How is the COVID outbreak affecting online forex trading? - The Armchair Trader

How is the COVID outbreak affecting online forex trading? – The Armchair Trader


The coronavirus pandemic threw the world into a tailspin. More than six months after COVID-19 came into our lives, the international community is still dealing with substantial uncertainty. Hundreds of millions have lost their incomes, and the future remains undecided for people and businesses around the world.

In this context, the current boom in FX trading seems even more remarkable. As those familiar with forex trading already know, the past few months have seen massive growth across a variety of trading platforms and commodities.

For example, forex broker IronFX has reported a month-to-month growth of 25-50% in forex accounts. These percentages represent 220,000 new client accounts over the period of March through June. According to the IronFX report, trading volumes also rose sharply between March and June, increasing by approximately 300% over those three months.

The growth rates were more pronounced in developing countries, with traders’ accounts from Africa, Eastern Europe, and Southeast Asia making up 60% of the new accounts.

Trading markets varied during lockdown, as some traders focused solely on safe-haven commodities and currencies, while others tried to leverage opportunities, such as the fluctuating demand for crude oil.

Increase in new forex trading accounts in 1H

The steep increases in trading activity and account numbers placed substantial pressure on forex brokers. Employees working remotely and liquidity demands mean that smaller forex brokers may not be a safe choice for traders. As worries regarding withdrawal grow, traders naturally move towards larger, reliable brokers.

Extensive growth such as this is extremely rare for the forex industry. Over the past decade, average daily forex trading volumes increased by no more than 40%. Of course, the staggering change is a direct result of this year’s unusual financial and economic climate, leading to a series of high-impact factors.

“Market volatility is directly affecting the steep rise we’re seeing,” says Andreas Efstathiou, senior analyst at IronFX. “The profit potential it signifies is undoubtedly a major pull factor for traders who wish to leverage on price swings. However, other sociological trends may have contributed, as well.”

Working from home has given new traders more time to focus on trading. Also, in the shadow of a looming financial crisis, people are actively looking for new income channels. New traders have time to learn more about trading and may feel like global events present a unique opportunity to make a profit.

Naturally, this means a higher interest in the market and more trading activity.

Unprecedented circumstances for online trading

The circumstances leading up to this rise have been unprecedented. The amount of data and information available is still small, and predictions will be nothing but educated guesses. However, with further outbreak ‘waves’ expected in the upcoming months, we can assume many of the underlying causes will remain in effect or re-emerge as soon as COVID-19 cases increase.

Lockdowns and social distancing mean market volatility will remain high, and remote work will keep traders focused on forex markets.


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