The growing FX retail trading market

Last week, I attended an Aite conference on FX retail trading. Some very interesting statistics were presented by Javier Paz, senior analyst from Aite.

Below are some of the highlights:

• FX retail trading is dominated by self-directed pros (approximately 500k users is US), self-directed amateurs (25M users), and normal investors (55% of US population)

• FX trading has a low barrier to entry for individuals with only about $1000 required to open an account.

• FX trading thrives on economic uncertainty and poor stock market.

• 2009 was a banner year for retail FX trading with over $70B in total volume; trade volumes in 2007 were approximately $34B.

• Industry regulation is growing as volumes increase and more and more non-professional individuals join the ranks.

• The main regulators in this space are CFTC, SEC, and OCC/FDIC.

• “Social investing” is a growing trend driven primarily by this nascent industry and lack of understanding investors have about FX.

• Google and Facebook have entered this space and are poised to help continue these trends and grow trading volumes.