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What are the major trends in the retail FX trading industry of 2022?

Retail Forex trading has grown significantly over the past decade, driven by a combination of factors such as lower transaction costs, increased online accessibility and the growth of mobile trading. 

Looking at 2022, we believe there will be are 6 key trends that will shape the retail Forex industry: 

1. Continued Growth in Emerging Markets 

Emerging markets have been a key driver of growth in the Forex market over recent years and this is set to continue into 2022. Countries such as China, India and Brazil offer vast potential for continued expansion due to their large populations and growing middle classes. This presents both opportunities and challenges for brokers operating in these markets – on one hand there is huge potential for growth but on the other hand regulations can be stricter compared to developed markets like Europe or North America. 

2. The Rise of AI & Automated Trading

Artificial intelligence (AI) is increasingly being used across all financial markets including foreign exchange (FX). In FX trading, AI can be used for tasks such as identifying patterns or predicting price movements. Some brokerages are already offering ‘auto-trading’ features which use pre-programmed algorithms to execute trades automatically without human intervention – although these still need to be monitored closely by humans given that they are not foolproof! We expect AI & automated trading will become even more prevalent over time as technology advances further.

3. Regulation and Restrictions 

The retail FX sector is set to undergo some major changes, with new regulations coming into effect that will have a big impact on how brokers operate. Here's what you need to know about the upcoming changes and what they mean for the future of the industry.

One of the biggest changes is that leverage limits are being introduced for all retail investors. This means that traders will no longer be able to use high levels of leverage when trading, which could lead to less risky trading strategies being used overall. The other main change is that negative balance protection will become mandatory for all brokers offering services to European clients. This means that clients' account balances can never go below zero, even if they make heavy losses on their trades.

These regulatory changes are likely to have a big impact on the way brokers do business, and it remains to be seen how they will adapt in order to continue serving their clients effectively. However, one thing is certain: the retail FX sector is set for some major changes and most of this will not be positive for the brokers.

Speaking of restrictions, Apple has removed the popular trading platform, MetaTrader 4, from its App Store. 

MetaTrader 4 is a widely used platform for online trading in the foreign exchange (forex) market. It provides various charting and trading tools, automated trading and the software has been around for over a decade, which resulted in an extremely high adoption rate. 

The removal of MetaTrader 4 from Apple's App Store is likely to be a blow to many forex traders who use the iPhone or iPad. However, there are still plenty of other ways to trade forex on these devices, including through web-based platforms and dedicated mobile apps

5. The growth continues, the momentum declines

Forex trading volumes are expected to continue growing, albeit at a slower pace than in recent years. This is due to a number of factors, including slower economic growth globally and tighter monetary policy from major central banks.

In terms of specific currencies, the US dollar is expected to remain the most traded currency in the world, followed by the euro and Japanese yen. The Chinese yuan is also expected to see increased trading activity as China continues to open up its economy.

6. More competition on the way

While retail FX trading has been around for a few decades, we see more and more innovation and competition coming from the crypto sector. It goes without saying that crypto has attracted a great number of day traders, while FX brokers have been struggling to offer decent conditions for day traders that are looking into crypto trading. The main question that remains now, will these crypto exchanges pivot from their key offer and introduce retail currency trading to their clients too? The rise of cryptocurrency exchanges like FTX has posed a threat to traditional retail forex brokers. The main reason for this is that crypto exchanges offer a much wider range of assets than most forex brokers, including many exotic cryptocurrencies that are not traded on traditional financial markets. This gives traders a much greater choice of assets to trade, and also allows them to take advantage of opportunities in the burgeoning cryptocurrency market.

Another key difference between crypto exchanges and traditional forex brokers is the way in which they make money. Crypto exchanges charge various fees - these are usually constant and are much more predictable. In contrast, most FX brokers make their money through spreads – the difference between the bid and ask prices of an underlying asset. This means that traders on crypto exchanges can potentially save money on costs, making it more attractive than dealing with a traditional broker.

It is also worth noting that crypto exchange platforms tend to be far more technologically advanced than their older counterparts in the Forex world. For example, FTX offers an innovative mobile app that allows users to trade directly from their smartphones or tablet devices. This kind of cutting-edge technology is simply not available from most retail Forex brokers at present, which could give crypto exchanges like FTX an edge in attracting new customers.


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