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How Much is the Forex Market Worth?

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How Much is the Forex Market Worth?

The forex market is a financial behemoth, but how much is it worth? Keep reading to find out.

How much is the forex market worth?

In 2022, there will be $2,409,000,000 in forex trading platforms. The daily trading volume in foreign currency markets is $6.6 trillion.

The Bank for International Settlements (BIS) assessed its value in 2016 at $1.934 quadrillion; thus, this current estimate is significantly higher.

The foreign exchange market dominates the global financial system, with greater transaction volume, liquidity, and value than any other financial market. The foreign exchange market is the only financial market that runs 24 hours a day, seven days a week.

With a daily volume of more than $2 trillion, spot fx, or foreign exchange, is the most actively traded type of currency on the foreign exchange markets.

The foreign exchange (forex) market is the world’s largest financial market, with prominent players including hedge funds, investment managers, multinational corporations, commercial investors, and central banks.

Individual traders account for just 5.5% of the overall volume of the foreign exchange market.

Only five global financial centers account for 79% of all foreign exchange trading: London, New York, Hong Kong, Singapore, and Tokyo.

FX transactions in the United Kingdom account for 43.1% of all FX transactions globally.

As foreign currency (forex) trading has increased in popularity throughout Asia, China has risen to the thirteenth largest forex trading center in the world.

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The Top 7 Most Traded Currencies

On the global foreign exchange market, roughly 170 different currencies are exchanged. Although traders have many alternative currency pairings to choose from, the top seven pairs account for 68% of all FX trading globally. The following are the seven most actively traded currency pairs in 2019, together with their share of total over-the-counter (OTC) FX turnover:

-The dollar/euro exchange rate has increased by 24% in favor of the US dollar.

-The exchange rate between the US dollar and the Japanese yen is 17.8 percent.

-The US dollar gained 9.3 percent against the pound.

-The exchange rate between the US dollar and the Australian dollar was 5.2 percent.

-The US dollar increased its value versus the Canadian dollar by 4.3%.

-The USD/CNY exchange rate fell by 3.8%.

-The conversion rate from US dollars to Swiss francs was 3.6%.

The World’s Most Popular Currency

The United States dollar is essential in financial markets and the worldwide economy because of pegged currencies, dollarization, and the fact that most central banks retain their reserves in USD.

Despite accounting for 4.31 percentage points of all FX transactions, the US dollar is engaged in 88 percent of all FX transactions globally.

The euro is the second most often used currency in foreign exchange transactions.

Over the last three years, there has been an increase in trading activity involving the euro and the Swiss franc (EUR/CHF), and the Japanese yen (EUR/JPY).

The Japanese yen is the third most often used currency in forex transactions, but its volume has been declining since 2016.

In contrast to the euro and the Japanese yen, the quantity of trade in the British pound, Australian dollar, Canadian dollar, and the Swiss franc has remained constant during the last three years. The daily trade volume for developing market currencies has lately increased.

Developing currencies accounted for 21% of total FX activity this year, down from 24.5% in 2015.

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Risk of Foreign Exchange

FX speculation is very dangerous for average investors due to high leverage and volatile currency markets.

According to a study of 35 FX brokers, 71 percent of retail FX traders lose money.

Only 29% of ordinary investors profit from their investments, while 99% of foreign currency dealers lose money every quarter.

The Forex Market’s Characteristics

Only around 10% of retail foreign currency brokers are women. Despite the fact that far fewer women than men participate in the foreign exchange market, Warwick Business School discovered that women outperformed males by 1.8% when investing in financial markets.

This is due to the fact that men are more willing to take risks and violate trade regulations, whereas women prefer long-term plans.

In terms of age, 43.5% of forex traders are between the ages of 34 and 45, 5.0% are millennials (those between the ages of 25 and 34), and 15% are 45 and over.

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Forex Trading Automation

Infrastructures for the marketplace

MetaTrader 4 is the platform of choice for ordinary investors.

In 2018, MetaQuotes Software was found to have been used to trade 54% of all retail CFDs.(MetaTrader 4 and MetaTrader 5).

More than 85% of forex market traders use trading platforms that are compatible with the Windows operating system.

The complex features offered in both versions may account for the success of MetaTrader 4 (MT4) and MetaTrader 5 (MT5).

These features are designed to help traders with various trading tactics, such as day trading and the use of expert advisors.

Most forex brokers provide demo accounts that are designed to simulate real-world trading conditions, allowing you to test the waters before committing to a genuine account.

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