LATAM market trading trends: today and tomorrow

Author: Lola Negmatova

LATAM has always been an important strategic region for Tools for Brokers, and we are glad to see it booming and getting the recognition it deserves in the past few years.

In today’s article, we’d like to share our thoughts about what is happening with the Forex market and online trading in general in LATAM countries, and what the future might hold for the region.

#1 The risks are high, but so are the rewards

The region remains highly volatile and high-risk, but it also continues to yield profits that are significantly higher compared to other regions, such as the EU, where the market’s maturity translates directly into lower earnings potential. As we all know, challenges create opportunities if they are recognised, thus many investors are taking advantage of the highly volatile situation. Economic volatility, for example, due to inflation, creates risks and opportunities for investors, with potential rewards being so enticing that no economic or political turmoil has put them off.

#2 The market is booming

At first, we noticed the boom in LATAM with the peak of crypto trading activity. A few months later, the TFB team started receiving numerous requests to assist newly-emerged brokers with trading platform management, bridge connectivity, hosting and PAMM services, as hedge fund management is a very popular trend within the LATAM area. Today, LATAM clients ask for the liquidity bridge solution and also risk management plugins and applications to ensure both brokers and traders are well-protected.

Also, the first-ever iFX Expo LATAM took place earlier this year, which signals that the market is growing and becoming more strategically important year by year.

We believe it was a very smart move to have the first expo in Mexico, as both internal market participants and external players show increased interest in new financial technologies and what they can offer. It is clear at this point that LATAM countries are developing and becoming more sophisticated and advanced in terms of their trading needs, preferences, and financial ecosystems. Establishing yourself on the market today will give you an early adopter advantage.

Despite the fact that the Forex market is still somewhat new to locals, the overall expectations are high, and there will be even more interest in the coming years.

Going back to the iFX Expo in Mexico, what we personally liked about it was the curiosity people expressed. Every conversation we had was filled with so many detailed questions, and we felt that every answer was absorbed fully, leading to even more questions. For the first time, we spoke to a teacher from the local university who was gathering knowledge about the event and its central idea to further pass this information to her students. Personally, we are beyond excited to witness the future of LATAM.

#3 New currencies are coming into the spotlight

The Brazilian real and Mexican peso remain leaders in terms of volumes traded, but other countries’ currencies are quickly catching up.

The Brazilian real and Mexican peso have traditionally been the most actively traded currencies in the LATAM region, no doubt. However, recently,there has been increased trading activity in other currencies, such as:

• Chilean peso. Thanks to the stable economy, the CLP is increasingly attractive to traders. Chile’s open market and strong regulatory framework support higher trading volumes and paint a bright future for the trading and investment industries.
• Colombian peso. Colombia’s economy is reforming, and growing oil exports, in particular, have boosted investor’s confidence.
• Argentina peso. Despite the economic challenges Argentina faces, the ARS sees high trading volumes due to the large agricultural sector and efforts to stabilise its economy.

Overall, improvements in financial market infrastructure, regulatory frameworks, and technology adoption make it easier to trade LATAM currencies.

#4 Literal market growth is happening

Trading and investment stopped being reserved for the elite thanks to the COVID-19 pandemic, during which many have realised how important financial independence and multiple sources of income are. As a result, the demand for convenient and straightforward trading instruments skyrocketed between 2020 and 2022. Although the markets have since started to decline in most parts of the world, the interest in trading isn’t going anywhere.

People in LATAM are seeking ways to diversify their earnings amid the economic volatility. The young population, in particular, who are tech-savvy and open to exploring new investment opportunities, is definitely playing a role in increasing investor demographics. At the same time, the rising middle class in many LATAM countries also means that more individuals have additional income to invest and multiply.

Because more people than ever are looking for ways to differentiate their earnings in times of high volatility, and with the industry’s joint efforts to help educate more people and introduce them to trading, we are confident LATAM countries will continue to grow aggressively in terms of numbers of clients and the volumes they trade and invest.

Tip: With developing markets, many brokers are faced with a dilemma – they want to acquire new clientele and secure their loyalty, yet they lack the instruments or experience with micro lot trading that so many new traders are looking for. At TFB, we have a solution for that to ensure brokers can provide services to those interested in low-volume trades without causing an administrative headache. We have a separate article about micro lot trading if you’d like to learn more about it.

Bottom line

The LATAM financial sector is growing, and we’re excited about watching its development and advancement and being part of the journey. It is an extremely promising region with lots of untapped potential in terms of audiences and volumes. The risks are high there, but in 2024, all markets will be risky, yet only a few can compare with LATAM in terms of potential revenues and market shares.

If you are based in LATAM or are interested in starting operations there, please feel free to reach out to us at sales@t4b.com. We’ll be happy to share our tips and tricks and find solutions that will support your growth there with minimal risks and delays.