New to forex trading? Looking for some statistics that will help you make sense of the markets? Use these 10 forex trading statistics to get a better insight into the world of forex.
10 Forex Trading Statistics
72% of forex traders are relatively new to trading
According to a recent survey, 72% of forex traders are relatively new to trading, and only about 15% have been trading for five years or more.
As a result of the massive influx of new traders, many forex brokers are competing aggressively for the attention of inexperienced traders. For example, brokers typically advertise leverage of up to 400:1, and accounts can be funded with as little as $100.
This has created massive competition between forex brokers, with constant offers of "no risk, no commission" deals and hundreds of dollars in cash bonuses.
The truth behind the myths: how much do forex traders REALLY make? Read our blog on the average trader salary here>>
The US accounts for only 19% of the world's currency trade, while the UK accounts for 41%
The US market doesn't account for a large percentage of currency trading, contrary to popular opinion. In fact, the US makes up 19% of the total global daily trading volume. On the other hand, the UK is responsible for 41% of the world's currency trading activity. Japan is third at 8%.
Even though the forex markets do not close during the night, most intraday trading takes place between 8:00 AM and 4:00 PM EST. Of all trades worldwide, about 60% take place in the New York–London forex market. Trading volume is a crucial indicator of market activity.
10.9% of forex traders are women
While there is no simple global answer about the demographics of forex traders, one thing that most people will agree with is that forex trading is a male-dominated industry. However, women make up to 10.9% of forex traders.
We speak to female traders about their experiences in the forex world in our Women in Trading series>>
The majors are the most active currency pairs in the forex market. They account for more than 85% of total forex transactions
There are over one hundred currency pairs in the forex market, so there's plenty to choose from. However, most traders, especially beginners, tend to ignore the rest and focus on the majors (EURUSD, USDJPY, GBPUSD, USDCHF, AUDUSD, NZDUSD, and USDCAD). In fact, it's believed that more than 85% of global forex market transactions happen on only seven currency pairs known as the majors.
Want to trade for a big bank? Read Cynthia's journey to trading for a bank here>>
Over 90% of spread bets are placed as buy orders
Spread betting is a versatile and straightforward way to trade the markets, taking advantage of direction, price, volatility, and more. A spread bet resembles a combination of a pre-determined future price and an option to accept or reject the outcome.
Spread bets are settled at this future price which may be higher or lower than the current market price. The alternative is to place an order to buy or sell the underlying asset as a separate trade at the prevailing prices in the derivatives market.
The US dollar is the most common currency used in nearly 90% of transactions globally
The US dollar is by far the most traded currency in the world. As of 2007, 90% of all foreign exchange transactions used the USD to make payments. The euro is second, and the yen is third. This fact alone should give you an idea of how valuable it is to be aware of current currency exchange rates.
Read how to find a forex mentor>>
Always be sure to use stop-losses, and don't risk more than 1% of your account per trade
Trading involves risk, and it's important to protect capital as you trade. Risk per trade is a critical metric in trading. Risk per trade could also be called "money at risk" or simply "risk."
Many newbie traders make the mistake of risking far too much money in a single trade (the cost of losing a large position can cripple your account). A typical percentage is 1-2% of your trading capital. This strategy assumes that if your trading capital is $5,000, your investment in each trade should never exceed $50.
Trading is 90% emotional intelligence and 10% technical analysis
It sounds funny, but it's true. The better we can control our emotional responses to market conditions, the better off we are over the long term. This means that having more information about trading psychology is worth far more than another number to track in any technical indicators!
Around 90% of forex trading is speculative
Forex trading involves the speculative buying or selling of currencies to make a profit on rate movements. About 90% of all trades are speculative, meaning that traders expect price fluctuations to occur in the future. Using short-term projections derived from technical analysis, it is possible to trade and reverse the position before it expires.
Trading foreign exchange is now a sound investment alternative to stocks and bonds. However, unlike stocks and bonds, most traders involved with forex do not trade based on fundamentals but on technical aspects such as charts and technical indicators, which are used to their advantage in predicting price moves.
Young traders between 18-34 years who make up 27% of the total forex trading population
When you hear the word “trading,” what do you think of? Wall Street stockbrokers making trades? What if we told you that most financial trading these days is not done by sophisticated investors or traders but by ordinary young people? These days, the average investor is not 60 years old or older but 18-44 years old.
The rise of the internet and faster broadband connections have made it much easier to trade forex, and as a result, more people are now getting involved. Younger traders are often better equipped to deal with the fast pace that's required. After all, many have grown up dealing with the world of Twitter and Facebook!