In this video, you’re going to talk about foreign exchange market size or liquidity. Liquidity refers to how much money is flowing through the market at any given point in time. Because foreign exchange is an over the counter or OTC market there is no central exchange to tally up the daily trading volumes. Instead most people refer to a report produced every three years by the Bank for International Settlements or BIS. This is the Triennial Central Bank Survey.
The last one was published in 2010 and shows average daily turnover in the global FX of US $4 trillion. There is evidence that the current levels are significantly higher than this even. Let’s put this in perspective. This chart shows daily turnover in the FX market in comparison to the value of turnover in all of the world’s equity markets combined. As you can see, FX is many, many times large. This chart shows a breakdown of the FX trading volumes. The most liquid currency pair is EUR/USD with 28% of daily turnover. The next most liquid is USD/JPY, which at 14% accounts for only half the volume of EUR/USD. In third place is GBP/USD or cable as it’s sometimes known and this pair represents 9% of the daily turnover. These three pair alone account for just over half of daily FX turnover based on the BIS data. Again to get some perspective on this, this chart shows that the average daily turnover in EUR/USD alone is greater than that of all of the world’s equity markets combined.
With this much volume liquidity is rarely a problem if you’re trading FX. For more information about trading foreign exchange, please contact our global trade support team. They are standing by 24 hours a day while the FX market is open, ready to take your calls, answer your emails and help you out. .
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