Forex Trading Volumes from Around the World

As if to time it with the Olympics, foreign exchange committees from around the world just published their semi-annual reports. The U.S., U.K., and Japan simultaneously published trading volume data earlier this week, providing forex traders with critical information on the three largest forex markets in the world.

Don’t get me wrong, these reports weren’t released in the spirit of competition. They were generated to give the public a better understanding of the health of the forex industry in the six-month period that ended in April 2012.

The stats include trading volume numbers for the forex market as a whole, including the following:

  • Spot transactions – the immediate or “on the spot” trading of currencies using current market price.
  • Forward transactions – the trading of forward contracts, which obligate holders to buy or sell a currency at a future date and at a certain price.
  • Forex swap transactions - a two-legged transaction that involves the simultaneous execution of a spot transaction and a forward transaction.
  • Over-the-counter options – the direct trading of options (as opposed to over an exchange), which give the holder the right to buy or sell a currency at a future time and at a specified price.

For our purposes, we will be focusing on spot market activity, since this is where retail traders like you and I play.

U.S.

As of April 2012, average daily total trading volume was at $859.8 billion in the U.S., which was 0.5% higher than April 2011. Interestingly though, a look at spot market transactions reveals that it actually dropped by 2.4% from the previous year.

Below, you’ll find a chart revealing the U.S. spot market turnover by currency pair.

U.S. Swap Market Turnover by Currency Pair

U.K.

Now, here’s a look at the figures from the Bank of England (BOE).

According to the BOE, the average daily trading volume in the U.K. was roughly $2 trillion in the six-month period that ended in April 2012. Pretty impressive, eh? Well, not quite – it’s actually 5% lower than from a year before!

Similar to the numbers we saw from the U.S., spot trading activity dropped by 12%, as spot trading turnover came in at $711 billion. The U.K. noted the following as the most traded pairs:

U.K. Swap Market Turnover by Currency Pair

Japan

With the latest Japanese forex stats, the Tokyo Foreign Exchange Market Committee reported that there is a data gap between April 2011 and April 2012 “due to an increase in the number of reporting financial institutions.”

In any case, total forex average daily volume in April 2012 clocked in at $282.6 billion, down from $284.6 billion last year. The spot transactions component fell from $106.2 billion in April 2011 to $100.0 in April 2012.

As you can see, USD/JPY was the most popular choice among Japanese market traders:

Japan Swap Market Turnover by Currency Pair

It’s important to note that not only do these forex trading volume stats give us a good look at the health of the global forex industry, they also provide us with critical insight on the most traded pairs.

Knowing which pairs are most popular in Japan, the U.K., and the U.S. gives us an idea of which markets are most traded in the Tokyo, London, and New York sessions. And in turn, this will allow us to fine-tune our trading strategies!

  • David Kasujja

    There must be a typo in the average daily total trading volume at $859,845 in the U.S
    It cannot be a mere $859,845, I am sure that some instituitions trade that alone in a single day. I think the meant almost $900 billion.

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