Forex trading has become increasingly popular in recent years, with many individuals seeking to invest in the global currency markets. But just how many forex traders are there? The answer is not a straightforward one, as there are different ways to define what constitutes a forex trader. In this article, we will explore some of the different approaches to estimating the number of forex traders and what they reveal about the industry.
One way to estimate the number of forex traders is to look at the number of brokerage accounts opened with forex brokers. According to the latest data from the Bank for International Settlements (BIS), there were 2.8 million forex trading accounts worldwide in 2020, up from 2.6 million in 2019. This figure includes both retail and institutional traders, although it is not clear how many of these accounts are active and how many are dormant or unused.
Another way to estimate the number of forex traders is to look at the volume of forex trading activity. The BIS also reports that the average daily turnover in the global forex market was $6.6 trillion in 2019, up from $5.1 trillion in 2016. This suggests that there is a significant amount of trading activity taking place in the forex market, although it is difficult to know how many individual traders are responsible for this volume.
A third way to estimate the number of forex traders is to look at surveys of forex traders. One such survey was conducted by the Investment Trends research firm in 2019, which found that there were 1.3 million active forex traders in the United States alone. This represents a significant increase from previous years, suggesting that forex trading is becoming more popular among retail investors. The survey also found that the average forex trader in the US has been trading for 3.8 years and spends an average of 12 hours per week on trading-related activities.
Another survey of forex traders was conducted by the European Securities and Markets Authority (ESMA) in 2018. This survey found that there were 1.2 million active forex traders in the European Union, with the majority located in the United Kingdom and Germany. The survey also found that the average forex trader in the EU was male, aged between 25 and 54, and had an average income of €50,000 to €100,000 per year.
Overall, these estimates suggest that there are millions of forex traders worldwide, with the majority being retail investors rather than institutional traders. However, it is important to note that these estimates are based on different methodologies and may not be directly comparable. Additionally, many forex traders may have multiple accounts with different brokers, making it difficult to get an accurate count of the number of individual traders.
Despite these limitations, it is clear that forex trading is a popular and growing industry, with millions of individuals seeking to invest in the global currency markets. This trend is likely to continue as more people become interested in alternative investments and as technology makes forex trading more accessible and user-friendly. However, it is important for potential traders to be aware of the risks involved in forex trading and to do their research before diving in. With the right knowledge and approach, forex trading can be a rewarding and profitable activity for those who are willing to put in the time and effort.
