FOREX MARKET

Foreign currency trading is substantially growing around the world – The Southern Maryland Chronicle


The Delta variant of COVID-19 is now the dominant strain globally, sparking a surge of deaths among unvaccinated people. There are growing fears that the raging coronavirus variant might threaten the outlook for a global economic recovery.

Despite the fact the Delta risk looms, foreign currency trading is slowly but surely accelerating, which represents a reassuring sign for investors who are worried about the oscillating demand and surging prices. Forex trading is burgeoning all over the world, while traditional forms of investing, such as stock trading, continue to be practiced, it’s foreign currency trading that has gained the right momentum among investors in the financial market. 

Not only will the commercial market for foreign currencies remain active, but also it will tend to increase the size of trading. The most influential factors of the Forex market are enumerated as follows:

  • Communication
  • Globalization
  • Risk management
  • International investments
  • Information access
  • Volatility
  • Advanced computers

The daily Forex volume increased by 40% over the last decade. According to J.P. Morgan, artificial intelligence and machine learning will be the two most important features to shape the future of foreign currency trading. Roughly 90% of successful Forex traders use robots these days. Owing to these groundbreaking technologies, they’re able to analyze impressive amounts of data, monitor their performance in real-time, and simplify trading processes.

The Forex exchange market is expected to grow at a CAGR of 7,5% during 2021-2026

Growing digitalization and urbanization in emerging and developed markets represent the key factors driving growth in the foreign exchange market. Minimal trading costs, new trading opportunities, and high transactional transparency and liquidity have promoted the acceptance of Forex across the globe. It doesn’t come as a surprise that foreign currency trading is experiencing healthy growth. Individuals all around the world can take part in buying and selling currencies with one another. As a rule, Forex traders are active financial professionals who trade Forex for a living. Nevertheless, ordinary people make money from trading Forex as well. 

The landscape of the foreign exchange market is highly competitive. Some of the top exchange companies worth mentioning are BNP Paribas, Citibank, Barclays, Deutsche Bank, Goldman Sachs, and The Royal Bank of Scotland. This list isn’t exhaustive, of course. In order to stand out from the crowd, firms are struggling to find new ways and unique ways to promote themselves. The outcome is the introduction of valuable products that cater to customers’ needs and wants. Rather than providing specific services, exchange companies go out of their way to enhance user experience. Needless to say, more resources are needed to keep up the pace with progress.

The amount of U.S.-based retail traders tends to be quite small

By the time the North American session comes online, the Asian market has already closed. The activity in New York City marks the high volatility and participation for the session. The Forex session opens at 8 a.m. and closes at 5 p.m. Completely unexpectedly, the number of active Forex traders in America is dramatically low. The question now is: Why? The explanation lies in the fact that not all brokers are willing to accept clients from the U. S. because of the very strict regulations. More exactly, the requirements are difficult to fulfill. For a broker to operate legally in America, it’s necessary to be regulated by the National Futures Association, even if they already have a license issued by the FCA.

Of course, it doesn’t stop here. The self-regulatory body for the U.S. derivates industry requires each broker to have at least $20 million to operate within the country. Some might be able to afford this fee, but others simply can’t. Offshore Forex brokers have stopped accepting clients from America to avoid high fees, operational costs, not to mention the paper mess. It’s not all bad news, though. There are a few offshore brokers willing to provide Forex trading services to U.S. traders. These brokers typically offer leverage that ranges from 1:1000 to 1:5000. Let’s not even talk about the better trading conditions and execution quality.  

The bottom line is that there are good reasons why the vast majority of Forex brokers refuse to collaborate with clients from the U.S. The heavily regulated environment coupled with the exorbitant costs doesn’t leave brokers too many choices. All hope is not lost. There are several U.S.-regulated brokers accepting clients from America. For the time being, trades are increasingly conducted on mobile devices, so the traditional computer is losing favor. Internet-connected devices are used for initiating currency exchanges, as MT4 and MT5 platforms have mobile versions. Last but certainly not least, it’s easier to send and withdraw money.

How does the process of Forex trading work?

Foreign currency trading isn’t more difficult as compared to other financial activities. Nonetheless, it presents some particularities and risks. The trader has a specific currency pair that they monitor. It’s up to the trader to decide if they want to buy or sell those currency pairs from the broker. Equally, the broker can accept the request or reject it. If the order is accepted, we have what is called a live deal. The transaction is completed in real-time, so the trader is immediately notified of what happens. Forex trading can turn out to be highly lucrative, yet it’s paramount to get a good understanding of how the foreign exchange markets work.

More often than not, research is necessary. Traders take time to grasp the value proposition and risks so as to make the right choice. Having a diversified portfolio – in other words, going for investments in multiple currencies – is always a good idea. This minimizes the risk of losses and enhances long-term savings. Many aspiring traders get involved in the foreign exchange market. Speaking of which, it’s expected that Forex trading is here to stay. Any person who educates themselves in the business can amass important wealth given that Forex is a global market. It’s recommended to register with a regulated broker for the sake of safety.  


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