FXCM’s Exit from US Drives Retail Forex Traders to Futures: Investment Trends

The exit of FXCM from the US retail forex market caused a big slump in overall trader numbers.

In what seems to be a continuation of a multi-year trend, the latest Investment Trends survey of the US market shows that the outflow of retail forex traders from the market continues. Citing the exit of FXCM from the market as a key reason, the survey of over 8,000 traders and investors across the US shows that the contraction of the market was massive in 2017.

The Investment Trends 2017 United States Foreign Exchange report assesses the market’s size at 85,000 as of August 2017. This figure represents the number of traders that placed at least one trade in the preceding 12 months. The figure is a decline by a fifth when compared to the previous year’s results.

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Dr Irene Guiamatsia, Research Director at Investment Trends, explains: “Aside from the strong run in equities, recent regulatory decisions caused the exit of former market leader FXCM.”

New Traders Still on Track

Although the number of active traders materially declined, new traders remained ample. A total of 25,000 Americans started margin forex trading in 2017, a figure that is comparable to similar results in 2016 (27,000) and 2015 (24,000).

Curiously, Investment Trends outlines college coursework and education programs as the main magnets for new traders.

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Futures Appealing to a Quarter of Respondents

The gradual shift towards different products has continued reverberating through the market. Almost a quarter of the survey respondents (23% to be precise) indicated that they are planning to trade futures in the coming 12 months. A total of 15 percent stated that they are already active in that market.

“Futures trading is a significant contender for the same share of wallet and FX traders who also trade futures currently split their trading volume equally between the two products,” Guiamatsia elaborates.

The competitive landscape for US retail brokers has shifted to include Futures Commission Merchants (FCMs) that are not retail foreign exchange dealers.

82% of Traders Use a Mobile Device

While Investment Trends is not detailing the market distribution results for each company, it is focusing some of its research on mobile trends. The company outlines that 82 percent of traders are using a mobile device to help their trading.

The researcher also highlights that the use of tablets has declined over the past years, with smaller screen devices favored by traders.

Earlier today the company also published the results of its research of the French market, which remained robust despite the advertising ban introduced earlier this year.

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