‘That huge $4 trillion number covers the entire global foreign exchange market, BUT retail traders (that’s us) trade the spot market and that’s about $1.49 trillion.’
Of the other $2.5 trillion do other groups also trade the Spot Market? Or are they generally confined to forwards/ futures etc…
Miscellaneous:
I’m asking because I was watching the ‘deficit/ supercommittee talks’ & as expected once it was clear the talks were failing the currency pair I was watching reacted accordingly to risk sentiment… though rather than an expected ‘n’ like graph there were 2 similar sized reactions like ‘m’ & I’m wondering why market responded in 2 waves rather than 1…
I don’t think retail forex has that much impact. I think spot retail is about 10% daily, which would put it at 400 billion.
And I think you’re over-reading market action in the case of what the super congress committee accounts for. Failure by them was most likely priced into the market a week ago or so.
It’s been well documented that they weren’t going to have a successful outcome.
Now, the next thing to watch will be the ratings agencies. They’re already warning, and the market is acting accordingly.
Trying to trade based on minute-by-minute news updates will have you chasing your tail. There’s no way to account for every particular incident, and make the correct decision to profit from.
There’s easier ways to play this game that don’t stress you out if you miss a Ransquack update.
The $1.49 trillion, and the $2.5 trillion, represent types of currency transactions — not the individuals or institutions doing the transacting. So, for instance, a portion of the business transacted by Deutsche Bank will figure into the total $1.49 trillion in spot forex turnover, and the remainder of their currency transactions will figure into the $2.5 trillion derivatives total.
• All of the world’s spot forex trading (retail + institutional) is included in the $1.49 trillion. As Tang correctly pointed out, spot forex turnover (worldwide) is approximately 10% retail, and 90% institutional (by dollar-volume).
• The “other $2.5 trillion” — the derivatives portion of world currency turnover — includes everything else (forwards, swaps, options, etc.).
If you want to read more on how the aggregate totals break down, here is some work I did (with help from Michael King at the Bank for International Settlements) several months ago — 301 Moved Permanently
If you really want to dig into the details of currency market metrics, read that thread from the beginning.
Hi the first sentence was what I was really looking for & the second one the type of direction I would like to go into… if onlyto glance at the forex market development… I mean it would be nice to predict the number of pips an event would cause , alas…
Again thanks for this will do my comprehensive catalogue of RSS feed isn’t looking so comprehensive anymore…