Daily trading volume of Equities, Fixed Income, Forex

Tortle's picture
Rank: Chimp | 14

I'm quoting below from a Wikipedia article

The forex market is a cash inter-bank or inter-dealer market, which was established in 1971 [citation needed] when floating exchange rates began to appear. The foreign exchange market is huge in comparison to other markets. For example, the average daily trading volume of US Treasury Bonds is $300 billion and the US stock market has an average daily volume of less than $10 billion. Ten years ago the Wall Street Journal estimated the daily trading volume in the forex market to be in excess of $1 trillion. Today that figure has grown to exceed $1.8 trillion a day.

http://en.wikipedia.org/wiki/Currency_market
Correct me if I'm wrong, but I think that means:

Equities: $10 billion
Fixed Income: $300 billion
Forex: 1.8 Trillion

Traded on a daily basis.

What do these numbers really mean though? Does it mean that there is the potential to generate more money from Forex trading than FI, and Equities trading?

Does it mean that Forex is "the biggest game out there"?

Do banks have prop desks for Forex Trading?

I'm just trying to understand these things, I'm still learning.

Comments (6)

Jan 12, 2007

Correct me if I'm wrong, but I think that means:

Equities: $10 billion
Fixed Income: $300 billion
Forex: 1.8 Trillion

Traded on a daily basis.

Sounds about right

What do these numbers really mean though? Does it mean that there is the potential to generate more money from Forex trading than FI, and Equities trading?

Volume does not equal margin

Does it mean that Forex is "the biggest game out there"?
By amount traded, yes.

Do banks have prop desks for Forex Trading?

Of course.

Jan 12, 2007

It's important to realise that there is no "forex market" as such. FX trades are done over the counter with no regulatory backup, and there is no one "market price". As a small investor it's easy to get your eyes ripped out by your broker.

Jan 12, 2007

Also FX is so huge because people are leveraged out of their ass (1000 to 1). Markets usually move so slightly that in order to make any money you have to invest on a grand scale.

The fattest spreads are usually in fixed income with the more exotic products. I'd say that's where traders can make a real killing.

Jan 12, 2007

lots of products are otc....there's no 'bond market' either by that reasoning.

Jan 17, 2007

If its otc..doesnt mean there is no market for the instrument..if that was the case only equities would have a 'market'

Jan 17, 2007
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