Lesson 3: Who Are The Big Players In Forex?
Lesson Three: Who Are The Forex Market Players?
There are five major groups of participants in the Forex market.
- When someone travels to another country, they would usually have to exchange their home currency for the new country’s currency.
- If a company imports and exports goods internationally, they are making currency exchanges all the time during the payment process.
- Banks and Financial Institutions. Everyone knows that banks make up a huge portion of the Forex exchange market. Banks and financial institutions may be transacting for multinational companies or even governments.
- Central Banks. Central Banks like the Federal Reserve Bank (US), the European Central Bank (EU) and the Bank of Japan (Japan) hold large cash reserves of various currencies. They will monitor the economic conditions and interest rates of the various countries and they will decide to buy more of, or sell their reserve currencies. These transactions can go into hundreds of millions of dollars.
- Speculators are not just people like you and I. The banks, financial institutions, businesses and even central banks all speculate on the price of currencies. The largest volume of trades transacted in the Forex market are made from speculators.