Who is trading in the Forex market?
Forex is the largest financial market in the world so it’s natural to ask who is trading in the Forex Market? In Forex, there are several participants.
Central Banks and Governments
Governments and central banks play a key role in the Forex market. Central banks like the Bank of England, the United States Central Bank and the European Central Bank are responsible for managing money supply and interest rates, as well as monitoring their commercial banking system. They are in fact the main decision makers of the Forex market. Central banks, as part of their authority in managing the growth and stability of the currency, exert tremendous influence on the Forex market.
Alongside central banks and governments, banks are also some of the largest contributors to Forex trading. Many people go to banks to make small deals, such as money to travel, need foreign currency. However, individual transactions are insignificant compared to those exchanged between banks known as the “interbank market”.
In general, banks act as traders who are willing to buy a currency at a bid-ask price and sell it. One way to earn money in Forex markets is to exchange foreign exchange at a price above the amount they have earned in order to obtain the relevant currency. Big banks make daily deals worth billions of dollars. These types of transactions are either in the form of customer service or the banks themselves enter the Forex market.
As you know, liquidity in the Forex market is very high, which is why it is very desirable for a deal. Equity funds can contribute to the Forex market using the portfolio of their portfolios. Another advantage of fundraising funds is the use of a high grade leverage that is commonly found on the stock market.
The Forex trading platform is an international trading point. Many companies are traded to different countries around the world, which may use different currencies to pay for such services and goods. In order to facilitate trade, billions of dollars are exchanged daily, and thus legal and commercial companies enter into currency transactions.
A normal person
Maybe that does not look like, but an ordinary person also has an important role in today’s Forex world. Each time he travels abroad for a holiday, he must buy the currency of that country and exchange it at the time of his return with the money of his own country, which is a currency exchange.
This person may also buy goods or services abroad, so a credit card company must convert its purchases into a base currency so that they can claim the amount they are asking for.
So know that you have understood who is trading in the Forex Market, maybe you are thinking about participating in this great market yourself too. Keep reading the Learn Forex page of our website to get started.