Forex trading on the rise – just not in Australia

Despite a high level of liquidity and $150 billion in net turnover in 2022, Australia is lagging behind in 35^th position on the list of 50 countries deemed to be the best foreign exchange (forex) trading centres.

The data, uncovered by City Index, was used to create a points-based ranking system that analyses each country’s net turnover of over the counter (OTC) forex instruments, current cost of living (considering metrics including local purchasing power), broadband internet speeds and forex trading hours, to determine the top forex trading hubs.

Australia ranked 35^th on the index with an overall forex sustainability score of 3.69 out of 10, dropping behind South Africa (4.0 out of 10) and Turkey (4.14 out of 10). City Index said that the nation’s relatively slow broadband speeds (76.47 megabits per second compared to first-ranking Singapore’s 233.46 megabits per second) and high cost of living were the two factors to bring the score down.

“In the fast-paced forex market, even a few seconds can make a significant difference in trade outcomes, so a reliable and speedy internet connection is crucial,” Fawad Razaqzada, forex trading expert from City Index, said.

“Fast broadband is key for forex traders as it allows for faster trade execution, minimises the risk of connection drops or disruptions and allows for multi-platform trading across several devices.”

City Index’s ranking also placed Singapore as the most suitable country for forex traders with an overall score of 8.07 out of 10, which the online platform attributed to the country’s high net turnover of OTC forex instruments of $929 billion.

Singapore’s net turnover is six times higher than second-placed China ($153 billion) and twice the amount of third-placed Japan ($433 billion). Hong Kong finished fourth with $694 billion in turnover last year and South Korea rounded out the top five with only $68 billion, but had high broadband speeds of 192.32 megabits per second (Mbps).

The United Kingdom’s $3.755 billion in global net turnover was the world’s highest, but it wasn’t enough to sit the country in the top five of City Index’s ranking. In eighth place, the online platform said the UK had a 98 per cent higher turnover than France’s $214 billion and it had the most pip movement of the four major markets (10) with the others being Sydney, Tokyo and New York.

“Different pairs will be better to trade at different times of the day. This is because the time of day heavily influences how liquid a market is, and how much price movement it’s likely to see,” Razaqzada said.

“By looking at the average pip movement of major currency pairs during each forex trading session, we can see that the London session – which runs from 08:00 to 16:00 GMT – has the most movement.”