Forex Market Players

Now that we've looked at the structure of the Forex market, let's take a closer look at who is climbing the ladder among these people.

It is important to understand the nature of the Forex spot market and to understand who the key players in the Forex market are.

Until the late 1990s, this game could only be played by big boys.

At that time, the funds required for the transaction had to be between $10 million and $50 million in the first place. Small change, huh？

Forex was originally meant for bankers and large organizations, not us “little people”.

But with the existence of the internet, online forex brokers now allow “retail” traders like us to open trading accounts.

Without further ado, Major Players in Forex Market:

1. The Super Banks

Because the foreign exchange market is decentralized, the banks in the world set the exchange rates

Depending on the liquidity of the currency, or supply and demand, it tends to create quotes and spreads that we all like (or dislike).

Known as the Interbank Market, this large bank carries out massive amounts of foreign exchange transactions every day for itself and for its clients.

Commonly nicknamed “flow monsters”.

For these flow monsters, the name of the game is a volume that reflects the percentage of currency transaction flows.

Some of these flow monsters include Citi, JPMorgan, UBS, Barclays, Deutsche Bank, Goldman Sachs, HSBC, and Bank of America.

2. Large Commercial Companies

Companies participate in the Forex market for business purposes.

For example, when Apple purchases electronic components for its products in Japan, it must exchange US dollars for Japanese yen. These types of market participants transact directly with commercial banks because their trading volume is much lower than that of interbank markets.

Mergers and Acquisitions (M&A) between large organizations can also cause exchange rate fluctuations.

There are many currency negotiations that can change prices in international M&A transactions between countries.

3. Governments and Central Banks

Governments and central banks such as the European Central Bank, the Bank of England and the Federal Reserve are heavily involved in the foreign exchange market. As with

corporations, the government participates in the foreign exchange market of trade, in the management of foreign exchange reserves and in the settlement of international trade.

Meanwhile, central banks play a large role in the foreign exchange market, controlling and adjusting interest rates to contain inflation.

Therefore, this may affect the value of the currency.

In some cases, the central bank directly or verbally recommends to the foreign exchange market when it is necessary to change the conversion standard. Sometimes central banks think their money is too high or too small, so they start bulk trading to change the conversion criteria.

4. The Speculators

Currency speculation is the buying and holding of foreign currency for the purpose of selling that currency at a much higher price in the future.

This is different from those who buy foreign currency to finance foreign investments or to pay for imported goods or services. “Victory”

This is probably the mantra of speculators.

Forex speculation involves trading currencies for profit. Speculators focus on fluctuations in value. This is called speculation because of its essential weakness.

Because no one knows “if”, “a” or “but” whether the cost of a currency pair will increase or decrease. The trader then evaluates the likelihood that something will happen before the trade begins.

The share of speculators in the foreign exchange market accounts for about 90% of the total trading volume. They come in a variety of shapes and sizes. Despite the fact that each of them engages in Forex trading to make a lot of money, some have fat pockets and some have narrow pockets. All you need to do is join this crowd after graduating from Pipsology School.

You don't even know your forex history, how can you be one of these cool cats？