The world of forex is ever-changing. Once it was the preserve of big financial institutions and professional traders, now, with the advancement of technology, anyone with a mobile phone and internet connection, can trade the financial markets.
However, trends have changed dramatically over the years. None more so than in 2020. As we enter the final few days or a turbulent year we can look back on a year of record volatility across all asset classes and the onboarding of a whole new generation of traders, lured by the zero-fee trading and extreme volatility. So, what will 2021 bring?
Increased Forex Regulation
As we saw with the recent ASIC restrictions, the winds of regulatory change are sweeping the globe. Earlier in the year, the Bahamas introduced a number of restrictions including leverage set at 200:1.
More and more regulatory bodies are looking at the restrictions and following the lead of bodies like the FCA and CySec. The coming year should more tightening of regulation and more brokers looking for alternative offshore jurisdictions.
Forex Marketing Practices
Alongside tighter regulation should be more scrutiny to forex marketing practices and how forex promotions are advertised. Forex Promotion has already undergone a massive upheaval, especially on social media.
However, the coming year should see more focus on forex promotions and the marketing practices used in forex overall.
Zero-Fee Trading
Zero-fee trading and the Robinhood-type apps have disrupted the way stocks are traded forever. Since its inception, Robinhood has amassed an incredible 13 million users and the effect it is having on the wider FX industry cannot be ignored.
Many FX and CFD Brokers will evolve into something resembling Robinhood soon enough. Mobile based trading along with a user experience aimed at younger people will continue the amazing onboarding of 2020 into next year and more importantly, keep the users engaged and trading.
Continued Volatility
Sadly, it does not look like COVID-19 or its lasting effects will go away soon. There will be high volatility again in 2021. Maybe not to the extreme as in 2020 where we saw Oil trade negatively for the first time ever, but still volatility.
Brokers and traders will have hopefully learned the lessons of 2020 and be better prepared for the volatility in the FX and CFD markets that awaits.
Anthony Young
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