10 Fascinating Facts About the Forex Market That Are Fun to Know 🌍💴
Guide
September 2024
The foreign exchange or forex market is one of the largest and most liquid financial markets in the world. As a decentralized global market, the forex market sees trillions of dollars traded every single day. Due to its scale and complexity, the forex market holds many interesting facts that provide insights into its inner workings. Here are 10 fascinating facts about the forex market that are sure to surprise you.
There Are About 180 Currencies in the World 🌐
With nearly every country having their own currency, there are approximately 180 world currencies that are regularly traded in the forex market. From major currencies like the US dollar, euro, Japanese yen to smaller ones like the Icelandic króna, Namibian dollar - knowing the economical standing and supply/demand dynamics of each currency is crucial for forex traders.
London is the Largest Hub in the World for Foreign Exchange Currency Trading 🇬🇧
As the financial capital of Europe and one of the biggest financial hubs globally, London witnesses the highest foreign exchange trading volume in the world. Around 35% of all forex trades are executed through London's financial institutions and trading platforms, making it the nerve center for the global forex marketplace.
The Forex Market is Open 24/7⏳
Unlike stock markets that have fixed trading hours, the forex market facilitates trading 24 hours a day, 5 days a week, except on weekends. This is because different financial centers around the world such as London, New York, Hong Kong, Singapore, and Tokyo keep the market open during their regular working hours, which overlap globally and allow currencies to be traded almost any time.
The Foreign Exchange Market is Decentralized🌐
Unlike other financial markets that operate through a single exchange, the forex market is decentralized with no central marketplace. Instead, it functions as an Over-The-Counter (OTC) market where transactions are conducted electronically via a network of banks and brokers across borders. This structure provides high liquidity and continuous pricing.
The Swiss Franc and Japanese Yen are Safe Haven Currencies⚖️
The Swiss franc and Japanese yen are considered safe haven currencies. This means investors tend to flock towards them as a protective asset during times of economic or political uncertainty elsewhere. Their stable economies and demand as a store of value against risk make them ideal options during market volatility.
Female Traders Account for Only 11% of Total FX Trading Activity👩🏫
Even with rapidly growing participation of female investors in other financial domains, the forex market continues to be highly male-dominated. Latest surveys reveal that traders identifying as female accounted for a mere 11% of total over-the-counter foreign exchange volume in 2021 highlighting the gender disparity.
There are Around 14.5 Million Forex Traders Worldwide🙍♂️
Latest industry reports suggest there were approximately 14.5 million forex traders in 2022 spread across different experience levels - from casual part-timers to large institutional investors. This number keeps increasing each year with accessibility to forex trading via apps and platforms.
A Crisis Cannot Occur in the Forex Market➡️
Since forex is a truly global market, no single entity has control over its functioning. The decentralized nature ensures no bank run or crisis can occur even in worst-case scenarios, making it one of the most stable and robust financial systems worldwide.
The US Dollar is Involved in 88% of Transactions🦅
Owing to its prominence as a global reserve currency and vehicle for international trade, the US dollar features in approximately 88% of all forex deals across borders. This cements its position as the most heavily traded and most influential fiat currency unit in today's monetary landscape.
Trading Currencies Requires Knowledge and Discipline, Not Just Luck🧠
Contrary to popular belief, being successful in forex is not purely a matter of chance. It demands applying diligent economic and market analysis, weighing risk-rewards astutely through proven strategies, and showing discipline - just like any other specialized financial domain. Luck alone cannot overcome the lack of fundamental knowledge and expertise.
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Many believe wealth comes only from inheritance, being born into a rich family, luck, greed, or fraud. Schools focus on training students for jobs, not entrepreneurship. Starting a business or investing is seen as too risky, while working a safe job for 40 years is considered the safe path. 🤷♂️
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When utilized in tandem, three straightforward yet potent indicators form the basis of the 'Big Three Trading Strategy.' This strategy employs the 20, 40, and 80-period simple moving averages (SMAs) to discern trading opportunities in the dynamic world of forex