It’s not unusual during a period of structural change to see the market lose momentum and focus.
The big inter-bank players are being forced out of prop trading through a combination of regulation and Basel III, and market making is also becoming an increasingly difficult proposition for many of them.
The retail market had been taking up some of the slack over the last few years but this market is also in a consolidation phase, becoming more mature with many marginal participants (both brokers and traders) being forced out due to their lack of competitiveness.
Which brings us back to the professional traders, the true backbone of the market, providing pricing and liquidity. In years gone by all professional traders were trained in the inter-bank space but those days are gone. Now the new breed of professional trader will almost certainly start their trading life in the retail space. This is another structural change which the FX marketplace will take some time to adapt to.
So all those aspiring professional traders out there should stay patient and keep the faith. As long as there are currencies, there will be a currency market needing pricing and liquidity. Once the ‘new’ market order rises after this current phase of structural change, the demand for good traders will increase sharply.