Even as the traditional financial market continues to battle the uncertainties caused by the pandemic, FOREX (FX) trading has seen substantial growth and adoption during the last 3 months.
Several trade brokers in the sector have seen month-to-month growth of 25-50% in forex accounts. These percentages represent 220,000 new client accounts for many of these traders. Many have even reported that their trading volumes also rose sharply between March and June, increasing by approximately 300% between those months.
Developing countries like Africa, Eastern Europe, and Southeast Asia saw the most profound growth making up 60% of the new accounts. Trading markets vary, as some traders focus solely on safe-haven commodities and currencies, while others try to leverage opportunities, such as the fluctuating demand for crude oil.
Extensive growth such as what is taking place now is extremely rare for the slow-paced forex industry. Over the past decade, average daily forex trading volume increased by no more than 40%. The current trend is, of course, influenced highly by the unprecedented economic climate created by the pandemic.
“Market volatility is directly affecting the steep rise we’re seeing,” says Andreas Efstathiou, senior analyst at IronFX. “The profit potential it signifies is undoubtedly a major pull factor for traders who wish to leverage on price swings. However, other sociological trends may have contributed, as well.”
“Working from home has given traders more time to focus on trading. Also, in the shadow of a looming financial crisis, people are actively looking for new income channels. They have time to learn more about trading and may feel like global events present a unique opportunity to make a profit. Naturally, this means a higher interest in the market and more trading activity. Forex trading has also been done online for many years, making it one of the most natural courses of action for new and dormant traders looking for profitable avenues.”
Is this a temporary spike, or a long-term trend?
The circumstances leading up to this rise have never been observed earlier. The amount of data and information available is still small, and predictions will be nothing but educated guesses. However, with further outbreak ‘waves’ expected in the upcoming months and years, we can assume many of the underlying causes will remain in effect or re-emerge as soon as COVID-19 cases increase. Lockdowns and social distancing mean market volatility will remain high, and remote work will keep traders focused on forex markets.
