Forex, or foreign exchange, is the global marketplace where currencies are traded. It is the largest financial market in the world, with an estimated $5.3 trillion traded daily. The forex market is open 24 hours a day, five days a week, and is accessible to anyone with an internet connection. But how much do currencies move per day in the forex market?
The answer to this question is not straightforward, as currency movements can vary greatly depending on a number of factors, including economic data releases, geopolitical events, and market sentiment. However, there are some general trends and statistics that can give us an idea of how much currencies move on a daily basis.
One way to measure currency movement is through volatility. Volatility is a statistical measure of the dispersion of returns for a given security or market index. In the forex market, volatility is often measured using the average true range (ATR), which calculates the average daily range of a currency pair over a specified period of time.
According to data from the financial analytics firm, AxiTrader, the average daily ATR for the EUR/USD currency pair, one of the most widely traded pairs in the forex market, was 0.0071 in 2020. This means that on an average day, the EUR/USD pair moved approximately 71 pips, or 0.71% of its value.
Other currency pairs can have higher or lower volatility than the EUR/USD, depending on a variety of factors. For example, the GBP/USD pair, which is often affected by Brexit-related news, had an average daily ATR of 0.0105 in 2020, meaning it moved around 105 pips per day. Meanwhile, the USD/JPY pair, which is often influenced by Japanese economic data and the Bank of Japan’s monetary policy decisions, had an average daily ATR of 0.0065 in 2020, or around 65 pips per day.
It’s worth noting that these figures are just averages, and currency movements can be much larger or smaller on any given day. During times of high volatility, such as during major economic data releases or geopolitical events, currency movements can be significantly larger than their average daily ranges. For example, during the Brexit referendum in 2016, the GBP/USD pair moved over 1,300 pips in a single day.
Another way to measure currency movement is through trading volume. Trading volume is the total number of contracts or shares traded in a given market during a specified period of time. In the forex market, trading volume is often measured using the Bank for International Settlements’ (BIS) Triennial Central Bank Survey, which collects data on trading activity in the forex market every three years.
According to the most recent BIS survey in 2019, the average daily trading volume in the forex market was $6.6 trillion. This means that over $6.6 trillion worth of currencies are traded every day in the forex market. The vast majority of this trading volume is concentrated in a few major currency pairs, including the EUR/USD, USD/JPY, and GBP/USD.
In conclusion, currencies can move a significant amount per day in the forex market, with average daily ranges ranging from around 65 to 105 pips for major currency pairs. However, currency movements can be much larger or smaller on any given day, depending on a variety of factors such as economic data releases, geopolitical events, and market sentiment. The forex market is also incredibly liquid, with over $6.6 trillion worth of currencies traded every day, making it one of the most accessible and dynamic financial markets in the world.
