Interesting data was released today, revealing some figures about retail Forex trading in the USA. In the last quarter of 2012, the number of active Forex retail accounts in the country declined 89,500 from 110,000 two years ago. This represents a decline of 20%, which is a significant blow to brokers. Just recently, Global Forex Trading (GFT) stopped catering to retail investors, focusing instead on the institutional side of the business. Other brokers report falling trading volume, at least 5% below the level from 2011.
By some accounts, these developments were caused by tougher regulations imposed on brokers, and traders in America. Perhaps. However, we also should remember that trading conditions were difficult last. Just like institutions, individual traders found it hard to produce profits, most likely to a higher degree. Currencies did not develop substantial trends; volatility was in historically low ranges. Obviously many market participants became disappointed with lack of opportunities and moved elsewhere. The situation could change once market conditions improve. We will see new people marketing systems and other products, new success stories (true or exaggerated). Eventually, traders will return and a crap of new ones will emerge, too. It is entirely possible that drop in participation marks a turning point in trading conditions. After all, as a group, retail investors tend to be on the wrong side when phases in market behavior change. This is true for all financial markets and not just Forex.
None of the possible trades mentioned this week have taken place yet. At the same time, though, so far markets have not invalidated them, so the orders remain active. I am adding another one, a sell in the CAD-JPY. On the 4H chart, this pair established a strong support at 88.90. I want to get in at 88.85, looking for at least 100 pips. Incidentally, my interest in all Yen pairs is on the sell side only. Throughout Wednesday, I will try to use all price run-ups in the EUR-JPY for potential selling opportunities, with focus on 5M and 15M charts. If the volatility is high enough, even 1M charts will be given consideration. In the next post, I will show how it worked out for me.
Mike K.