According to the Bank for International Settlements, the preliminary global results from the 2016 Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives Markets Activity show that trading in foreign exchange markets averaged $5.09 trillion per day in April 2016. I understand that this has now increased to more than 7 trillion, partly due to large option and swap trades. This is a clear indication that the forex market is the largest of the financial markets.
The major traders in the forex market are banks, who trade both directly, and on behalf of large corporate investors, followed by institutional traders and investors. It is estimated that institutional money accounts comprise approximately 94.5% of the market volume. Retail trading appears to fall into two major categories – scalpers and swing traders, and it seems that retail traders generally trade for profits of between 5 and 10 pips per trade.
Perhaps this is the reason we regularly read that between 90% and 95% of retail traders fail to become profitable. Is it simply overtrading or, alternatively, is it the focus on scalping, or the use of indicators that respond after the event and form most of the computer driven trading system, that has created this statistic?
The trade of the week for me was the market structure trade on the AUDJPY currency pair. It provided a profit of more than 100 pips.