What’s the big deal about trading meme stocks? Retail investors dominating the U.S. stock market have turned their attention to forex trading, with leverage as high as 500:1!

A wave of retail investors is flooding into the traditionally professional-dominated high-risk foreign exchange market with unprecedented enthusiasm. Their collective bets amounting to billions of dollars are reminiscent of the previous "Meme stock" frenzy, but the inherent zero-sum game nature and high leverage characteristics may pose even more severe risks.

In the first half of 2025, according to data provider Finance Magnates, retail investors are averaging about $600 billion in the foreign exchange market daily, a 28% increase compared to the same period last year. Excluding the relatively stable Japanese market, this trading volume has surged by 51% year-on-year, and has skyrocketed by 174% compared to five years ago.

Although $600 billion accounts for only a small portion of the global average daily foreign exchange market of $7.5 trillion, this massive collective bet made up of amateur speculators is enough to raise alarms.

Unlike Meme stocks and cryptocurrency investments, the foreign exchange market is a purely zero-sum game, where one party's profit necessarily means another party's loss. When retail traders face off against what could be Wall Street professional traders, high-leverage tools further amplify the potential loss risks.

Behind this trend are multiple factors, including the severe exchange rate fluctuations triggered by the Trump administration's trade war, investment strategies peddled by "financial influencers" on social media, and the proliferation of online courses.

However, professionals warn that it is extremely difficult for retail investors to sustain profits in this market, as its high-risk nature poses severe challenges for the vast majority of individual investors.

The Temptation and Trap of Leverage

The core attraction of foreign exchange trading for retail investors lies in its high leverage characteristics, which industry insiders also view as the biggest risk.

Through financial instruments known as Contracts for Difference (CFDs), retail traders can leverage a small amount of capital to control large trades.

Even in the most heavily regulated countries, individual investors can access leverage of up to 20:1. In regions with relatively loose regulations, such as Seychelles, where many international brokers are registered, leverage can even reach 500:1.

However, high leverage is a double-edged sword. This year's sudden plunge of the dollar caught many bettors off guard, and even professionals found it difficult to predict the recent market turmoil.

According to mandatory disclosures from the European Securities and Markets Authority (ESMA), the vast majority of retail traders across all asset classes are losing money. Steven Hatzakis, Global Director of a research institution, stated:

People think they will get rich from this, but it often backfires. The odds are not in their favor.

The New Landscape of Retail Forex Trading

Geographically, the retail forex trading craze is spreading globally.

Japan was once the center of retail forex trading, as investors sought returns by investing yen savings into foreign currencies like the Australian dollar and Brazilian real due to its long-standing near-zero interest rates and sluggish stock market.

Analysts say, Japan is the only major market in the world where the retail investor group is large enough to influence the direction of the national exchange rate.

However, the current growth momentum mainly comes from other parts of the world, such as Vietnam, India, and Mexico. In contrast, this craze is relatively subdued in the United States, where retail trading of CFDs is not allowed, and the dollar's global dominance means that the public is generally less concerned about foreign exchange rates Despite rapid growth, the scale of retail forex trading remains relatively small compared to the stock market. Data from a certain CFD broker shows that in the first quarter of this year, retail forex trading volume was only 13% of stock trading volume, but the year-on-year growth rate exceeded 30%.

The Rise of "Financial Influencers" and the Cost of Expertise

The rise of "financial influencers" on social media and the proliferation of online courses are another driving force behind retail participation in forex trading.

These self-proclaimed "masters" actively promote their expertise and courses on platforms like YouTube and X, attracting novice clients. Individual investor Greer is critical of this, believing that:

Some people rush to teach others before they have fully learned themselves.

Unlike choosing an influencer as a mentor, Greer opted for an experienced former trader from the London financial district as her coach, who had worked at UBS and Goldman Sachs.

Under professional guidance, Greer's life has become tense yet fulfilling. She receives a large number of trading alerts every day, and even during meetings with legal clients, she anxiously waits for breaks to check charts and adjust her positions.

She states that she loves technical and economic analysis and enjoys the "dopamine rush" that comes with successful bets. Greer admits that she sometimes feels overwhelmed, but she does not want to give up:

I have spent a lot of money and time on this, I must succeed.

She adds:

This is now everything I do. Well, not entirely. I still do that boring legal work, but just to pay the bills