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Forex Trading: Main Forex Market Players

Forex Trading: Main Forex Market Players

The forex market is as complicated as the stock market. And just like any other markets, there are players and people in the market that play a huge role in it.

The forex market has forex market players, and it is important for you to know these people and they make the forex market go around.

Until the latter part of the 1990’s, only the richest can belong in this game. And that first requirement was Stock News that you could trade if you had around 10 to 50 million dollars.

But because of the rapid development of trading systems, technology, Commodities News and the forex market itself, online forex brokers can now offer forex trading services to retail investors.

Here are the biggest forex market players you should know about.

The Largest Banks

The forex market is a decentralized market, meaning there’s no single regulator for the market. The biggest implication of this is that the world’s largest banks are the one determining the exchange rates.  

Based on the supply and demand of the currencies, the largest banks around the globe are generally the ones that make the bid/ask spreads.

Such large banks, which are collectively called the interbank market, take on countless amounts of foreign exchange transactions. Such transactions take place among their clients and among themselves.

Some of these super banks are Citi, JPMorgan, USB, Barclays, Deutsche Bank, and HSBC.

Giant Commercial Companies

Companies that participate in the foreign exchange market for the purpose of doing business are also a major foreign exchange market player.

For example, tech giant Apple Inc must first exchange its US dollars for another currency when purchasing electronic parts from other countries for their products.

Since these companies trade much lower volume of transactions than those in the interbank market, these market players usually deals with commercial banks for their transactions.

Mergers and acquisitions among large companies can also make currency exchange fluctuations. This is especially true when it comes to international cross-border mergers and acquisitions.

Governments and Central Banks

Examples of those that fall under this category are the European Central Bank, the Federal Reserve, and the Bank of England. These, along with governments, are regularly involved in the forex market too.

Similar to companies, national governments also participate in the forex market for their operations, international trade transactions, and handing their foreign exchange reserves. On the other hand, central banks influence the foreign exchange market when they adjust interest rates in order to control inflation, thus affecting currency valuation.

In some cases, central banks can also intervene in the foreign exchange market. They can do this either verbally or directly when they aim to realign exchange rates. There are also cases when central banks deem their currencies’ are priced too high or too cheap. They would then start huge sell and buy operations to change currency rates.

The Speculators

Speculators comprise the staggering 90 percent of all trading volume. Speculators are all over the forex market, coming different sizes and shapes.

There are different kinds of speculators, but their distinct similarity is that they move the market by their sheer number.



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