"In Japan, individuals have opened 600,000 so-called margin trading accounts at brokerages that lend money for currency bets, 80 percent more than a year ago, according to Yano Research."
Margin trading is a treacherous endeavor; it could end up badly for the retail investor. Investment banks tend to have the ability to absorb losses when the foreign exchange markets turn against them; retail traders are not likely to have that much of a cushion. Margin trading by individuals strikes me as a fad that will eventually result in significant losses for a significant proportion of these people. It is an analog of the day-trading of stocks that was popular in the US a few years ago. Simply trading with their existing holdings of yen savings would be a better tactic for trading on the lack of good investment opportunities within Japan.
That said, I think it is interesting that retail traders
"are the bane of professional currency traders,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., who has been trading in Japan's capital city for 25 years. ``It's becoming hard to make money as the dollar-yen doesn't move as it used to, because of their constant buying on dips.''
Clearly, retail trading is a new factor that professional traders hadn't taken into account.