Major Markets

• The US & UK account for more than 50% of turnover
• Major markets: London, New York, Tokyo
• Trading activity is heaviest when major markets overlap
• Nearly two-thirds of NY activity occurs in the morning hours while European markets are open 4

4. NY Federal Reserve

Average Daily Turnover by Country

Concentration in the Banking Industry

• 16 banks account for 75% of turnover in the U.K.
• 11 banks account for 75% of turnover in the U.S.
• 11 banks account for 75% of turnover in Japan

Note: The reference here is to individual banking offices rather than banking organisations.

Source: BIS Triennial Survey 2004

Trading

• An estimated 95% of transactions are speculative
• More than 40% of trades last less than two days
• About 80% of trades last less than one week
• Brokers research: 90% of traders lose money, 5% break even, 5% make money

Technical Analysis

Commonly used technical indicators:

• Moving averages
• RSI
• Fibonacci retracements
• Stochastics
• MACD
• Momentum
• Bollinger bands
• Pivot point
• Elliott Wave

Currencies

• The US dollar is involved in approximately 90% of all foreign exchange transactions, equivalent to over $1.5 trillion a day

Currency Codes

• USD = US Dollar
• EUR = Euro
• JPY = Japanese Yen
• GBP = British Pound
• CHF = Swiss Franc
• CAD = Canadian Dollar
• AUD = Australian Dollar
• NZD = New Zealand Dollar

Average Daily Turnover by Currency

N.B. Because two currencies are involved in each transaction, the sum of the percentage shares of individual currencies totals 200% instead of 100%.

Source: BIS Triennial Survey 2004

Currency Pairs

• Majors: EUR/USD, USD/JPY, GBP/USD, USD/CHF
• Dollar bloc: USD/CAD, AUD/USD, NZD/USD
• Major crosses: EUR/JPY, EUR/GBP, EUR/CHF

Average Daily Turnover by Currency Pair

Source: BIS Triennial Survey 2004