Forex Facts – funny and statistics
The forex market is trendy, and a significant reason for this is that it is always open in one part of the world. So, you can trade forex either in New York or London, Tokyo or Sydney, at different times on the same day. Now you know why they call it the market that never sleeps!
Also, the size of this massive decentralised market has rapidly expanded over the years, gaining in popularity due to technological advancements. The forex market has become easily accessible ever since people have participated online, with millions of traders and investors from across the world wanting a piece of the pie.
Fun Facts About the Forex Industry
- Not many people are aware that forex trading dates back to ancient times. The first currency transaction can be traced back to the Talmudic writings. Money-changers used to help others change their currency while taking a commission for their services.
- Did you know that the GBP/USD currency pair is the Cable in the forex market? The pair is called the Cable because before the advent of satellites, and fibre optics, the London and New York Stock Exchanges were connected via a giant steel cable that ran under the Atlantic. Amused?
- Another interesting fact about forex is the way the traders are categorised. Traders are classed into bulls – or those who are optimistic and believe the market will go up – and bears – the downbeat ones, expecting the markets to fall. The names are derived from the fact that a bull strikes upwards and a bear swipes downwards.
- The volume of trading in forex markets stands at more than $5 trillion a day, much more than the New York Stock Exchange volume. Also, the most traded currency is the US dollar, which features in nearly 80% of all forex traders.
- Nearly 90% of forex trading is speculative trading.
- Immediate exchange of currencies is called spot trading since the exchange takes place “on the spot.”
- Forex trading was once only possible for banks and institutions with at least $40 million to $60 million in liquid funds. Today, people with a much smaller sum can engage in forex trading.
- Pip is a commonly used term in forex trading, referring to one-tenth of a pip or the fifth decimal in a currency’s value. So, if we say the euro is 1.17224, 4 is the pip value.
- Most people think that the US is the forex trading centre since maximum transactions involve the US dollar. That is not true. In reality, 41% of all forex transactions occur in the UK, with only 19% in the US. So, the London Stock Exchange is the trading hub for forex deals.
- The internet has revolutionised the way forex trading is done. Most forex transactions take place online rather than on the exchange floors.
Forex Trading Statistics
- Forex markets had a daily turnover of 6.6 trillion dollars in 2019, up from $5.1 trillion in 2016.
- The total value of the forex industry increased from $1.934 quadrillion dollars in 2016 to $2.409 in 2019.
- Forex is the only financial market in the world to operate 24 hours a day.
- The forex market is comprised of 170 different currencies.
- The United States Dollar (USD) is on one side of 88% of all forex traders.
- Seven currency pairs make up 68% of the forex markets trading volume.
- Female forex traders tend to outperform male traders by 1.8%.
- 54% of retail traders use MetaTrader 4 or MetaTrader 5.
- Since 2009, over 6,000 different cryptocurrencies have been released.
The 7 Major Currency Pairs
The global forex market is comprised of over 170 different major, minor and exotic currencies. Although traders’ have a diverse range of currency pair options to choose from, seven major fx pairs make up 68% of global foreign exchange transactions. In 2019, the seven most frequently traded currency pairs and their share of the OTC forex turnover was the:
- United States Dollar vs Euro 24%
- United States Dollar vs Japanese Yen 17.8%
- United States Dollar vs Great British Pound 9.3%
- United States Dollar vs Australian Dollar 5.2%
- United States Dollar vs Canadian Dollar 4.3%
- United States Dollar vs Chinese Yuan 3.8%
- United States Dollar vs Swiss Franc 3.6%
Forex Trading Software
MetaTrader 4 is the most popular trading platform currently available to retail investors. In 2018, it was found that 54% of all retail CFDs were traded using MetaQuotes Software (MetaTrader 4 and MetaTrader 5). Forex traders prefer Windows over other computer software, with 85% of traders using Windows compatible trading platforms.
A key reason MetaTrader 4 (MT4) and MetaTrader (MT5) are so popular is due to the software’s advanced tools designed to assist those executing trading strategies such as day trading or Expert Advisors. Most forex brokers offer demo accounts that provide real-time trading conditions if you want to explore the platforms before you sign up for a live performance.
History of Forex Markets
Before the 1970s, forex trading as its known today was prohibited due to the Gold Standard and Bretton Woods systems. Exchange rates were controlled. Therefore traders could not speculate on foreign currency movements. After the Bretton Woods system collapsed in 1973, floating exchange rates opened the door for modern-day forex trading.
In 1996, the introduction of forex trading platforms allowed retail investors to participate in foreign exchange markets for the first time. Following the introduction of retail traders to forex markets, MetaQuotes began releasing trading platforms designed for retail traders. In 2005 MetaTrader 4 (MT4) was launched, which continues to be the gold standard and most popular retail forex trading platform to date. Although MetaQuotes released MetaTrader 5 in 2010, MT4 remains the most popular retail trading platform globally.
The release of the first decentralised Cryptocurrency in 2009 was a pivotal moment in the history of CFD trading and financial markets. Since Bitcoins release, over 6,000 other cryptocurrencies have been created that are usually traded against the USD (US dollar), EUR (Euro), GBP (Great British Pound) or AUD (Australian Dollar). The total value of Cryptocurrency markets is now estimated at 201 billion dollars.
Disclaimer: cryptos carry an even higher risk than forex and other CFDs because of the historically high volatility in crypto markets. Due to this, the UK’s financial authority (the FCA) banned cryptocurrency trading for retail traders in 2020.