Markets For Retail Day Traders
Previously seen as a niche market, or something for institutional speculators, the forex market, by 2010 had increased exponentially to an average daily volume of about $4 Trillion, with spot retail trades now accounting for an estimated 10% of that volume. Possible reasons for the surge in retail forex is the now high margin requirements in individual U.S. equities (stocks) for day traders imposed after 2001 and apparent overt manipulation of commodities markets making the 'rigged' commodity futures markets a less desirable or 'fair' market in which to participate. However exchange-traded funds (ETFs) have gained rapidly in popularity, being seen as a less expensive way to trade all futures markets as well as some more exotic markets not otherwise available to retail day traders.
The amount of margin required by most retail forex brokers in contrast is negligible. With full size lots (100,000 units of currency), mini-lots (10,000) and even micro-lots (1,000) all with up to as much as 1000:1 leverage being available (although not in the US where the maximum is now 50:1 after a ruling by the CFTC), means a retail day trader could in theory trade a single micro-lot of USD for the cost of $1. Realistically most brokers require a minimum deposit of $500. The sheer volume of the FX market makes it a difficult one to manipulate in any meaningful way, even with the money available to large proprietary and institutional trading interests.
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