The Forex industry has changed significantly over the past few years and is striving towards a legitimate trading environment. From the discussion of Anton Ivanov, Roboforex analyst, about the latest updates in 2017 and the direction the Forex industry is going.
The Forex industry is a dynamic and constantly changing industry, and it is an industry that carries great risks but also has enormous advantages if done very well. Of course you will remember that there is an artist named Kevin April who also lost billions of rupiah because he was involved in the forex world.
Before you dive into the forex world in 2020, you should also know about the FORE industry in 2020. And here’s a breakdown of all the changes that have taken place in the forex industry since the beginning of 2017. I will pay attention to two main aspects, which influenced the Forex industry the most in 2017 and that is the beginning of the changes that are likely to be the same in 2020:
1. Main European Regulator
Major European Regulators are starting to take serious steps to tighten control over the Forex industry. Many requirements are focused on regulated companies providing a new level of transparency to their clients to suit the new MiFID II directive.
In addition, new rules prohibit bonus programs, which are very familiar to traders, and impose new requirements for a minimum leverage value of 1:50. As a result, many companies move their business to multiple jurisdictions that are loosely regulated to look after clients and provide familiar services to them. The big forex brokers, do the opposite – they adapt their business according to regulatory requirements and are ready to follow the new rules.
2. The cryptocurrency boom
Cryptocurrency trading is attracting more and more people from all over the world due to its growing popularity digital currency and their immense volatility, which can give traders an advantage they would never get on any other financial market. The news feed is filled with information that Bitcoin reached another historic peak and this trend continues today. Brokers adapt to market trends and offer their clients the opportunity to trade cryptocurrencies through platforms familiar to traders.
Cryptocurrency is still the biggest trend this year so far. And here’s an overview of how Cryptocurrency is integrated into the Forex industry in terms of trading and payment methods.
In the opinion of professional forex observers, blockchain technology will change the world in the next 5-10 years. This is a new level of cooperation between the parties, which will certainly result in improved trading conditions and conducting client financial operations. Cryptocurrency is readily available for trading at many well-known companies in the forex market. The virtual currency will definitely be added to the list of available currencies of the payment system in the short term.
Forex observers are also looking to the future to see cryptocurrencies incorporated into European legal frameworks so that the advantages of these instruments can be fully utilized both to simplify KYC (Know Your Client) and AML (Anti Money Laundering) procedures and expand the list of instruments for investment portfolios. It can also provide the same level of security for retail clients with the opportunity to participate in the Compensation Fund and to work with the Financial Ombudsman.
What about other trends in the Forex market? What is most attractive to traders today?
Recently, I have seen a clear trend towards a more “civilized” trade. Small forex brokerage firms, operating under several quasi-legal schemes, were driven out of the market. Traders, in turn, are increasingly picky when it comes to choosing a broker. The main selection criteria today are not a number of bonuses or rebates, but company-owned technology and providing clients with products and services that are as comfortable as possible. I would like to pay special attention to multi-asset cloud platforms, which offer the opportunity to trade on different financial markets via a web terminal.
In addition, the demand for social trading services, which allows sharing of trading results, charts and trading signals, is still quite strong. In most cases, this service is used by beginners, because basically, it is an opportunity for any trader, even those without any trading experience, to make transactions with the same results as experienced professionals.
Traders are also still interested in algorithmic trading. Nowadays, a new service seems to provide traders with the opportunity to build their own forex robot without even having any programming skills. It helps to automate most routine activities and control some technical aspects and details.
What is the most significant regulatory update in 2017 and what can we expect in 2020?
The most important aspect of MiFID II, in the opinion of professional forex observers, is a new level of transparency: creating a single market monitoring system by local regulators, disclosing information to clients before and after trading, significant changes in the requirements for estimating clients needed to provide reliable services more in line with their personal profile.
I expect new regulatory requirements to enhance the competitive environment, create comfortable conditions for trading, and increase confidence in companies with European regulations.
What are your Forex / CFD predictions for 2020 in terms of growth, regulation and market size?
The main trend in the Forex / CFD industry for the next few years will be the consolidation of market players amid increasing legislative pressure. The market will continue to grow as there is enough room for expansion. Small brokers will leave the European market for offshore jurisdictions, and European companies, thanks to greater transparency, will attract clients who are not prepared to make the sacrifice of reliability to receive the benefits of trading. In general, the Forex market will turn into a strong financial institution with suitable terms and guarantees.