After gaining record volumes and new traders this year, what are forex brokers expecting in 2021?
This year has been an interesting one for Forex traders around the world, coronavirus pandemic, lockdowns and unprecedented volatility fueled trading activities and resulted in high volumes with the record-breaking addition of new traders. The retail forex industry was facing a tough challenge before 2020 due to regulatory concerns across the world as companies started reporting a dip in volumes. Several brokers closed offices in different parts of the world because of regulatory issues.
In March 2020, due to a massive outbreak of COVID-19, lockdowns restricted travel, and people were bound to stay at home. Financial markets started reacting and that resulted in several trading opportunities across different assets. Due to high volatility in the forex market, existing traders started increasing their exposure to take advantage of new trading opportunities as new traders entered the market. As a result, forex brokers registered record volumes and new clients. Now that 2020 is about to end, the real question arises, is it possible for the retail Forex Trading industry to maintain the significant growth it achieved during 2020? We asked industry experts for their take on the retail forex trading industry in 2021.
David Moyes, Chief Commercial Officer at Exness told Finance Magnates that he expects the industry to sustain growth in 2021 due to the record number of new clients.
“One major consequence of the pandemic has been the move to working from home, both for traders and brokers alike. The COVID-19 outbreak has also resulted in unprecedented volatility. These have been some of the drivers for the huge increase in trading volume seen since March, as traders had more time on their hands due to lockdowns and less travel in general, and were also looking for new interests to develop since they had newfound time to dedicate. So, not only were existing traders increasing their volumes but some firms have seen record levels of new traders enter the industry. This was certainly the case for Exness regarding both volumes and new clients,” Moyes said.
Sustainable Growth
“Initially in March when the pandemic broke out globally, there was a major upsurge in volatility which, along with all the newcomers, was driving volumes to unprecedented levels. Although there was the inevitable slight drop off in the months immediately after, volume levels had steadily increased throughout the year with levels far exceeding those before the pandemic. For many firms, the increases may well be sustainable given the number of new clients. Also, circumstances around the spare time of people and working from home have changed very little since earlier in the year, therefore, the same drivers for increased volumes still apply. We are getting about 80% of the March volatility volume in Exness and currently running near to a 50% increase from this time last year,” the Chief Commercial Officer at Exness added.
New Traders
While the trend has been pretty evident across the industry about the growing interest of first-time traders. Ahmad Khatib, Chief Executive Officer at Amana Capital told Finance Magnates that the number of new traders this year has broken all previous records. Moreover, he added that all regions have performed extremely well for the company this year.
“Reasons for the recent growth are the extremely high volatility in most asset classes which increased volumes from old clients and attracted new clients to trade. Certain market movements during the year were major breaking news and not just business news (oil going negative, stock indices crashing in March, gold movements, and others), so it was catching the attention of the general public and not only people following business or financial news. The number of first-time traders was higher than in previous years.”
Regional Expansion in 2021
Additionally, Khatib outlined the importance of understanding the local market before regional expansion. He mentioned that the firms must break the region into parts to understand local fundamentals. “It is important to understand the local market fundamentals before any regional expansion. Also important to breakdown the region into parts, because it is not always the case that all countries within a region have the same characteristics. For example, in the middle east each country has its own regulatory structure, business requirements and type of clients,” Khatib added.
Risk Factors
As the volumes increased, traders started taking more risks than normal. Alex Katsaros, CEO of TopFX pointed out this issue in his latest discussion with Finance Magnates. “2020 was a good year for the retail forex industry. It is something we expected due to the combination of extended lockdowns and a very eventful year leading to high volatility across the board. Most of our clients needed a way out of their enclosure, while others tried to supplement their income by participating in the Markets. Traders were ready to take on more risk since it was quite apparent that the daily swings would be colossal. The stress of the pandemic was transferred to the Markets, which then turned very volatile creating even more stress for the investors in a vicious cycle. We expect traders to come more seasoned and controlled into 2021,” Katsaros said.
“It was a great year for us to launch our new retail website and further develop our retail business by opening new local offices across the globe. The higher conversion rates allowed us to accelerate our expansion worldwide, which will continue in 2021," he added.
Tough Year for Introducing Brokers
While 2020 was really good for the retail forex industry, introducing brokers struggled this year due to limited communication activities. “The year wasn’t great for all stakeholders of the industry though. Introducing brokers struggled in 2020, unable to reach out to traders to offer their services. Events, seminars and expos were canceled globally decreasing the effectiveness of their business model," he added.
This year has been an interesting one for Forex traders around the world, coronavirus pandemic, lockdowns and unprecedented volatility fueled trading activities and resulted in high volumes with the record-breaking addition of new traders. The retail forex industry was facing a tough challenge before 2020 due to regulatory concerns across the world as companies started reporting a dip in volumes. Several brokers closed offices in different parts of the world because of regulatory issues.
In March 2020, due to a massive outbreak of COVID-19, lockdowns restricted travel, and people were bound to stay at home. Financial markets started reacting and that resulted in several trading opportunities across different assets. Due to high volatility in the forex market, existing traders started increasing their exposure to take advantage of new trading opportunities as new traders entered the market. As a result, forex brokers registered record volumes and new clients. Now that 2020 is about to end, the real question arises, is it possible for the retail Forex Trading industry to maintain the significant growth it achieved during 2020? We asked industry experts for their take on the retail forex trading industry in 2021.
David Moyes, Chief Commercial Officer at Exness told Finance Magnates that he expects the industry to sustain growth in 2021 due to the record number of new clients.
“One major consequence of the pandemic has been the move to working from home, both for traders and brokers alike. The COVID-19 outbreak has also resulted in unprecedented volatility. These have been some of the drivers for the huge increase in trading volume seen since March, as traders had more time on their hands due to lockdowns and less travel in general, and were also looking for new interests to develop since they had newfound time to dedicate. So, not only were existing traders increasing their volumes but some firms have seen record levels of new traders enter the industry. This was certainly the case for Exness regarding both volumes and new clients,” Moyes said.
Sustainable Growth
“Initially in March when the pandemic broke out globally, there was a major upsurge in volatility which, along with all the newcomers, was driving volumes to unprecedented levels. Although there was the inevitable slight drop off in the months immediately after, volume levels had steadily increased throughout the year with levels far exceeding those before the pandemic. For many firms, the increases may well be sustainable given the number of new clients. Also, circumstances around the spare time of people and working from home have changed very little since earlier in the year, therefore, the same drivers for increased volumes still apply. We are getting about 80% of the March volatility volume in Exness and currently running near to a 50% increase from this time last year,” the Chief Commercial Officer at Exness added.
New Traders
While the trend has been pretty evident across the industry about the growing interest of first-time traders. Ahmad Khatib, Chief Executive Officer at Amana Capital told Finance Magnates that the number of new traders this year has broken all previous records. Moreover, he added that all regions have performed extremely well for the company this year.
“Reasons for the recent growth are the extremely high volatility in most asset classes which increased volumes from old clients and attracted new clients to trade. Certain market movements during the year were major breaking news and not just business news (oil going negative, stock indices crashing in March, gold movements, and others), so it was catching the attention of the general public and not only people following business or financial news. The number of first-time traders was higher than in previous years.”
Regional Expansion in 2021
Additionally, Khatib outlined the importance of understanding the local market before regional expansion. He mentioned that the firms must break the region into parts to understand local fundamentals. “It is important to understand the local market fundamentals before any regional expansion. Also important to breakdown the region into parts, because it is not always the case that all countries within a region have the same characteristics. For example, in the middle east each country has its own regulatory structure, business requirements and type of clients,” Khatib added.
Risk Factors
As the volumes increased, traders started taking more risks than normal. Alex Katsaros, CEO of TopFX pointed out this issue in his latest discussion with Finance Magnates. “2020 was a good year for the retail forex industry. It is something we expected due to the combination of extended lockdowns and a very eventful year leading to high volatility across the board. Most of our clients needed a way out of their enclosure, while others tried to supplement their income by participating in the Markets. Traders were ready to take on more risk since it was quite apparent that the daily swings would be colossal. The stress of the pandemic was transferred to the Markets, which then turned very volatile creating even more stress for the investors in a vicious cycle. We expect traders to come more seasoned and controlled into 2021,” Katsaros said.
“It was a great year for us to launch our new retail website and further develop our retail business by opening new local offices across the globe. The higher conversion rates allowed us to accelerate our expansion worldwide, which will continue in 2021," he added.
Tough Year for Introducing Brokers
While 2020 was really good for the retail forex industry, introducing brokers struggled this year due to limited communication activities. “The year wasn’t great for all stakeholders of the industry though. Introducing brokers struggled in 2020, unable to reach out to traders to offer their services. Events, seminars and expos were canceled globally decreasing the effectiveness of their business model," he added.
Bilal Jafar holds an MBA in Finance. In a professional career of more than 8 years, Jafar covered the evolution of FX, Cryptocurrencies, and Fintech. He started his career as a financial markets analyst and worked in different positions in the global media sector. Jafar writes about diverse topics within FX, Crypto, and the financial technology market.
The Menace of Clones: Malta’s Regulator Warns against Fake "Documents and Emails"
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
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20-22 MAY 2024
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Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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