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by Martin on January 22nd, 2021

Is It Possible To Sustain Growth In Retail Forex Trading In 2021?

2020 has been the most unpredictable year with a series of unfortunate events for traders throughout the world. From the covid-19 pandemic, groundbreaking volatility caused by trading activities and lockdowns. Many industries were affected by this outbreak of the pandemic, and the retail forex industry is one of them. However, the impact of the pandemic on retail forex trading was growth, caused by high levels of volatility as a lot of new participants joined the market due to either being laid off from their jobs or needing something to do while stuck at home.

People were bound to stay at home since March 2020 because of the fast spread of the pandemic, restricted travels, and lockdown. And the markets started reacting to the movements caused by the pandemic, as several new opportunities for trading developed. And existing traders on the market used this as an opportunity to take advantage of the volatility of the market. This resulted in brokers recording new landmarks with the registration of new traders. The real question that arises as the year has ended is if the markets will be able to maintain the level of growth that was attained in 2020. A few experts were asked about what they think with regards to how the industry will perform this 2021, and here is their take on retail forex trading for the year.

The Opinion Of Experts With Regards To Retails Forex Trading In 2021

According to a statement made by the Chief Commercial Officer at Excess, David Moyes, the industry is expected to maintain the level of growth it had achieved throughout 2020 because of the massive number of new traders.

He said that one of the major impacts of the coronavirus is that it moved people from their offices to work from home. The spread of the pandemic also caused high levels of instability in the financial markets. Which have been the main instruments driving the massive rise in the volumes traded on the Forex markets since the pandemic started. Especially because traders had more time and less travel due to the lockdown. Thus not only did firms see a high level of new customers joining the foreign exchange market, but the existing traders increased their trading volumes. Moyes also confirmed that this is the case with Exness, as the trends led to the increase in the number of new Forex traders and sustainable growth. Besides the effects of the lockdown and social distancing restrictions, there are several other reasons that affected market movements leading to the high volumes traded throughout 2020 that include economic updates, political events such as the Brexit, other political news like the US presidential elections of November 2020, and also brokers providing bonuses and a favorable forex spread for their new clients which makes it easy for them to start trading.

Sustainable Growth

Boyes says that when the pandemic first started, volatility was at its peak as well as new traders, which all contributed to the high levels in trading volumes. Despite there being a drop in April, there has only been an increase since April. For many firms, this increase in sustainable increases can be sustained because the number of new traders is high. In Addition, the remote working situation has not changed significantly making the possibility of a drastic change in the state of affairs on the financial markets very slim. This implies that those same factors that influenced the market volumes then still do now. According to Boyes, about 50% of the 80% volatility volume gained in March 2020 is still running.

New Traders

The Chief Executive Officer at Amana Capital, Ahmad Khatib said that despite there being an increase in the industry of new traders, the numbers in 2020 broke all regards in the previous years and that the volumes will be sustained for 2021, given that all the sectors of the company have performed extremely well throughout the year. He continued that the reason for the increase was that to the high level of instability which resulted in old traders trading more volumes and new traders being attracted to the platform as there was a lot of groundbreaking news about the financial market reports. For a midsized broker such as Axiory, there was an increase in the number of new traders from various parts of the world caused by the market events of 2020, and the broker anticipates that the same standards are going to be upheld for 2021, because not so much has changed with regards to the covid-19 restrictions and rules of social distancing.

Regional Expansion in 2021

Khatib additionally talked about how vital it is for investors to understand markets in the local area before a regional expansion. He stated that in order for firms to understand the fundamentals of the regional markets, they have to break the regions into parts since the case is different in all countries within a specific region.

Risk Factors

According to Alex Katsaros, the CEO of TopFX, many traders started taking more risks than usual when the volumes increased, and that most retail forex traders can say that 2020 was a great year for the business. He said that they had expected such an outcome given the restriction caused by the pandemic. Most TopFX clients wanted a way out of the lockdown and staying at home, while some wanted a new source of income through taking part in the markets. Thus most traders did not fear taking risks because it was certain that the subsequent days would be bad. And they transferred their fear and stress to the markets, which led to high levels of volatility. However, Katsaros expects traders to be a little bit more controlled and seasoned in 2021.

Tough Year For Introducing Brokers

Although last year was a groundbreaking year for the foreign exchange industry, since communication activities were limited, introducing brokers struggled, as they were unable to get to traders in order to offer their services. Events such as expos and seminars were canceled worldwide, which reduced the effectiveness of their business.

Everything considered it is safe to say that there is a possibility for the growth in retail trading to be sustained in 2021 because a lot hasn’t changed with regards to the covid-19 restrictions. Although the potentials of the vaccine could make a difference, however, most analysts and experts anticipate that the growth will be retained for the most part.

By Martin

Martin is a professional trader with 3 years of working experience in a Cyprus based brokerage. After the experience, he moved to the UK where he became a financial news reporter at a local news outlet. His years of experience of trading helps him deliver the most quality news, while also analyzing the impacts of it on various markets.

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