algorithmic and copy trading and the rise in broker offerings of these platforms and tools.
Footnote: The researchers at CompareForexBrokers used Google’s keyword research to identify countries with the highest number of visitors and looked at search volume for popular forex-related keywords for the past months within that sample. Some information, such as the volume of forex trading in a given country, was taken from reports published by the Bank of International Settlements (BIS) and Statista. The data is correct as of September 6 2022.