How Forex brokers benefited during the pandemic

For an unprecedented number of staying-at-home people during pandemics, trading online became a new source of income. In the context of global uncertainty and the increase in the unemployment rate, the trend in foreign currency trading has seen a boom. Only after six months of pandemics, the Forex market showed an average increase of 50 percent in daily trading volume.

The staggering change in trading volume

It’s important to know that the volume in trades on the Forex market has increased by not more than 40 percent over the last decade. Compared to previous years, the growth in profits for online brokerage during the year 2020 was substantial.

According to Bloomberg statistics, the opening of new accounts on Forex brokerage platforms grew between 25 to 50 percent in just one quarter. 

Between March and June in 2020, the trading volume skyrocketed by nearly 300 percent. In Southeast Asia, Eastern Europe, and Africa, Forex trading became a particularly attractive way of creating a new source of income. In these regions, the number of new trading accounts rose by approx 60%. 

Forex trading as a counterbalance for lost income

Besides the human cost, the pandemics brought financial disasters for many, with the local business left at a standstill. With most of the nonessential business being closed, people were obliged to find the solution for maintaining their finances stable. 

Millions of ordinary people turned their attention to the online trading platforms seeking a way to earn extra cash. The steep rise in the count of new Forex traders is also due to turbulences in the commodity market and consequently the increasing volatility of the currency pairs’ prices. 

The volatility has always been the ‘’tool’’ for the profit for experienced Forex traders. Thanks to the digital trading platforms, rooky traders worldwide overtook the market. They massively started reaping the profits from the currency market dizzy movements.

More time at home meant more time for trading. Consequently, it increased the interest for other financial markets and assets for trade such as commodities, cryptocurrencies, stocks, etc. The new situation turned out to be the vehicle for profits and an unmissable opportunity for the new profitable avenues from the overall perspective. 

The booming of retail brokerage business 

Rewind just a couple of years ago, and the Forex brokerage looked completely different. The pandemic crisis was the tipping point for discovering the opportunities of capital markets for ordinary people and inexperienced traders.

For the latter, copy trading was particularly interesting since they could piggyback on the trades from more experienced fellow traders. Besides automated trading, copy trading was extremely popular when it comes to the Forex market. Instead of the time-consuming development of trading strategies, people benefited from others’ success. 

Lately, the brokerage business landscape took the shape of a jungle due to the new players on the brokerage scene. Fierce competition made many of the players decrease their commissions and fees.

Etoro, one of the biggest trading platforms, was the first to offer commission-free service for retail investors. Many now must keep up with this trend for the sake of reputation on the Forex market. Besides the competitiveness in terms of spreads and fees, the brokerage platforms need to keep up with the variety of assets available.

As we already know, the crypto market is also experiencing a big change and attracts many new investors. With that in mind, the new Forex brokers are now offering cryptocurrency trading in Bitcoins and Ethereum with the fixed spreads and low margins. 

In Conclusion

The latest pandemic circumstances led to great changes in the retail brokerage industry. The financial market finally widely opened its doors to the droves of small investors during the pandemic year. It seems that the trend doesn’t subside. And it imposes new challenges to new emerging brokerage businesses in terms of the quality of their services and new investment opportunities for online trading enthusiasts all over the world.

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