How Big Is The Forex Market? Daily Forex Trading Volume Explained

Key takeaways

• The daily trading volume of the Forex market is around $7.5 trillion

• The EUR/USD is the most traded currency pair accounting for 22.7% of volume, followed by the USD/JPY(13.5%) and GBP/USD (9.5%)

Understanding the global Forex market

The global Forex (foreign exchange) market is the largest and most actively traded financial market in the world, offering myriad opportunities for traders. An overview reveals a complex interplay of currencies, players and influencing events.

• Major players. The Forex market encompasses a wide range of participants, from central and commercial banks and financial institutions to multinational corporations, governments, and retail investors. Central banks arguably play the most critical role due to their influence on interest rates and currency stability, often engaging in the market to adjust their currency's value. Commercial banks, hedge funds and institutional investors account for 48% of volume

• Top trading centers. Liquidity in Forex is largely attributed to major trading centers operating across different time zones, ensuring 24/5 market activity. Key hubs by volume include United Kingdom (38%); US (19%); Singapore (9%), Japan (4%)

• Top currencies. The currencies experiencing the highest turnover are the ones held in significant reserve quantities globally and include the US Dollar (USD), Euro (EUR), Japanese Yen (JPY), British Pound (GBP), Australian Dollar (AUD), Canadian Dollar (CAD), and Swiss Franc (CHF). The USD reigns supreme, involved in approximately 88% of all trades, primarily due to its role as the world's primary reserve currency

• Influential factors. Forex market fluctuations hinge on various factors, with geopolitical events topping the list due to their potential to cause immediate and substantial market impact. Economic indicators, such as employment reports, GDP, inflation rates, and consumer spending, also hold sway as they signify the health of an economy

Additionally, central banks' interventions and policies are crucial, as they decide interest rates and monetary policy, influencing currency valuation. These elements combined dictate the ebb and flow of the Forex market, underscoring the need for traders to stay informed and responsive to global events.

What Is the daily trading volume in the global Forex market?

While the exact daily trading volume of the global Forex market is difficult to measure accurately, the triennial survey conducted by the Bank for International Settlements (BIS) showed that the market averaged $7.5 trillion in April 2022.

The breakdown of trading activity reveals that the most traded currency pair was the euro/US dollar (EUR/USD) at 22.7%, followed by the US dollar/Japanese yen (USD/JPY) at 13.5%, and the British pound/US dollar (GBP/USD) at 9.5%.

Despite its size, the Forex market remains accessible to anyone with an internet connection. Such conditions make Forex a popular choice among beginning traders. But according to BIS retail trading accounts for only 2.5% of the volume. While occasional large orders by hedge funds or asset managers can move prices, retail traders do not have the capacity to significantly influence market prices and trends. Their orders are too small and get lost among the enormous daily trading volumes.

Also, high-frequency trading (HFT) has become increasingly prevalent in Forex markets over the past 10-15 years. That makes competition for retail traders even harder. Estimates vary, but some analysts suggest HFT now accounts for 30-40% of spot Forex trading volume on electronic trading platforms.

Top Forex brokers in the world by trading volume

Assessment of trading volume is important as traders may gravitate toward larger brokers for their liquidity (resulting in tighter spreads and lower costs for traders), market access, advanced technology, compliance with regulations, educational resources, and reliable customer support.

We can gain insight into the daily trading volume of the global Forex market by looking at the top Forex brokers in the world.

IC Markets, Forex.com, XM, Saxo Bank, HF Markets, Oanda, AvaTrade, IG Markets, Pepperstone, and FxPro are the largest Forex brokers by average daily trading volume (ADVT).

IC Markets has the highest ADVT of 18.9 billion USD, followed by Forex.com with an ADVT of 15.5 billion USD and XM with an ADVT of 13.4 billion USD.

FxPro has the lowest ADVT among the giants at 6.5 billion USD.

Trading volume is a substantial factor but it's ultimately about finding the right broker for your needs.

Best Forex brokers

1

9.4/10

Go to broker

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest.

Minimum deposit:

$50, $100 (for UK clients)

Bonus for deposit:

0%

Regulation:

CySEC, FCA, ASIC

Review

The eToro broker was founded in 2007. The company promotes itself as a social trading platform working with traders from over 140 countries. The broker has several divisions operating under different jurisdictions and licensed by different regulators. For example, eToro (Europe) is licensed by the Cypriot regulator CySEC (109/10) and eToro (UK) is licensed by the British regulator FCA (583263). The broker also has a representative office in Australia and the USA. eToro Profile Details

Pros/Cons

•the minimum transaction amount for copying is $1;

•handy functionality for passive investing;

•regulated by independent monitors;

•it is possible to purchase contracts for fractional shares (that is, to invest amounts less than the cost of one share);

•it is possible to buy shares at once (not CFDs) on the US stock exchanges.

•high spreads;

•periodic technical failures in order execution;

•lack of the most popular platforms such as MetaTrader 4 and MetaTrader 5 in Europe and the CIS;

•no access to ECN systems, orders are processed only according to the STP (straight-through processing) scheme with access to specific liquidity providers;

•there is a commission for withdrawing funds;

•impolite support staff;

•inconvenient website.

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2

9.2/10

Go to broker

Your capital is at risk.

Minimum deposit:

No minimum

Bonus for deposit:

0%

Regulation:

FSC (BVI), ASIC, IIROC, FCA, CFTC, NFA

Review

The name OANDA is an acronym for “Olsen & Associates” or “Olsen AND Associates”. It is registered in the United States and provides its clients with a wide range of financial services in most countries of the world. The company was founded in 1996 and is currently regulated in four jurisdictions. The main regulator of the broker is the UK Financial Conduct Authority (FCA). Oanda Canada is licensed by IIROC. The company has several significant awards to its credit, including a victory in the category "Best Forex Trading Technologies" from the UK Forex Awards, "Best Trading Platform" from FX Week, as well as "Best Customer Service" from the US Foreign Exchange Report.

Pros/Cons

•Minimum deposit from 1 dollar.

•A large selection of the most popular trading instruments.

•Several reliable and reputable financial regulators.

•Inconvenient and poorly functioning site.

•Lack of cent accounts.

•Lack of bonus programs.

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