According to the Bank for International Settlements (BIS), tasked with fostering financial and international monetary cooperation, the daily volume in trade of the global currency market dwarfs every other financial market by a long margin.
The 2022 Triennial Central Bank Survey of Forex and OTC Derivatives Markets (April 2022) stated that the global forex markets shot up 14% vis-a-vis the 2019 survey, hitting US$7.5 trillion as a daily average turnover.
The BIS surveys are conducted every three years by gathering relevant information from reputable banking authorities around the world.
For example, the following data indicates precisely how big the global Forex trading market was from 2013 to 2022:
Below is a basic table showing the currency % share in the foreign exchange market for different years, based on the data from the BIS and the Bank of Mexico:
Year | USD | EUR | JPY | GBP | AUD | CAD | CHF | RMB | MXN |
|---|---|---|---|---|---|---|---|---|---|
| 2013 | 87.0 | 33.4 | 23.0 | 11.8 | 8.6 | 4.6 | 5.2 | 2.2 | 2.5 |
| 2016 | 87.6 | 31.4 | 21.6 | 12.8 | 6.9 | 5.1* | 4.8 | 4.0 | 1.9* |
| 2019 | 88.3 | 32.3 | 16.8 | 12.8 | 6.8 | 5.0 | 4.9 | 4.3 | 1.7 |
| 2022 | 88.5 | 30.5 | 16.7 | 12.9 | 6.4* | 6.2* | 5.2 | 7.0 | 1.5* |
These rudimentary statistics highlight each currency’s importance as part of the global Forex trading market.
Importantly, the USD has strengthened its dominance from 87% to 88.5%, while the EUR has declined from 33.4% to 30.5%.
Other declines include the JPY from 23.0% to 16.7%, the MXN from 2.5% to 1.5%, and the AUD from 8.6% to 6.4%.
This bodes well for forex traders interested in the major currency pairs – notably those including the USD.
Post Contents
- 1 #1 – It All Begins With A Comprehensive Forex Education
- 2 #2 – Naturally, Your Choice Of Broker Is Central To Your Success As A Forex Trader
- 3 #3 – Demo Trading Is An Important Determinant Of Your Success As A Forex Trader
- 4 #4 – Learn About Forex CFD Trading. CFDs Are Known As Contracts For Difference
- 5 #5 – Understanding Risk
- 6 #6 – Forex Trading Resources
- 7 #7 – Adopt A Balanced Approach To Trading
#1 – It All Begins With A Comprehensive Forex Education
New and experienced traders need to be well-versed in reading the financial markets.
Since forex – currencies trading – hinges upon macroeconomic variables, including monetary and fiscal policy interest rates, inflation, trade policy, and geopolitical events, a complete understanding of variables is required.
Fortunately, the leading Forex brokers and platforms like MetaTrader 4 present retail and institutional traders with a wealth of tools and resources to understand the Forex markets. These include demo trading options with zero risk and real market trading conditions.
#2 – Naturally, Your Choice Of Broker Is Central To Your Success As A Forex Trader
Selecting a broker with credible references, a sterling reputation, and licensing and regulatory compliance is imperative.
Beyond the obvious, traders are best served with a robust mobile trading platform for on-the-go access to the financial markets.
Top-tier brokers present traders with various financial instruments, notably stocks, commodities, indices, bonds, crypto, and forex trading options. Low spreads, instant trade executions, and access to real-time data are sacrosanct.
#3 – Demo Trading Is An Important Determinant Of Your Success As A Forex Trader
Too many traders dive into real-money trading with registered experience of real market trading conditions.
With limited budgets and no real-world experience, it’s easy to see how a bad run could dissuade a forex trader.
That’s why experts urge traders to open demo trading accounts with reputable brokers to get a feel for the buy and sell options in the financial markets.
#4 – Learn About Forex CFD Trading. CFDs Are Known As Contracts For Difference
These are derivatives instruments which track the price of the underlying financial instruments.
In the case of currency pairs, CFDs mirror the price movements of the said pair, allowing traders to go long or short with contracts for difference.
The price at which you purchased the contract is assessed against the price at expiry time, and the difference (in addition to the initial call or put option) determines the profitability of the trade.
It is important to understand that CFDs are inherently risky. High volatility trades using leverage can go either way, magnifying profits or losses – caution is advised.
#5 – Understanding Risk
Risk and reward are important concepts in trading and investing. The risk should ultimately be worth the reward, failing which the trade should not be made.
To decrease risk and increase the probability of a favorable outcome, it is essential to implement risk management practices.
To do this, traders can implement budgetary measures, stop-loss orders, auto trading where appropriate, copy trading of proficient traders, technical and fundamental analysis, and a host of other factors.
Viewed in perspective, risk management is perhaps one of the most important elements to master with Forex trading.
#6 – Forex Trading Resources
Almost every trader utilises some other form of tools and resources to make better-informed FX trading decisions.
While the choice of trading platform is sacrosanct, there are many other elements at play.
For example, stochastic indicators, RSI (Relative Strength Index), simple moving averages (50-day, 100-day), exponential moving averages, oscillations, Moving Average Convergence Divergence (MACD), and many others are readily available.
It’s important not to overburden your trading decisions with too many Forex trading resources.
Stick to the basics like economic calendars, announcements, geopolitical news, interest rates, inflation rates, and the like.
Today, many resources are incorporated into powerful trading platforms for quick and easy decision-making when trading currency pairs online.
#7 – Adopt A Balanced Approach To Trading
This is an art form since it requires a big-picture perspective. Emotionally based trades can result in significant losses.
It’s imperative to trade with purpose, using appropriate indicators, news, tactics and strategies. If you overtrade, losses will result.
A strict focus must be maintained throughout; this requires a strict budget and a sensible trading approach.
Never trade with money that you cannot afford to lose – the biggest winners are those who put in the time, learn about the market mechanics, and understand that the unpredictability of financial markets is always the elephant in the room.
