The coronavirus pandemic threw the world into a tailspin. More than six months after COVID-19 came into our lives, the international community is still dealing with substantial uncertainty. Hundreds of millions have lost their income, and the future remains undecided for people and businesses around the world.
In this context, the current boom in FX trading seems even more remarkable. As those familiar with what is forex trading surely know, the past few months saw massive growth across a variety of trading platforms and commodities. For example, trading broker IronFX reported a month-to-month growth of 25-50% in forex accounts. These percentages represent 220,000 new client accounts over the period of March through June. According to their report, trading volumes also rose sharply between March and June, increasing by approximately 300% over those three months.
The growth rates were more pronounced in developing countries, with traders’ accounts from Africa, Eastern Europe, and Southeast Asia making up 60% of the new accounts. Trading markets vary, as some traders focus solely on safe-haven commodities and currencies, while others try to leverage opportunities, such as the fluctuating demand for crude oil.
The steep increases in trading activity and account numbers placed substantial pressure on forex brokers. Employees working remotely and liquidity demands mean that smaller forex brokers may not be a safe choice for traders. As worries regarding withdrawal grow, traders naturally move towards large, reliable brokers.
People are making up for lost income
Extensive growth such as this is extremely rare for the forex industry. Over the past decade, average daily forex trading volume increased by no more than 40%. Of course, the staggering change is a direct result of this year’s unusual financial and economic climate, leading to a series of high-impact factors.
Is this a temporary spike, or a long-term trend?
The circumstances leading up to this rise have been unprecedented. The amount of data and information available is still small, and predictions will be nothing but educated guesses. However, with further outbreak ‘waves’ expected in the upcoming months and years, we can assume many of the underlying causes will remain in effect or re-emerge as soon as COVID-19 cases increase. Lockdowns and social distancing mean market volatility will remain high, and remote work will keep traders focused on forex markets.