Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.

Crypto Brokers: Evolution of Forex Brokers in 2020

Author: Martin Moni
Martin Moni
All publications of the author

FX agents, just like any other business, have to stay ahead of the game in order to survive and thrive. The FX industry is especially competitive. For one, there is a lot of potential for everyone involved given the $5.1 trillion daily trading volume involved, so lots of pie to go around. And secondly, there are a lot of FX agents all competing for the same clients around the world. 

To remain competitive, therefore, FX agents must include additional assets for trade by their clients. The most popular FX agents have at least 50 currency pairs ranging from major to minor and exotic pairs. Additional assets for trade are also made available in the form of CFDs by most agents. This allows traders access to the stock, commodities and futures arenas all in the form of CFDs. Most recently, the crypto arena has become the ripest arena due to traders’ interest and potential gains. FX agents have thus been including as many cryptocurrencies into their portfolios as possible, and this has become the main competitive area. (Find out more about: OmiseGo (OMG) Coin and Price Prediction for 2020)

Since the crypto boom of 2017, coins have grown in interest and the FX agents have been adding as many coin pairs as they can. The competition has been stiff, and the agents have been evolving to fit the role and beat their peers. 2020 is going to be very interesting indeed because of stabilization in the coin industry and the proliferation of more promising ICOs and blockchain technology. Thus, it is going to be interesting to see how FX agents evolve to the changing environment in the new year. (To The Moon: Most Promising Asian Crypto Companies 2020)

In the beginning… the rise of retail trading

Like many things that came before the internet, FX specialists began in that long-forgotten area known as the offline world. It all started shortly after President Nixon pulled the United States from the Gold Standard to let the value of a U.S. Dollar float in August 1971. It is unlikely that anyone could have accurately predicted how the Nixon Shock would create a several trillion dollar, world-spanning industry, but that’s what became of it. These offline FX agents comprised solely of enormous budgetary foundations, for example, banks and significant investment firms, since investing in currency trading for speculative purposes involved a lot of money just to participate. 

Incidentally, the coming of the web corresponded with the appearance of the Contract for Difference (CFD) on the venture scene. CFDs implied that no real cash needed to be involved in FX trades. Due to this new investment structure, there was no longer a need to have as much money as before and money exchanges could be utilized with much fewer venture sums. The mix of a growing prevalence of CFDs and the internet helped propel the ascent of the online FX specialist. (Learn everything you need to about the: Launch of The Binance Decentralized Exchange Future (DEX))

Once FX specialists went on the web, and this gave them the chance to offer their services globally. In addition, there was also a change in the manner in which merchants would initiate an exchange. As opposed to frantically hollering "BUY!" or "SELL!", traders could now offer agents the online orders to put in the request in a split second. (Here’s an interesting question: Will Crypto Trading Become Popular in Islamic Countries?)

To execute online trades, the agents had to provide trading software, and this created yet another layer to the retail FX arena. FX agents around the globe began to understand that the innovation they offered made a difference just as much as their trading services, and the contest for the most extensive trading platform around started. agents would come to be categorized into three broad categories - those that crammed as many assets as they could, those that made their interface easy to understand, and those that portrayed a sleek and elegant design for major traders. Regardless of how one looks at it, there is no dispute that trading technology and services became inextricably linked. (Here is: All you need to know about futures commitments)

In the past, money-related speculation has for quite a while been viewed as the region of the first class. All things considered, most individuals could not teach themselves in the complexities of the arena and afterward think of a speculation capital that would really have any kind of effect? The internet and advent of CFDs changed all that because now more people had access to the knowledge required and also leverage. With access to leverage, capital ceased to be a block for most people with less financial resources as the major financial institutions. agents even allowed new traders to give it a shot through demo accounts just to whet their appetite. 

The proliferation of FX agents around the world

Since then, FX has gone from being a moderately obscure and inaccessible speculation apparatus to a practically overall wonder. The simple openness that computers provide for FX exchanging, and the abrupt blast of FX programming devices and sites, alongside a wide range of preparing and publicizing, have made numerous individuals need to take a stab at making a benefit through it. (You should: Learn How To Use Position Exchanging In The FX Arena For Profit)

As per a Dow Jones Newswires examination, the "Day by day normal remote arena turnover came to $5.1 trillion in June 2016," which is slightly less than the earlier years’ volume distributed in the Bank for International Settlements' 2013 report with a figure of $5.3 trillion every day. (All you need to know about: Options trading)

Aside from advertising and availability, however, the possibility of perhaps getting rich while still at home has clearly interested many – and will positively keep on doing as such. At the point when cash was increasingly open and all the more promptly streaming – before 2008 – individuals could place their cash into FX, lose a few, and not miss it. After 2008, cash was more earnestly to drop by, however, individuals expected to discover approaches to enhance their pay, and FX gave off an impression of being the perfect and simple approach to do it. (Can A FX Agent Avoid Sending Trades Directly To The Interbank Arena?)

This happened all around the world too, and not just in the main financial centres of the world like London and New York. FX trading became very common in other European countries and pretty soon developing economies got in on the action as well. Nowadays, it is common to find FX agents with offices in multiple countries including some developing nations in Africa and Southeast Asia. It would thus seem like the FX arena has truly become a global industry with multiple participants than ever before. 

Future of FX agents in 2020 and beyond

Despite the fact that there was an expansion in the general volume of exchanging over the years, the Triennial Central Bank Survey of Foreign Exchange and Derivatives arena Activity ("the Triennial"), announced in the archive previously referenced by the Bank of International Settlements, that the pace of rising had really backed off, going from an immense increment of 72 percent somewhere in the range of 2004 and 2007, yet just rising 20 percent from 2007 to 2010. (These are: The Best FX Events And Expos To Attend Every Year)

On the off chance that the economy doesn't change a lot, this might be a premonition shadow being thrown over the eventual fate of FX. For the FX agents at the centre of the retail FX arena, there are definitely a lot of considerations that ought to be taken into account in 2020 and the years afterward.

Changing regulations

ESMA was the first to make significant changes to the FX industry when caps were placed on leverage and binary options made restricted. In 2018, ESMA placed a cap on leverage down to 30:1 from as high as 1000:1 seen previously. It was a huge blow to the industry, especially for individual traders with little capital for trading and it definitely had a negative impact on the growth of the industry as a whole. Fortunately, the blow to the binary options industry did not cause too much of a stir because the industry was already facing a lot of criticism and traders were wary of the dangers. (Concepts Every Trader Should Understand: Leverage, Margin, and Hedging)

That being said, the new regulations sweeping across Europe, Australia and the US will definitely be a factor all FX agents will have to take into account. As it stands today, most agents have already figured out some workarounds, such as the use of offshore regulators. Traders seeking higher leverage can then select to trade with an agent’s offshore subsidiary and not face the restrictions in Europe. The problems with this option are obvious, though, mostly being the lower safety standards by most offshore regulators compared to the FCA and ESMA. Furthermore, the favourite regulator CySEC is also considering a change in regulations sometime in the future, and this may add more complications to the matter in 2020 should the regulator decide to go the way of ESMA. (Do you know: Which Are The Best Commodities To Commerce In The Autumn?)

If this happens, most agents will begin to focus their attention on professional traders and institutional investors who wouldn’t mind the lower leverage considering their trading capital. That would surely be a blow to retail investors, but the good news is that offshore regulators will remain to be an option. 

Crypto trading

Investors and traders are always looking for the next best thing, and lately, that has become the crypto arena. Ever since we saw a huge rally in the crypto arena throughout 2017, everyone has become interested in trading coins. The challenge for agents is to include as many coin pairs as they can. The problem with coins is that the prices can vary from one exchange to the next, which makes it hard for the agents to track their prices accurately. (Do you know: How much money FX agents make?)

This happens because the coin arena is not centralized and arena forces can vary from one region to another. For instance, increased demand for Bitcoin in Japan can cause BTC prices to rise in Japan but not so much in other countries like the US. Nevertheless, agents have to stay ahead of the competition by offering as many coins as they can, and this will be a major consideration for agents in 2020. (Choose from: The 3 Most Trusted Exchange Authorities in The World)

The good news is that agents have the advantage of leverage because they only offer CFDs rather than actual coins. This makes coin trading potentially more profitable because one can make a lot of money even with a small amount of capital. One can already start to notice that FX agents are becoming more receptive toward coins because some even accept deposits in BTC, LTC, and some other popular coins. 

Social trading

Inasmuch as everyone is encouraged to learn as much as they can about the arenas, it can still be very challenging. The statistics show that a majority of new traders lose money and quit soon after starting out. Despite this hurdle, traders have figured out that they can still make a profit by relying on other successful traders. This is social trading, where a trader can either copy the trades made by another trader or invest their money with the professional trader and give them a cut. (Choose from: The 3 Most Trusted Exchange Authorities in The World)

Many of the top FX agents now offer social trading services in one way or another. One of the most notable brands in social trading is eToro that has millions of trading accounts connected together for investors to copy trades from each other. In 2020, this will become one of the most productive avenues for FX agents to attract new clients and keep up with the competition. Do not be surprised, therefore, if you see this being offered as a new feature by your current agent in 2020.

Trading software

As soon as traders became more knowledgeable about the arenas, the trick to staying ahead of the game became having better software than others. Thus, trading software became more sophisticated to allow trading algorithms and technical indicators to run smoothly. Now it is not surprising to find an agent offering multiple trading software and facilities such as Virtual Private Servers (VPS) just to enhance the trading experience for its traders. (These are the: 10 steps of successful arena participants)

The extension of cell phones internationally now empowers FX merchants to watch spilling features, or read financial information and see examination insights in a flash. They can likewise get value alarms and significantly more. This makes it electronic, yet it additionally empowers merchants to exchange from anyplace and whenever of day. There is no uncertainty that FX exchanging will be substantially more rearranged a long time from now. (Do you know: How Is Spread Betting Different From FX Exchanging?)

Numerous remote trade intermediaries are seeing tremendous increments in portable application use, with some expression that it represented as much as 15% of all-out online retail exchanges. As per CommSec's Richard Burns, 20% to 30% of offer exchanging will be done on a cell phone before the end of 2013. On the off chance that we mull over the sheer size of the FX showcase contrasted with exchanging shares, FX exchanging 20 years will be exclusively be done on cell phones. (Have you ever asked yourself: Should You Invest In CFDs Or Stocks To Make More Money?)

What does all this mean for agents in 2020?

We have now seen that FX agents have changed a lot over the years in response to a changing trading environment. The status quo has more or less stayed the same in the past decade until the previous one or two years when there were a lot of changes. Now the FX agents must once again adapt to the new environment in order to survive in 2020 and beyond. No doubt, the new decade will be an exciting time for everyone involved in the industry, and it will be interesting to see the new changes as described above. (These are the: Top 10 Most Outrageous FX Arena Scammers)

You can learn more about trading crypto and Forex pairs on this video:

Was the article useful for you?
5 (1)

Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.