2020: A Year Like No Other With Trading Volumes Like No Other

Almost 12 months after an unanticipated virus broke out and began spreading around the world, now known as Covid 19, Coronavirus, or simply Covid, the global community is still struggling to find some stability amid unprecedented economic and financial uncertainty.

The sudden outbreak had immediate and massive effects on trade and the global economy.

It caused fluctuations in national economies all around the globe.

Just as lockdowns were being introduced in March 2020, the Dow Jones Index dropped 2,997 points, the largest ever-recorded single-day point loss since May 1897.

Hundreds of millions of people lost their jobs. Millions of others had to suddenly adjust to working from home. While businesses had to adapt to meet the requirements of a newly created remote workforce. 

However despite the many major economic and financial market upheavals 2020 presented, unlike many identities and markets, this year’s foreign exchange market has not only survived, but it has also thrived.

How did see high volumes in 2020?

Traders discovered that working from home meant they had more time to learn and practice trading.  As a result, Google Trends showed a significant increase in people searching for words like forex, stocks, and day trading, all of which have doubled since the beginning of 2020.

Increased market volatility across financial markets rose, led to greater activity on retail trading with brokerage companies reporting a rise in volumes in the months that experienced an increase in volatility.

In the developing world where the Covid pandemic has wrecked the most havoc on national currencies, more and more traders turned to forex trading to hedge against inflation. In Africa, forex trading volumes grew by around 477%. The developed world was affected too, with retail trading volumes doubling in Japan, just as volatility in the -yen exchange rate spiked.

also contributed to the surge, by offering competitive margin requirements and low (even zero) commissions. As a result, the uptrend in new traders continued gathering speed for most of the year. 

And what will the future of FX volumes hold?

According to a recent industry report the Compound Annual Growth Rate (CAGR) for the Forex market is expected to rise by 6% between 2020 and 2025.

Whether that will happen or not is still not clear because the circumstances that led to the rise of 2020’s trading volumes are particularly unique. The data is still limited, and making predictions is difficult but with new entrants still pouring into the market, the expectation is that daily forex trading volumes, which were at $6.6 trillion globally in 2020, will continue to rise in 2021.


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