Forex Retail Markets What to Expect

by Himanshu
(Tokyo)

After a decade of sustained and rapid growth, the retail foreign exchange (Forex) market is seemingly entering the phase of consolidation. Japan, which used to have the top place globally with estimated USD 65B per day turnover is estimated to have come down to USD 35B/day. The decline of Japan market does not represent the global trend but is an indication of consolidation. Over the past few years Forex trading has been getting very popular among small retail investors and the retail forex trading volumes have been growing exponentially. Some of the factors which have been fueling this exponential growth was the heavy advertizing by Forex firms to lure new investors or traders, the spread of a feeling that this could be a fast way to riches because of very high leverages and hence very less capital requirements and also that anyone can do it with practically no experience and minimum of studies or knowledge. Even though many of these points could be taken as true but on the other side most of these points are the slow poisons for both the traders and the Forex brokers.

Many people say that the heavy regulations being imposed by some of the major markets are killing the retail trading. For example the highest allowed leverage cut by Japan to 1:25 and by the US to 1:50 but on the other side these regulations are going to be the cause of the matured and long-term growth of the market. No market can grow when more people are losing money but a market will always grow when more people make sensible amounts of money.

Some other factors which are making the traders more knowledgeable and hence pave the way for a matured growth is better education avenues and better communities like various forex technical analysis, forex portals like BrainyForex, mirror trading platform and other forex trading communities.

Any matured market always depend on the awareness of both, the buyers and the sellers about the market dynamics and it needs better sources of information, better knowledge sharing and better knowledge management. Every new market goes through it’s own cycles of growth and consolidations and foreign currency exchange market, with its continued growth is no exception.

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