There are millions of individuals who have opened forex trading accounts and are placing buy/sell orders and making trades in the market and thus contributing to the phenomenal increase in daily forex volume, but the bulk of activity is generated by Fund Managers who have been entrusted with the management of forex managed accounts.
According to the Bank of International Settlements, the daily volume of forex trading surpassed $4.1 trillion a day. The report, which is published only once every three years, is useful since it highlights the phenomenal growth of the forex market.
The forex market is the market through which all global trade activity is made so it’s no surprise that the daily volume is so high.
An important part of the market however is also related to trading or investing activity, the bulk of which is carried out by institutional fund managers as opposed to the retail speculators who hop in and out and trade small lots.
There is no doubt that the majority of investors who wish to trade in forex prefer managed forex accounts handled by professional forex fund managers who use a combination of fundamental and technical analysis tools to trade in the forex market.
There are many who question whether a small retail investor can survive in the forex market. In fact many forex firms who have the license to act as marker makers that is they take the risk and never cover client positions have based their business success on the failure of the retail investor.
The reasoning is that eventually, the retail investor will lose his money because retail investors are not sophisticated, they are not disciplined and they trade with their heart rather than their brain.
An increasing number of market makers thus increase the leverage offered in an effort to convince the retail investor to trade bigger amounts and thus increase the chance of losing the original capital invested.
On the other hand, a professional manager is more likely to use sophisticated technical analysis tools, have access to the latest news and comments hitting the newswires and which are likely to have a major impact on prices and equally importantly trade based on discipline and risk management tools.
This is why more and more investors are shifting to professional fund managers, especially those employed at regulated investment firms, giving them the mandate to manage their forex accounts.
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