Key findings of the annual Investment Trends Australian Foreign Exchange (FX) Report:
- The number of retail foreign exchange (FX) traders in Australia held up well despite a fall in market volatility compared to 2011
- The Australian FX market remains fragmented
- Two in five current FX traders use social media in the trading context
- Social trading (following other traders’ movements) is still to take root in Australia
The number of retail foreign exchange (FX) traders in Australia is relatively large compared to other countries
53,000 Australians traded FX at least once in the 12 months to December 2012, which is similar to the level seen in 2011 (54,000).
The Investment Trends 2012 Australia FX Report is the second iteration of the in-depth study on the use of FX, based on a survey of 13,459 conducted between November and December 2012.
Pawel Rokicki, Senior Analyst at Investment Trends said: “The Australian FX trader numbers have held up remarkably well, despite a 26% fall in market volatility compared with 2011 (and 41% compared with the second half of 2011) as measured by the average value of the VIX index.”
On a global stage, the Australian market is large compared to other countries studied. Australia has more currently active FX traders than Germany (29,000) and France (15,500) combined. Relative to the adult population, the level of adoption of FX trading in Australia is twice as high as in the UK and six times higher than in the US.
The Australian FX market is intensely competitive
The FX market in Australia is fragmented. In contrast to many other investment markets analysed by Investment Trends, none of the providers has more than 20% market share of primary relationships. The top two providers control 29% of primary relationships – compared with 58% in the Australian CFD market and 66% for online share trading. This low level of concentration has remained broadly unchanged since 2011, when 28% of primary relationships were controlled by the top two FX providers.
The top five providers by primary relationship were:
- Four out of ten FX traders embrace social media in the context of trading, but most prefer to make their own trades rather than following others
- 2 in 3 (67%) FX traders rely on technical analysis and charts when deciding on what trades to make, and one in five uses automated trading signals. We see an increase in the use of business and economic news in traders’ decision making process when choosing FX trades (37% in 2012 compared to 32% in 2011)
- 40% of current FX traders use social media in relation to investing. These traders mainly use social networks for analyst commentary (47%), market trends (44%) and current events (42%).
The relatively new phenomenon of social trading, where traders can follow in the footsteps of trading leaders is still to gain popularity in Australia. Only six per cent of current FX traders say they follow other traders on social trading sites. OpenBook (eToro) is the most widely used network.
The top five social trading sites:
1. OpenBook (eToro) 35%
2. ZuluTrade 27%
3. myFxBook 16%
4. Currensee 9%
5. Tradency 8%