• The global forex market has an average daily turnover of approximately US $5 trillion
  • The US dollar accounts for approximately 87.8% of total daily forex trading
  • The UK was the most popular country for Forex trading in 2016, with US $2.4 trillion traded on average each day 

The foreign exchange, or forex market, is without question one of the largest and busiest financial markets in the world. With forex trading taking place around the clock, from when traders in London go to sleep on Sunday night, to when traders in Asia wake up on Saturday morning, the forex market can truly be called the market that never sleeps.

To give some indication on the sheer size of it, in 2016 the forex market had an average turnover of over US $5 trillion, every day

These stats, and those to follow, are based upon one of the most comprehensive sources of data for the global forex market, the April 2016 Triennial Survey on foreign exchange and OTC derivatives trading by the Bank for International Settlements (BIS).

The BIS’s Triennial Survey produces data on the volume of forex trading, which is used by market analysts around the world, as well as historical data dating back to 1996 depicting how the forex market has expanded both in size and geographical range over the years. 

Furthermore, the BIS is currently scheduled to release an updated forex market survey for April 2019, with results being released in September of 2019 for forex turnover. This will then be followed in November 2019 with an account for the outstanding forex amounts, with the full 2019 Triennial Survey report then scheduled for release in December 2019. 

The Size of the Forex Market by Currency and Currency Pair

As of April 2016, the largest volume of any currency traded was the US dollar, which accounted for 87.8% of total forex trading volume, and only slightly above its share of 87% of traded volume in 2013. The second most popular traded currency was the euro, the consolidated currency of the European Union (EU), composing 31.3% of the total traded volume. Here, the euro showed a slight decline in trading from 2013’s 33.4% registered volumes. In third was the Japanese yen with a market share of 21.6%, a slight decrease from 23.1% in 2013, followed behind in fourth by the UK’s pound sterling, which held a market share of 12.8% in 2016, up 1% from the 11.8% observed in 2013. 

With respect to the volume of currency pairs traded, the EUR/USD pair scored the highest in 2016 with a trading volume share of 23% on a net-net basis, down from 24.1% in 2013. A close second was the USD/JPY pair with a 17.7% share in 2016, which also fell from its 18.3% share seen in 2013’s survey.

Other major currency pairs include GBP/USD, AUD/USD, USD/CAD, USD/CNY and USD/CHF, which are listed in declining order of their trading volume share. 

Forex Market Turnover by Instrument

When it comes to the popularity of instruments traded in the forex market, the highest amount of forex market turnover occurs in foreign exchange swap transactions.  As per the BIS survey in April 2016, the daily average amount of foreign exchange swaps traded was $2.37 trillion. Furthermore, the next most popular instrument for forex traders were spot transactions with a total of $1.65 trillion being traded in April 2016.  These instruments were followed in popularity by forward outrights, forex options and currency swaps. 

OTC Forex Turnover by Instrument in April 2016
Daily averages, in millions of US dollars
 Total   Spot transactions   Outright forwards   Foreign exchange swaps   Currency swaps   FX options 
Total, “net-net” basis    5,066,955         1,652,349        699,676     2,378,304          82,151        254,414 
by currency
USD  4,437,554 
 1,385,410 
   599,764   2,160,211       73,820     218,350 
EUR  1,590,573 
   519,363 
   177,530     807,131       22,290       64,259 
JPY  1,095,562 
   394,931 
   151,068     457,929       18,119       73,516 
GBP    648,576 
   211,054 
     92,005     305,393       10,360       29,765 
AUD    348,312 
   142,932 
     40,877     137,877         7,052       19,574 
CAD    260,408 
   104,551 
     34,482     103,060         4,256       14,060 
CHF    243,419 
     57,286 
     29,833     149,727         1,702         4,870 
CNY    202,055 
     67,555 
     27,984       86,030         2,618       17,868 
SEK    112,321 
     33,710 
     13,386       59,081           872         5,272 
Other currencies  1,195,130 
   387,906 
   232,425     490,168       23,213       61,293 

Forex Turnover of the Various Forex Market Participants

In 2016, the types of forex market participant that had the biggest forex market turnover were reporting dealers. These turned over more than $2.1 trillion in transaction volume, with other financial institutions accounting for the remaining daily turnover of $2.5 trillion. 

In contrast, prime brokered transactions amounted to $887 billion and non-financial customers only turned over $381 billion as of April 2016. Moreover, hedge funds and proprietary trading firms (PTFs) had a transaction volume of $389 billion, while retail forex transactions accounted for an even smaller amount of $282 billion of the total forex market turnover in that month.

OTC Forex Turnover by Counterparty in April 2016
Daily averages, in millions of US dollars
 Total   Spot transactions   Outright forwards   Foreign exchange swaps   Currency swaps   FX options 
Total, “net-net” basis    5,066,955     1,652,349        699,676     2,378,304          82,151        254,414 
By counterparty
with reporting dealers  2,120,759        605,344        189,029      1,205,038          37,835          83,513   
local    673,340        203,673          58,915        373,928          14,287          22,537   
cross-border  1,447,419        401,670        130,114        831,110          23,548          60,976   
With other financial institutions  2,564,432        929,512        430,741      1,026,125          37,341        140,713   
local    900,645        333,728        157,886        343,884          13,220          51,927   
cross-border  1,663,788        595,784        272,855        682,242          24,121          88,786   
non-reporting banks  1,113,499        353,645        135,681        563,848          18,002          42,323   
institutional investors    797,726        290,477        171,089        277,933            6,287          51,940   
hedge funds and PTFs    389,338        200,344          82,441          65,971            8,883          31,699   
official sector      73,558          13,909          14,187          42,661            1,545            1,255   
other    182,375          68,437          26,004          71,950            2,569          13,415   
undistributed        7,935            2,699            1,340            3,762                54                80   
With non-financial customers    381,703        117,494          79,906        147,141            6,976          30,187   
local    224,174          82,041          55,303          66,397            3,287          17,145   
cross-border    157,529          35,452          24,603          80,743            3,689          13,042   
Prime brokered    887,151        564,007        118,891        143,180           3,205         57,868 
Retail-driven    282,529         60,429         21,609        177,778           3,321         19,393 

Countries with the Biggest Forex Market Transaction Volume

Forex market transaction volumes differ substantially among countries that host sizeable numbers of forex market participants. By far, the largest geographic centre for forex trading is the United Kingdom with more than $2.4 trillion traded on average each day in April 2016. 

In fact, the UK’s trading volume accounted for almost half of the $5.06 trillion average daily volume traded during that period.

The country with the second-largest forex trading volume is the United States with an average daily transaction volume of $1.27 trillion. That impressive turnover was followed by several Asian countries, with Singapore, Hong Kong SAR and Japan showing average daily volumes of $517 billion, $436 billion and $399 billion respectively.

Overall, the foreign exchange sales desks and systems located in just the five countries mentioned above transacted 77%of all foreign exchange trades performed in April 2016.

OTC Forex Turnover by Country in April 2016
Daily averages, in millions of US dollars
 Total   Spot transactions   Outright forwards   Foreign exchange swaps   Currency swaps   FX options 
Total, “net-net” basis    5,066,955      1,652,349        699,676     2,378,304          82,151        254,414 
United  Kingdom     2,406,301 
      784,254 
      265,898      1,161,152          52,699        142,248 
United States     1,272,122 
      580,990 
      219,141        391,241            6,526          74,224 
Singapore       517,197 
      121,642 
      104,675        248,002            6,101          36,777 
Hong Kong SAR       436,557 
        91,580 
        44,187        275,894          12,123          12,772 
Japan       399,028 
      109,917 
        62,669        205,742            5,808          14,892 
France       180,600 
        22,766 
        15,211        136,511            1,636            4,475 
Switzerland       156,431 
        25,335 
          8,441        116,404                13            6,239 
Australia       121,271 
        26,769 
          9,621          80,684            3,213              983 
Germany       116,381 
        22,944 
          5,631          85,247            1,438            1,121 
Other Countries    908,508 
   267,824 
     94,316     508,534       16,143       21,658 

OTC Forex Market Turnover by Execution Method

The most common forex transaction execution method was via electronic direct services, which accounted for the highest amount of forex market turnover totalling $1.66 trillion traded according to BIS’s April 2016 report. The second most common trading method was through voice direct, which reached a daily average of $1.40 trillion in forex transactions. This was followed in popularity by electronic indirect transactions of $1.12 trillion.

The least common execution type consists of the voice indirect method with only $755 billion in average daily transactions. Whilst, undistributed trade executions accounted for only $109 billion on average per day. 

OTC Forex Turnover by Execution Method in April 2016
Daily averages, in millions of US dollars
 Total   Spot transactions   Outright forwards   Foreign exchange swaps   Currency swaps   FX options 
Total, “net-net” basis    5,066,955         1,652,349        699,676     2,378,304          82,151        254,414 
Voice direct  1,409,508         410,394     257,563     589,904       28,667     122,915 
Voice indirect       755,398               142,103          60,717        472,605          17,812          62,161 
Electronic direct     1,666,213               704,151        226,828        678,576          16,949          39,709 
Electronic indirect     1,126,122                372,983        138,745        574,464          14,455          25,474 
Undistributed       109,717                   22,718          15,822          62,754            4,268            4,154 

How Forex Traders Benefit from Trading a Large Market

The sheer size of the forex market, and its correspondingly large number of professional and retail participants, are the key contributing factors to the high degree of liquidity that the forex market offers. Additionally, due to these factors, the foreign exchange market is much harder for big financial institutions and traders to manipulate and influence. Nevertheless, it is possible for central banks to sometimes shift the market by using their large currency reserves. 

Additionally, market shocks do still sometimes occur in affected currency pairs due to unanticipated news events. A classic example was the so-called Swiss Shock in January 15, 2015 when Switzerland pulled out of its managed exchange rate regime that had placed a ceiling on the Swiss franc value relative to the EU’s euro. This surprise announcement by the Swiss National Bank resulted in a sharp spike higher for the franc, resulting in drastic profit and losses for forex traders and financial institutions. 

Overall, the forex market’s large size, depth and high liquidity means that big trades do not generally solely cause excessive exchange rate moves in the market, contributing towards unwelcome volatility and unanticipated trading losses.