Forex traders are reaping the rewards of investing in the retail currency market
It may be hard to believe now, but the retail currency market was born only in the late 1990s, when the appearance of the Internet offered groundbreaking technologies and provided individuals with access to trading. The next 10 years can be called ‘wild’ as the FX fields were completely deregulated. However, the industry kept expanding at a quick pace and, step by step, retail FX turned into a professional financial market, offering unlimited opportunities to all the motivated, willing-to-learn and independent people.
The April 2013 BIS Triennial report admitted the importance of the retail FX as it for the first time included statistics of retail volumes. According to the report, the overall FX trading averaged to $5.3trn per day (to compare: $4trn in April 2010 and $3.3trn in April 2007). The daily retail volume accounts for 3.5 percent of this sum and equals to $185bn.
New trading opportunities
The retail FX trading volumes bottomed out in Q3 2012 due to the subdued currency volatility. However, the market has seen a strong comeback since then gaining more and more popularity among traders. It’s interesting to note that in this respect the bond and share markets don’t have much to boast of: here, daily dollar volumes still can’t stop contracting.
[T]he market has seen a strong comeback since then gaining more and more popularity among traders
The boost of FX volume in the year 2013 was fueled mainly by Bank of Japan’s aggressive monetary easing, which led to a sharp depreciation of the Japanese yen. By the end of 2013, the US dollar rose above 100 yen, finally turning Japanese deflation into a low inflation. The surge in yen volatility mobilised all the types of FX traders, supporting market activity. Apart from Japan, talks about the possible policy tightening in the US and the UK on the one hand, and dovish policy of the Australian regulator on the other hand, created new drivers for the market. In the late 2013 the British pound broke to the highest levels since mid-2011, while the Australian dollar spent most of the year in a free fall, offering new trading opportunities. In the meantime, the volatility of the Swiss franc remains lower due to the Swiss National Bank’s EUR/CHF peg.
Evolving market structure
In the recent years the number of retail FX traders has been constantly rising. The strongest growth is seen in the emerging countries – this is the new geography of trading. Unlike the indebted economies of the euro area and the US, such regions as Asia, Middle East, Africa, Central and South America with their resilient growth represent a truly bright spot. In fact, this region is a true FX front runner: rapid technological development facilitates access to the currency market, while rising wages make people more active financially. We expect the age of blossom of the less developed FX markets to continue in the coming years.
In the meantime, the outlook for the more mature markets in the US, the UK and Japan is not that optimistic. Operating environment in Europe and North America is becoming more and more stringent. There is a clear and sustainable trend towards a consolidation of the market: business conditions are becoming too severe for the small brokers to survive, and the large players keep growing by acquiring the smaller ones. Such a tendency has some disadvantages for traders: the Western world is standing on the edge of an oligopolistic FX market with minimum of competition and, as a result, with lower quality of service.
Another important development is that nowadays it is hard for a new-born company to push its way to the market using price competition. It is no longer possible for brokers to cut spreads and commissions because they are already extremely low. It is goodwill and the company’s reliability that matters today. And, no doubts, the quality of products and service. It is bad news for the new players as the start-up investments increase dramatically.
In the meantime, the outlook for the more mature markets in the US, the UK and Japan is not that optimistic
All in all, today’s retail currency market can be characterised by the two key words: simplicity and speed. Every broker offers online trading access, but to gain a real competitive advantage they need to switch into the fierce technological race. This is actually quite beneficial for traders as trading tools become more and more advanced.
New software solutions allow trading almost from every place on earth with a few clicks, while the vast number of available strategies, signals and advisors provides opportunity to make money without the in-depth understanding of the economic processes. However, despite all these technical novelties, motivation and self-discipline should remain the basic values of a trader. It is the constant use of the risk management that makes a difference between an FX professional and a short-lived gambler.
How to choose the right broker?
It may be pretty hard to choose the right broker for a profitable and sustainable partnership. According to the FX BAZOOKA 2013 survey, the key aspects the traders pay attention to while choosing a broker are the quality of service, withdrawal options and speed and fund protection. Beneficial trading conditions, wide choice of financial instruments and 24/7 customer support are also seen as important.
FBS is an international brokerage company providing top quality financial and investment services all over the world. The company is doing all the best to satisfy the needs of the most demanding investors. Being an ECN/STP broker, the company provides traders with a wide range of services and competitive trading environment. A team of highly educated and experienced professionals constantly works on the development and enhancement of FBS services.
In addition, it’s always good to have many account options. FBS provides 4 types of real trading accounts specifically designed for each category of traders. Beginners may open a micro account with minimum volume order of 0.01 lot and $5 minimum deposit. For more experienced players we offer standard accounts with floating spread from 1 pip and $25 minimum deposit. FX professionals take advantages of unlimited or ECN/STP accounts with the lowest spreads from 0.2 pips and no-limited trading. Segregated accounts allow traders to keep their own funds at their own bank account. In other words, a person deposits only 30 percent of a total amount, but is able to trade with 100 percent of it – the most exciting and safe choice.
Another important benefit of FBS is the highest commission for introducing brokers on FX market
You can often test the broker’s trading conditions and service quality by opening a free-demo account. With FBS, however, new clients have a better offer: they receive $5 real deposit bonus after opening the micro account. Since the launch of promotion thousands of traders have multiplied their initial $5 in 10 and even 50 times.
Another important benefit of FBS is the highest commission for introducing brokers on FX market. Each IB receives 2.2 pips from trading of every client he brings to FBS. Also note that all partners have a vast range of promo materials at their service. In addition, FBS frequently launches contests for IBs and multilevel bonus program.
Every FBS trader has a unique opportunity to protect their funds. FBS is the world’s first broker that offers its clients to get their lost money back. A trader can insure from 10 percent to 100 percent of deposit. In case the initial deposit is lost FBS will pay your money back at once.
It is necessary to mention that one of the main things distinguishing FBS Company from competitors is its enormous devotion to clients. For the maximal convenience of its customers FBS Customer Service is available round the clock in a variety of languages.
Professional trader needs to be well-informed about the latest economic and political developments. On the one hand, the market is flooded by huge amounts of news and rumors. On the other hand, despite all this diversity, the retail traders often misinterpret these data: the information they possess is either superficial or one-sided. It is indispensable for traders to be guided through this constant stream, so that they could focus on the most important things. FBS has excellent currency analysts who prepare currency forecasts, trading signals and recommendations and help traders make the right decisions. The company acts as a sponsor for FX BAZOOKA – an advance analytical source which is providing the coverage of the latest economic and market news and was awarded as the best forex media source on the Moscow forex Expo 2013.