A Map of Forex Traders: Where Are the 9.6 Million Online Traders?

The Forex market has been particularly active since the 1970s. It has become the world’s largest financial market, with an average daily trading volume growing from around 1.2 trillion in 1995 to 5.1 trillion in 2019, according to figures from the Bank for International Settlements.

Although large financial institutions and banks are responsible for a substantial part of the trading volume in this market, modern technology has also made it accessible to a broader customer base. Forex brokers have developed easy-to-use online trading platforms, which have simplified the trading process, and made it available from almost anywhere in the world.

In fact, 9.6 million people worldwide are now online traders – that is, 1 in 781 people.

Where are the world’s online Forex traders?

The industry is globalized, with many brokers obtaining the permission of various regulators around the world, or taking advantage of international arrangements to promote their services in jurisdictions outside their home country.

Although the United Kingdom and the United States remain by far the largest centers of Forex trading activity, various reports found that a third of online traders are established in Asia and the Middle East, representing a total of over a million Forex traders above Europe and North America.

Online trading platforms like Metatrader 4 have spread the focus away from major financial centers, such as London and New York, to the farthest corners of the world.

Internet users

Today, all that is required is an internet connection for potential traders who want to start participating in the Forex markets. Personal computers are not even necessary as many of the platforms can be accessed from a mobile phone.

The numbers are even more staggering when people who don’t use the Internet are removed from the equation: With 3.8 billion Internet users worldwide, we can say that 1 in 396 people is an online Forex trader.

A research carried out by Aite Group in 2014 suggested that up to a quarter of adult Internet users in the United States could be online traders.

In Europe, with 651 million Internet users and 1.5 million online traders, 1 in 434 Internet users zre Forex traders.

With 1.9 billion Internet users, it is not surprising that the largest number of online traders are in Asia, at 3.2 million. However, this means that a smaller proportion of Internet users are online traders, a smaller proportion compared to other regions, which is equivalent to 1 in 594 users.

While in Africa, with 1.3 million online traders and only 388 million Internet users, a high proportion of Internet users trade online: 1 in 298.

Notably, the ratio of online traders to Internet users is highest in the Middle East with 1 in 152 of the 147 million Internet users.

The Middle East and North Africa have the highest proportion of online traders, however these regions are predominantly populated by Muslims. Why does this present a problem for Forex trading? Why does this present a problem for Forex trading? It is because usury, or profits made from trading, are not permitted by Islamic law. Forex accounts that have transactions open beyond trading hours are subject to rates similar to interest charges, either debit or credit, depending on the position the account is in when the market closes. However this is seen as usury, and therefore currency trading restrictions have been imposed to allow foreign exchange to comply with Islamic law.

Many Forex brokers have taken note of this and offer Islamic trading accounts. These accounts are not subject to interest (swaps), and the buy and sell trades with currencies is immediate. This allows Muslim traders to exchange currencies according to their faith, and could explain the high proportion of online traders in these regions.

Map of Forex traders

Traders in the UK and Europe

In the UK there are around 46 million Internet users. With over 280,000 online traders, that means that 1 in every 164 adult internet users in the UK is an online trader.

In fact, there are more online trader in Britain than in any other European country as the study shows.

This is one of the reasons why there are many Forex brokers installed in the UK and regulated by the FCA. You can consult a complete list at: Forex brokers from UK

Why is trading so popular in the UK?

There have been some recent regulatory changes across Europe regarding trading leveraged products, such as Forex and CFDs, which may be contributing to lower levels of account traders. For example, in France and the Netherlands, the promotion of leveraged products is not allowed, and Belgium has totally prohibited leverage. Cyprus regulator CySEC has introduced controls, whereby increased leverage will only be available to clients who specifically request it and who can demonstrate their suitability and adequacy.

In the UK, the Financial Conduct Authority (FCA) has consulted on tightening controls on leverage, but have not yet made changes. Traders in the UK could still take advantage of the fact that they can trade on  margin, which means they can magnify their exposure to currency movements using relatively small deposits. As over 50% of online traders in the UK earn a salary of less than £ 35,000, this can be particularly attractive.

Although the German regulator (BaFin) has only implemented changes around negative balance protection, so this does not explain why its volume of online trader are just over half that of the UK.

What is clear however is that, while trading has opened up to a world of Internet users, from a wide range of different backgrounds and beliefs, for now the UK will remain one of the central hubs for retail Forex trading.

Number of online traders by Continent/Region

Continent/Region Approximate number of online traders
Asia 3200000
North America 1500000
Europe 1500000
Africa 1300000
Middle East 970000
South America 600000
Central America 335000
Oceania 190000

 


 

Leave a Comment