There are many interesting and worrisome consequences to the outbreak of COVID-19. One outcome very few people expected was an increase in Forex trading. It is one of the few financial segments to note strong growth over the past few months.
An Increasing Appetite for Forex Trading
Most financial markets haven’t performed all that well since the COVID-19 pandemic began. As such investors and traders have begun directing their attention elsewhere. One interesting development is the growing volatility of foreign currencies. Those engaging in the trade of foreign currencies have found a lot of new potential markets to explore.
As a result, the global forex trading has increased by 300% since the pandemic began. Growing financial uncertainty around the world is fueling this volatile trend of foreign currencies. Several brokers have noted strong month-to-month growth. For some platforms, that growth is as high as 50%, whereas others note roughly half that.
What is even more remarkable is how this growth may not slow down. A lot of people have lost income due to COVID-19. Whether it is as an individual or a business, new revenue streams need to be found. Trading forex is one accessible option to explore in this day and age.
Keeping that in mind, one has to wonder if there is any longevity to this trend. An increase in forex trading might be temporary. However, the global financial uncertainty is not letting up.
Things may get a lot worse before there is even a sign of improvement. More than likely, it will result in even more volatile forex markets. Those price swings will undoubtedly attract even more people to these markets.
Developing Countries Note Major Growth
This growth in forex trading is very interesting for many different reasons. Firstly, the growth spans numerous platforms in the industry. Secondly, the biggest growth in users can be noted across Africa, Eastern Europe, and Southeast Asia. Those regions combine for 60% of the new accounts.
IronFX senior analyst Andreas Efstathiou adds:
“Working from home has given traders more time to focus on trading. Also, in the shadow of a looming financial crisis, people are actively looking for new income channels. They have time to learn more about trading and may feel like global events present a unique opportunity to make a profit.
Naturally, this means a higher interest in the market and more trading activity. Forex trading has also been done online for many years, making it one of the most natural courses of action for new and dormant traders looking for profitable avenues.”
Regardless of the region, traders are focusing on very completely different markets. Some play it safe, by sticking to safe-haven commodities and currencies. Others are leveraging every possible opportunity in search of fast riches. It is a very dangerous game to play, but under the current circumstances, it can yield powerful results.