There were some interesting figures announced recently which show that the volume of forex trading has fallen sharply since the global economic crisis first began to take hold. This is largely because a lot of hedge funds have run into difficulties or worse still gone bust, and have therefore left the markets.

There may be other underlying reasons as well because the actual figures show a fall of 25% in London and 26% in New York, which is a significant fall in volume.

As a reduction of this fall in volume, the currency markets have unsurprisingly been extremely volatile in the last year or so, which makes trading a lot more challenging because ideally you want large price moves backed by large volumes.

Whether we will start to see a lot of these traders returning to the markets remains to be seen, but I think it is fairly likely that volume will pick up again as soon as economic conditions start to improve.

 

 

Filed under: Forex

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