The forex market is one crazy place, very crazy. It has so many numbers and strange information that certainly makes you wonder. Historically, it is believed to have begun around 2000 BC when people exchanged commodities and goods for coins. Along with the commodity market, the forex market is the most ancient of all capital markets.
The modern foreign exchange market, as we know it these days, was established in 1971. Since then, it has been the world’s largest and most dominant capital market. And nowadays, it has an average daily trading volume of over $6.6 trillion.
So, it is not surprising that some forex facts will amaze you. Let’s see some of those:
10 Forex Facts That You Need to Know About
Here are some of the most important facts about the forex trading market as of 2023:
- There Are About 180 Currencies in the World
- London is the Largest Hub in the World for Foreign Exchange Currency Trading
- Female Traders Account for Only 11% of the Total FX Trading Activity
- There Are Around 14.5 Million Forex Traders in the World
- The Foreign Exchange Market is Decentralized
- The South Sudanese Pound is the Newest Currency in the World
- The Forex Market Belong to the Youngsters
- A Crisis Cannot Occur in the Forex Market
- More Than 90% of Traders Lose in Forex Trading
- Germany Has Had Nine Currencies Since 1873
1. There Are About 180 Currencies in the World
As of the time of writing this article, 180 currencies in the foreign exchange market are recognized by the United Nations as legal tender. These currencies are used in 195 countries – 193 UN member states, and two non-member observer states (Palestine and Vatican City).
2. London is the Largest Hub in the World for Foreign Exchange Currency Trading
Even though many believe the United States is the primary hub for foreign currency exchange, London is, in fact, the world’s capital of the forex market. Let’s back it up with numbers. According to CurrencyTransfer, London is the largest global currency trading, with 38% market share, followed by the US with 19%.
The primary reasons why most forex trades happen in London are its location, time zone, system infrastructure, and historical roots as the financial capital city in the world.
3. Female Traders Account for Only 11% of the Total FX Trading Activity
According to a WomenInvestors survey conducted in 2020, only 11% of forex traders worldwide are women. Surprisingly, the data seems extremely low; however, female traders have made tremendous progress compared to two or three decades ago when they had nearly zero market share in the trading arena.
4. There Are Around 14.5 Million Forex Traders in the World
Although it is nearly impossible to determine the exact number of forex traders in the world, the estimations suggest that there are 14.5 million forex traders worldwide. As expected, the total number of forex traders is increasing every year. That is a result of the growing population worldwide and the ability of undeveloped countries to access technological tools and software.
5. The Foreign Exchange Market is Decentralized
One might wonder who controls the forex market. Well, no one. The forex market, unlike other financial markets, is completely decentralized, meaning no organization or entity owns or controls it.
Still, commercial banks, who participate in the forex market as market makers, are said to have the most control and influence over FX currency trading.
6. The South Sudanese Pound is the Newest Currency in the World
As South Sudan is the newest country in the world, its currency, the South Sudanese Pound, is also the newest currency in the world. The youngest currency in the world is just 12 years old, following its foundation in 2011 when South Sudan became the world’s newest country. On another note, the oldest currency in the world is the British Pound, which has been around since 775 AD.
7. The Forex Market Belongs to the Youngsters
Quite remarkably, most forex traders worldwide are younger than you might expect. According to the Forex School Online, the 18-34 age group accounts for 27% of all forex traders. 28% of forex traders worldwide fall into the 35-44 age group, while 45-54 age group ( 21%), 55-65 (24%), and 65+ (9%) account for the remaining market share.
8. A Crisis Cannot Occur in the Forex Market
Pay attention; this could be tricky. Theoretically, a crisis cannot occur in the forex market since it was not designed to go up or down. Therefore, it is not affected by any major economic crisis or turmoil. A currency might fall drastically versus another currency; however, unlike all markets, including the cryptocurrency market, the foreign exchange market is a marketplace of currencies, and that’s it.
In theory, the only scenario in which the forex market can even go away is due to illiquidity. In other words, it could happen if there’s no trading volume, and the value of currency pairs will have no impact on the economy and the financial system. For that to happen, people must lose their trust in the financial system and the currency market and switch to another legal tender such as… Bitcoin and cryptocurrencies?
9. More Than 90% of Traders Lose in Forex Trading
Unfortunately, most people who trade the FX market lose money in the long run. Based on several studies, 90%-95% lose money in forex trading and end up quitting. The reasons are endless, including using a high leverage ratio, the lack of discipline and a well-defined trading plan, and utilizing a poor risk management system.
10. The German History of Currency – Germany Has Had Nine Currencies Since 1873
Germans are generally known for their practicality, efficiency, and stability. But that’s not the case when it comes to their local currency. As a matter of fact, the history of Germany’s currencies over the past century and a half is quite fascinating. Since 1873, Germany has had no less than nine currencies in use. These include the German Gold Mark, German Papiermark, German Rentenmark, Reichsmark, Saar mark, Saar franc, East German mark, Deutsche Mark, and Euro.
Today, Germany is the most powerful country in the Eurozone, with the most notable impact on the Euro valuation.
So, What is So Special About the Forex Market?
Clearly, the forex market has its unique characteristics that make it one of a kind. Being the largest financial market on the planet with a global forex market size estimated at approximately $2.4 quadrillion and with its decentralized unique system, the forex market is undoubtedly special. Not only that, but the forex market is actually essential. It allows people to convert FX currencies, global companies to transact, and importers and exports to exchange goods and services.
Liquidity is a key factor that makes the forex market so effective. Unlike the stock or the commodity market, there’s no liquidity problem in currency trading. Moreover, although major currency pairs make up 85% of forex trading volume, minor and exotic pairs also have substantial liquidity. And presently, it seems that there will never be a problem of liquidity in the forex market. It’s another reason that makes FX currency trading so appealing to many around the world. Anyone who enters the market can do it without any major problems while being able to make fractional trades and using leverage. It’s also easy to open a trading account, with a process that typically takes several hours to a maximum of a day or two.
What’s more? The forex market is open 24 hours a day, five days a week. This means forex trading can be done around the clock, making it the best financial market for automated trading systems.
Finally, for traders, the forex market is a place where they can analyze the intrinsic value of a country rather than a specific company or a commodity. Many people find this form of fundamental analysis the most interesting and exciting. To do that, they need to be alert to all the strengths and weaknesses, the political situation, and the economic growth of the chosen country. More specifically, they must constantly analyze the inflationary status of each economy to predict central banks’ interest rate decisions. A higher interest rate usually favors one currency versus the other since more money will flow into the country. That’s pure geopolitical analysis.
So, overall, the forex market is perhaps the most attractive financial market for retail traders. Its entry barrier is low, and trading conditions offered by forex brokers are fantastic with nearly zero commissions, a free trading platform, and a low initial deposit requirement. And, there are plenty of resources online to start learning about forex trading.
Frequently Asked Questions About Forex Trading
Here are some popular questions about forex trading:
What makes forex interesting?
Well, lots of things. But in short, fractional trading, leverage, opening and closing times, liquidity, and its decentralized nature. Moreover, many find forex interesting due to how one currency might strengthen or weaken versus the other. Usually, this involves following each country’s economic growth and political development and determining the expectations of one central bank raising or lowering rates before the other.
Why is forex trading so popular?
The forex market is certainly the most popular marketplace for trading. Some of the reasons why the forex market is so popular include:
- Low entry barriers
- Low Forex transaction costs
- The ability to leverage your trading capital
- High liquidity
- Ease of short-selling currency pairs
- A wealth of resources and information to learn and analyze the forex markets
Is it hard to get rich from forex trading?
Yes, getting rich from forex trading is nearly impossible for the average retail forex trader. If you are a talented forex trader, forex trading can certainly provide you with a solid monthly income; however, it is still far from making you rich (although it is possible).