Foreign exchange (FX)—or forex—trading is finding time in the spotlight right now as the COVID-19 era sees more and more new entrants capitalizing on time spent at home investing via online credit instruments, and the global foreign exchange market is expected to grow at 7.5% during 2021-2026.
Urbanisation and digitalisation driving growth of market
The recently released “Foreign Exchange Market: Global Industry Trends” report analysing the competitive landscape of the market—surveying some of the UK’s top foreign exchange companies such as Barclays, BNP Paribas, Citibank, Deutsche Bank, Goldman Sachs, HSBC Holdings plc, JPMorgan Chase & Co., and The Royal Bank of Scotland—finds that growing urbanisation and digitalisation in both the emerging and developed economies are among the key factors driving the growth of the market.
Despite—or perhaps even owing to—the uncertainties of COVID-19, the availability of electronic platforms and the provision of improved security mechanisms for trading are also providing a boost to market growth.
Various internet-based platforms—many of them employing a forex robot —are available to users for conveniently exchanging currencies between countries, while ensuring the delivery of goods and services in a secure and centralised setting.
Additionally, various technological advancements, such as the availability of outright forward and currency option, are creating a positive outlook for the market growth. Outright forward enables the trader to lock the current exchange rate, which further protects the investor, exporter or importer from future rate fluctuations.
On the other hand, the currency option refers to a contractual document that establishes an obligation to purchase or trade currency at a specific rate. FX also finds extensive applications for transferring funds to support the exchange of various goods and services between nations.
Trading grew by 33% in 2021
The key features of FX—such as minimal trading costs—24×7 trading opportunities, high transactional transparency, and liquidity, have favoured its widespread acceptance across the globe.
Trading Authority, a privately owned financial services industry research company based in London, names platforms Skilling, eToro, and Plus500 among the leaders in the UK market ushering in a new generation of platforms that are native in the digital space and have earned popularity with younger users who are attracted by the convenience, interactive user experience, social media support, and the wide array of sophisticated digital products on offer.
The report also notes that trading has grown by 33%, with 550,000 active users in 2021. So-called meme stocks and cryptocurrencies such as GME and Dogecoin have also boosted the interest.
SOURCE Vestigo Finance