175,000 Retail Traders Traded Forex in the US in Q2 2022

The retail FX market in the US has consolidated in the past few years.

The number of traders placing currency bets is still high, above pre-pandemic levels.

The United States is one of the most developed investment markets worldwide, but at the same time, the most tightly regulated. Due to the strict regulations, trading in typical contracts for difference (CFDs) is impossible, but investors can use other instruments for Forex (FX) margin trading. In the second quarter of 2022, 175,000 retail traders took advantage of this opportunity.

Investment Trends data suggests that in the twelve months to July 2022, the number of retail traders in the US spot FX market was greater than before the Covid-19 pandemic. However, this is a drop of 55,000 from the record highs reported in 2021, when investment activity peaked worldwide.

"Similar to other geographies, US margin forex trader numbers have fallen for the second consecutive year, however, remain higher than pre-pandemic levels. An estimated 175,000 unique individuals placed a spot margin FX trade in the 12 months to July 2022, and intend to continue trading (down from 230,000 in 2021)," Lorenzo Vignati, Associate Research Director at Investment Trends, told Finance Magnates.

"Of note, the research highlights dialling up the education offering and decision support tools can meaningfully strengthen client engagement."

Data collected by Finance Magnates Intelligence for Q2 2022 confirms the findings above. They show that five American-regulated FX brokers: Forex.com. IG US, Interactive Brokers, OANDA, and TD Ameritrade operated nearly 175,000 active spot FX accounts.

The largest number of them, more than 70 thousand, was operated by TD Ameritrade. On the other hand, Interactive Brokers had the highest percentage of customer profitability, standing at 43%. In contrast, the average rate of profitability for all retail traders was 32%. This is several percentage points higher than reported by European CFD brokers.

Places without Forex CFDs Attract Many Traders?

The number of retail investors in the US who trade with forex leverage is one of the highest in the world. Of course, it should be remembered that they are also the third most populous country on the planet.

However, a similar number of active retail investors can be found in much smaller Hong Kong. In its case, CFDs are banned, and traders are looking for other products that allow them to trade currencies, including margin FX.

"Similar to other markets, dormancy rates started creeping up back to pre-pandemic levels resulting in an estimated 185,000 unique individuals placing a listed derivative trade in the 12 months to December 2021, and intend to continue trading, (down 12% from 2020). Of note, the research highlights most dormant traders are open to reactivate, and better education on risk management can help brokers unlock those opportunities," Vignati commented.

If we wanted to create a ranking of countries with the highest average number of people trading in FX derivatives, Australia (100,000), Germany (84,000) and Poland (80,000) would be next in line after HK and US.