Current Forex Trends & Key Players

The forex market is one of the biggest and most active in the world. Central banks, governments, brokers, and individuals trade billions of dollars from Brazil to Tokyo daily.

Over the years, some key trends have emerged, as well as who the biggest players in the forex market are.

Why is Forex Trading So Popular?

There are three main reasons why forex has become so popular across the globe; it has high liquidity, the markets are open 24/7, and it is easily accessible to anyone with an internet connection and access to a broker or trading platform.

Forex trading can be tricky to get right, but it is also fairly easy to understand, meaning regular people can also trade, and it isn’t limited to financial institutions and experts.

Where is Trading the Most Popular?

With millions of traders worldwide, the most popular trading region is Asia, which has over 3 million daily traders. Europe and North America are next, with Africa close behind. The forex market is still growing in Central and South America, with a few hundred thousand traders, respectively.

Forex Worth in 2023

The global forex market is worth a staggering $1.93 quadrillion, with the average daily turnover going up 14% in the last couple of years, from $6.6 trillion to $7.5 trillion. Forex swaps and spots make up most of this number, making up close to $7 trillion.

Major Currency Pairs

The most popular currency pairs to trade have remained relatively unchanged over the past few years, with only one or two becoming more or less popular. The biggest pairs are The US Dollar and Euro, the US Dollar and Japanese Yen, and the Great British Pound and Dollar.

The Australian Dollar and the Swiss Franc, paired with the US Dollar, have also emerged as two major currency pairs. Surprising to some, but the Australian Dollar and Franc are two of the strongest currencies in the world.

Most Traded Pairs

When it comes to the most traded pairs, the US Dollar is king. The USD, paired with the Yen, Pound, Euro, Yuan, Canadian Dollar, Australian Dollar, and Franc, is the most popular pairing with financial institutions and individual traders alike.

Most Popular Currencies

As mentioned, the US dollar is the biggest and most important currency in the forex world. Even though most forex trading takes place outside of the US, most reserve banks hold the dollar, and most currencies are pegged to the Dollar as well.

The second most popular currency is the Euro, which is then followed by the Yen. The Chinese Yuan has gained serious traction and popularity leading into 2023 as the forex market expands in Asia.

Who Trades Forex the Most?

When it comes to the demographics of traders, the vast majority of traders are institutions. However, on an individual level, men make up the majority of traders worldwide, with close to 90% of traders being men, with an age range spanning 19 to 65+.

However, while men make up the majority of the traders, women have been shown to outperform them by almost 2%. However, this is down to the fact that they are a much smaller group and, therefore, on average, lose less money due to averages.

Key Forex Players

Considering individual traders only make up a small percentage of forex traders, governments and financial institutions are easily the biggest players in the sector, trading billions of dollars daily.

Commercial Banks

Commercial banks are the biggest traders in the forex market. Over 80% of the forex traded is done by commercial banks, which is due to the many laws that most countries have regarding where money can be deposited.

Considering the laws, these countries make it of paramount importance to deposit your money into a bank, the banks leverage this to trade the forex market and make profits for their clients.

Central Banks

Central banks are part of the forex market simply due to being the ones that provide the liquidity needed to trade. If central banks didn’t have the local and international currencies available, you wouldn’t be able to trade.

Governments

Governments take part in the global forex trade as a way to hedge against inflation and therefore help their economies. While this is a very typical reason to invest in forex, it is estimated that governments make up 5% of the global forex trade.

Hedge Fund Managers

Hedge funds take in billions of dollars from the wealthy to be used by managers to trade and make a profit for their clients. While commercial banks have a lot of power in the forex market, hedge funds have their level of influence as well. While you can’t corner the forex market, some entities can steer it in a general direction for short periods of time for the benefit of their clients.